­Acuité has consolidated the business and financial risk profiles of Borkar Packaging Private Limited (BPPL) and its wholly own subsidiary Universal Carton Solutions Private Limited (UCSPL) together referred to as the ‘Borkar Group’ (BG). The consolidation is in view of the common management, same line of business and financial synergies between these entities.

­Experienced Management with established track record of operations
The Borkar Group was established in the year 1910 by late Mr. Shripad Borkar, thus having an established brand position for over a century. Later in 1994, the third generation of the Borkar family diversified its core competency business by establishing its flagship company BPPL. The operations of the group are currently managed by Mr. Vinay P. Borkar, Mr. Deepak P. Borkar, Mr. Nikhil A. Borkar and Mr. Amol A. Borkar. The promoters of the group have an experience of over three decades in the aforementioned line of business. The promoters are supported by experienced and qualified second line of management. The long track record of operations of over 100 years coupled with experience of management have helped the group to forge healthy relationships with reputed clients and suppliers. Acuité believes that BG will sustain its existing business profile on the back of established track record of operations, experienced management, and reputed clientele base.

Well diversified geographical operations along with reputed clientele
The Borkar Group caters to various industries such as FMCG, Liquor, pharmaceutical to name a few. The group caters to reputed players such as Hindustan Unilever Ltd., Nestle India Ltd., Pernod Ricard India Private Limited to name a few with more than three decades of relationship. The group has set up various manufacturing plants located across different locations such as Goa, Daman, Himachal Pradesh and Kolkata.

Moderate financial risk profile
The tangible net worth of the group stood at Rs.190.14 crore as on March 31, 2023 (Prov), as against Rs.182.40 crore as on March 31, 2022. The tangible net worth also consists of quasi equity of Rs.32.00 crore. The gearing of the group stood at 0.94 times as on March 31, 2023(Prov), as against 1.12 times as on March 31, 2022. The total debt of the group stood at Rs.178.73 crore as on March 31, 2023 as against Rs.204.29 crore as on March 31, 2022. The interest coverage ratio stood at 1.67 times as on March 31, 2023(Prov), as against 1.53 times as on March 31, 2023. The DSCR stood below unity at 0.92 times as on March 31, 2023(Prov), as against 0.82 times as on March 31, 2022. The DSCR is expected to improve and is likely to be in the range of 1.15-1.27 times in medium term. Acuité believes that the financial risk profile of the group will continue to remain moderate with no major debt funded capex in medium term.

Improved albeit intensive working capital operations
The group’s working capital operations have improved in FY23(Prov). However, they are intensive as evident from the GCA days of 160 days as on March 31, 2023 (Prov) as against GCA days of 226 days as on March 31, 2022. The inventory days stood at 106 days for FY2023(Prov) as against 131 days for FY2022. The inventory majorly consists of paper boards, printing inks and foils. Average inventory holding period is of around 60-70 days. The debtors’ days stood at 57 days for FY2023(Prov) as against 73 days for FY2022. The average credit period allowed to the customers is around 70-75 days. The creditors days stood at 47 days for FY2023(Prov) against 59 days for FY2022. The group majorly makes immediate payments to the suppliers. The average credit period received from the supplier is around 90 days. The average utilization of the bank limits are high at around 94 percent for BPPL after taking into consideration the ad hoc limits and 46 percent for UCSPL for six months ending September ‘2023. Acuité believes that the ability of the group to improve its working capital management will remain a key rating sensitivity in medium term.