Acuité has reaffirmed the long-term rating of Acuité BBB (read as Acuité Triple B) and the short-term rating of Acuité A3+ (read as Acuité A Three Plus) on the Rs. 28.00 crore bank facilities and assigned the long-term rating of Acuité BBB (read as Acuité Triple B) and the short-term rating of Acuité A3+ (read as Acuité A Three Plus) to the Rs. 32.00 crore bank facilities of S D International Private Limited. The outlook is 'stable'.

Rationale for the rating
Acuite has taken into account the improvement in operating revenue, comfortable coverage indicators, and the long experience of the promoters in the plastic packaging goods industry. The revenue of the company has increased year on year from Rs. 125.98 crore in FY 2022 to Rs. 156.55 crore in FY 2023 (provisional). Although the operating income has increased, the operating profit margin of the company has declined year on year to 13.20% in FY 23 (provisional) as compared to 14.21% in FY 22 and 16.53% in FY 21. The company has dealers spread across India and has long-standing relationships with reputed customers such as Haldiram’s, Amul, Bikanerwala Foods Pvt. Ltd., Domino’s, RSPL Group (Ghari Detergent), Bikaji, etc. The company is currently in expansion mode, wherein it is increasing its capacity by 6500 MT with a total capital outlay of Rs. 45 crore. The rating is underpinned by the susceptibility of margins to volatility in raw material prices, as can be seen by the constant dip in EBITDA in the past three years, major debt-funded capex affecting the financial risk profile in the upcoming year, and strong competition from existing market players.