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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 7.56 | ACUITE BB- | Stable | Reaffirmed | - |
| Bank Loan Ratings | 49.44 | - | ACUITE A4+ | Reaffirmed |
| Total Outstanding Quantum (Rs. Cr) | 57.00 | - | - |
| Rating Rationale |
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Acuite has reaffirmed its long-term rating of Acuite BB- (read as Acuite double B minus) and short-term rating of Acuite A4+ (read as Acuite A four plus) on the Rs.57.00 Cr bank facilities of Toyop Relief Private Limited (TRPL). The outlook is 'Stable'.
Rationale for Reaffirmation The rating reaffirmation reflects steady operating performance of TRPL marked by stable revenue growth and range bound operating margins. The revenue stood at Rs.56.52 Cr in FY2023(Prov) against Rs.45.32 Cr in FY2022. The rating also factors in comfort derived by long track record of operations with an experienced management spanning over more than two decades with reputed customer base. Further, the rating is constrained by TRPL’s below average financial risk profile and intensive nature of working capital operations. |
| About the Company |
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Maharashtra Based - TRPL was incorporated in 1997 as a proprietorship concern reconstituted as a partnership firm and later as a private limited company in 2007. TRPL was promoted by Mr. Sachin Shah and his wife Mrs. Toral Shah. TRPL is engaged in the business of supplying relief materials to various organizations that cater to needy nations in times of calamities and disasters. TRPL is also an authorized dealer of plastic granules for Lyondell Basell Group in India. TRPL has also invested in 1.5 MW wind power generation in Rajasthan.
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| Analytical Approach |
| Acuité has considered the standalone business and financial risk profile of Toyop Relief Private Limited to arrive at the rating. |
Key Rating Drivers
| Strengths |
| Long Track Record of Operations with an Experienced Management
TRPL was established in 1997 as a proprietorship concern and reconstituted as a private limited company in 2007. The company is promoted by Mr. Sachin Shah who has been in this business since the past two decades. Acuite believes company's long track record of operations along with promoter's extensive experience will help the company in maintaining long term relations with its customers and suppliers. Reputed Customer Base TRPL is engaged in the business of supplying relief materials to various non-governmental organizations including UNICEF, IOM, UNHCR, IFRC to name a few that cater to needy nations in times of calamities and disasters. Further TRPL is the authorized distributor of Lyondell Basell Group a public multinational chemical company listed on the NYSE stock-exchange. |
| Weaknesses |
| Below Average Financial Risk Profile
The financial risk profile of the company stood moderate marked by low net worth, moderate gearing, and debt-protection metrics. The net worth of the company stood at Rs. 6.36 Cr as on 31 March 2023(Prov) as against Rs. 4.51 Cr as on 31 March 2022. The gearing (debt-equity) of the company stood at 3.80 times as on 31 March 2023(Prov) as against 4.70 times as on 31 March 2022. Total debt of the company stood at Rs. 24.16 Cr as on 31 March 2023(Prov) which comprises of short-term debt of Rs. 15.16 Cr, long term debt of Rs.2.10 Cr and Unsecured loans form promotors and related parties at Rs.6.89 Cr. Interest coverage ratio stood at 2.31 times for FY2023(Prov) as against 2.10 times for FY2022. Further, debt service coverage ratio stood at 1.56 times in FY2023(Prov) as against 1.41 times in FY2022. TOL/TNW stood at 4.67 times for FY2023(Prov) and Debt-EBITDA stood high at 4.31 times for FY2023(Prov). However, NCA/TD stood at 0.10 times for FY2023(Prov) as against 0.07 times in previous year. Working capital intensive operations The working capital operations are intensive in nature with high GCA days of 183 days for FY2023(Prov) as against 175 days for FY2022. The high GCA days are led by inventory days of 113 days in FY2023(Prov) against 89 days in FY2022. The increase in inventory is due to increase in value of inventory and partial increase in volumes. The debtor days stood at 49 days in FY2023(Prov) against 51 days in FY2022. The current ratio stood moderate at 1.47 times as on 31st March 2023(Prov) against 1.61 times in the previous year. |
| Rating Sensitivities |
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| Material covenants |
| None |
| Liquidity Position |
| Stretched |
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The liquidity position is stretched with high reliance on working capital limits, with average fund-based limit utilisation at 92.18 percent over the last 12 months ending March 2023. Further the working capital operations are intensive with high GCA days of 183 days in FY2023(Prov). However, the cash accruals generated stood at Rs.2.50 Cr for FY2023(Prov) against maturing debt repayment obligation of Rs.0.74 Cr during the same period. TRPL is expected to generate net cash accrual of around 3.65 Cr to 4.85 Cr for FY24 & FY25 as against repayment obligation of around Rs. 0.94 Cr and 0.47 Cr during the same period.
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| Outlook: Stable |
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Acuite believes that TRPL will maintain a 'Stable' outlook over the medium term owing to its experienced management. The outlook may be revised to 'Positive' if the company registers substantial growth in revenues and profitability while maintaining its debt protection metrics. Conversely the outlook may be revised to 'Negative' in case of considerable deterioration in its financial risk profile or working capital management.
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 23 (Provisional) | FY 22 (Actual) |
| Operating Income | Rs. Cr. | 56.52 | 45.32 |
| PAT | Rs. Cr. | 1.84 | 0.89 |
| PAT Margin | (%) | 3.26 | 1.96 |
| Total Debt/Tangible Net Worth | Times | 3.80 | 4.70 |
| PBDIT/Interest | Times | 2.31 | 2.10 |
| Status of non-cooperation with previous CRA (if applicable) |
| Not Applicable |
| Any other information |
| None |
| Applicable Criteria |
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• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm • Entities In Manufacturing Sector:- https://www.acuite.in/view-rating-criteria-59.htm • Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm |
| Note on complexity levels of the rated instrument |
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In order to inform the investors about complexity of instruments, Acuité has categorized such instruments in three levels: Simple, Complex and Highly Complex. Acuite’ s categorisation of the instruments across the three categories is based on factors like variability of the returns to the investors, uncertainty in cash flow patterns, number of counterparties and general understanding of the instrument by the market. It has to be understood that complexity is different from credit risk and even an instrument categorized as 'Simple' can carry high levels of risk. For more details, please refer Rating Criteria “Complexity Level Of Financial Instruments” on www.acuite.in.
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