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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 50.00 | ACUITE BB+ | Reaffirmed & Withdrawn | - |
| Bank Loan Ratings | 16.00 | - | ACUITE A4+ | Reaffirmed & Withdrawn |
| Total Outstanding | 0.00 | - | - |
| Total Withdrawn | 66.00 | - | - |
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Rating Rationale |
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Acuité has reaffirmed and withdrawn the long-term rating of 'ACUITE BB+' (read as ACUITE double B plus) and short term rating of 'ACUITE A4+' (read as ACUITE A four plus) on the Rs.66.00 Crore bank facilities of Vananchal Concast Private Limited (VCPL). The rating withdrawal is in accordance with Acuité's policy on withdrawal of rating as applicable to the respective facility / instrument. The rating has been withdrawn on account of the request received from the company along with No objection certificate received from the lender. Rationale for Rating The rating also draws comfort the moderate capital structure of the company and moderate debt protection metrics. Further, the rating considers the adequate liquidity of the company with a moderate reliance on short term bank borrowings. The rating also factors in the experience of the promoters in the industry which is also reflected from its growing revenue driven by increase in metal prices. However, the above mentioned strengths are partly off-set by the working capital intensive operations of the company with a high GCA days of 139 days and vulnerability in the margins due to fluctuations in the raw material prices of the company. |
| About the Company |
| Vananchal Concast Private Limited was incorporated in 2019, based in Jharkhand, managed by Mr. Nitin Bhalotia and Mr. Ankit Poddar. The company engaged in manufacturing of MS Billets. |
| Unsupported Rating |
| Not Applicable |
| Analytical Approach |
| Acuité has taken the standalone view on the business and financial risk profile of Vananchal Concast Private Limited. |
| Key Rating Drivers |
| Strengths |
| Experienced Management VCPL has been engaged in manufacturing of MS Billets and has started its full fledge operations in 2023. Currently the company is managed by Mr. Nitin Bhalotia and Mr. Ankit poddar who has an experience in manufacturing of MS Billets. The company caters to strong customer base in various end-user industries. The company witnessed turnover of Rs.269.16 Crore in FY24(Prov.) as against Rs.250.86 Crore in FY23. Further, the EBIDTA margins of the company stood at 2.47% in FY24(Prov.) as against 2.21% in FY23. The PAT margins of the company stood at 0.68% in both years. Going forward, the company is expected to increase in the top-line of the company in the range of Rs.300 Crores with better margins on the back of increase in the production due to increase in installed capacity post completion of capex will resulting to increase in the top-line. Acuite believes that the ability of company to ramp up the production and increase its top line is a key rating sensitivity. Moderate Financial Risk Profile The financial risk profile of the company is moderate marked by net worth of Rs.59.67 Crore as on 31st March 2024(Prov.) against Rs.75.12 Crore as on 31st March 2023. The total debt of the company stood at Rs.64.51 Crore as on 31st March 2024(Prov.) against Rs.20.89 crore as on 31st March 2023. The promoters of the company infused funds in the business to support the capital expenditure in form of quasi equity as the unsecured loans are subordinated (condition mentioned in the sanction letter) Further, the ICR and DSCR ratio of the company stood at 2.61 times and 1.91 times respectively as on 31st March 2024(Prov.) against 3.34 times and 3.04 times respectively as on 31st March 2023. The gearing ratio of the company stood on 1.08 times as on 31st March 2024(Prov.). TOL/TNW ratio stood at 2.63 times as on 31st March 2024(Prov.) against 0.49 times as on 31st March 2023. Acuite believes that financial risk profile of the company is likely to improve in near to medium term due to absence of debt-funded capex in near future. |
| Weaknesses |
| Working Capital Intensive Operations
The working capital operations of the company are intensive marked by GCA days stood at 139 days as on 31st March 2024(Prov.) against 120 days as on 31st March 2023. Inventory days stood at 39 days as on 31st March 2024(Prov.) against 35 days as on 31st March 2023.Further, the debtor days of the company stood at 93 days as on 31st March 2024(Prov.) as against 70 days as on 31st March 2023. The average debtor days maintains by the company under the range of 60-90 days. Acuite believes that the working capital operations of the company will remain the same range in near to medium term Acuite believes that the working capital operations of the company may continue to remain in the same range in near to medium term. Fragmented industry characterized by intense competition and vulnerability to changes in commodity prices The company works in a highly competitive and fragmented segment of the Indian aluminium market, which is characterised by the existence of numerous small, unorganised players. As a result, the industry's players have little pricing power and are subject to pressure from the competition to increase their profitability. Aside from this, its products, which are mostly used by intermediaries, are exposed to the risks linked to industry cyclicality and pricing volatility. The susceptibility of the margins to changes in the raw materials price is inherent in this industry.
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| Rating Sensitivities |
| Not Applicable |
| Liquidity Position |
| Adequate |
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The liquidity profile of the company is adequate. The company has generated net cash accruals of Rs.4.77 Crore as on 31st March 2024(Prov.) as against the debt repayment obligations of Rs.0.91 Crore in the same period. The current ratio of the company stood at 0.73 times as on 31st March 2024(Prov.) against 2.39 times as on 31st March 2023. The unencumbered cash and bank balance of the company stood at Rs.3.33 Crore as on 31st March 2024(Prov.) against Rs.1.65 Crore as on 31st March 2023.Acuité believes that going forward the liquidity position of the group will remain adequate due to the improving net cash accruals.
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| Outlook |
| Not Applicable |
| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 24 (Provisional) | FY 23 (Actual) |
| Operating Income | Rs. Cr. | 269.16 | 250.86 |
| PAT | Rs. Cr. | 1.83 | 1.70 |
| PAT Margin | (%) | 0.68 | 0.68 |
| Total Debt/Tangible Net Worth | Times | 1.08 | 0.28 |
| PBDIT/Interest | Times | 2.61 | 3.34 |
| 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 • Manufacturing Entities: 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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