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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 190.44 | ACUITE BB | Stable | Assigned | - |
| Bank Loan Ratings | 444.56 | - | ACUITE A4+ | Assigned |
| Total Outstanding | 635.00 | - | - |
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Rating Rationale |
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Acuité has assigned its long-term rating as ‘ACUITE BB’ (read as ACUITE Double B) and short-term ratings as 'ACUITE A4+’ (read as ACUITE A four plus) on the Rs. 635.00 Cr. bank facilities of 'Walchandnagar Industries Limited'. The outlook is 'Stable'.
Rationale for Rating Assigned The rating assigned is on account of long track record of operations, experienced promoters with over three decades in the heavy engineering industry, reputed private and government clientele. Further, the rating gets comfort from additional capital infusion from promoters & investors improving the liquidity position, moderate financial risk profile, and healthy order book of the company to the tune of Rs. 543 Cr. The rating also factors in the comfort derived from prepayment of its term loan, completion of seven projects of TNEB resulting into release of Rs. 7.79 Cr. of BG and expected further release by this year. However, rating is constrained with intensive working capital operations. |
| About the Company |
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Mumbai based, Walchandnagar Industries Limited (WIL) is an ISO 9001:2015 certified company with global presence and diversified business portfolio in Projects, Products and High-tech Manufacturing. Incorporated in 1908, WIL has a long track record of operations for over 100 years. WIL has been engaged into EPC of sugar mills, nuclear power plants and fabrication and heavy engineering segments like Defence, Nuclear, Aerospace and Missiles (DNAM). WIL has a strong customer base. WIL is a listed company on the BSE and NSE stock exchanges in India. The directors of the company are Mr. Chirag Chakor Doshi, Mr. Rupal Anand Vora, Mr. Anil Purushottam Kakodkar, Mr. Chakor Lalchand Doshi, Mr. Jayesh Chaturdas Dadia and Mr. Giriraj Sharan Agrawal.
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| Unsupported Rating |
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Not Applicable
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| Analytical Approach |
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Acuite has taken standalone financial and business risk profile of Walchandnagar Industries Limited to arrive at this rating.
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| Key Rating Drivers |
| Strengths |
| Established track record of operations and experienced management
WIL has been engaged in strategic business areas like Defence, Nuclear, Missiles, Aerospace (DNAM) and industrial products like Gears, Centrifugal, Castings and Gauges. The company is also in the EPC business of sugar mills, nuclear power plants & fabrication. The company has been engaged in this industry for more than 100 years and was promoted by (Late) Seth Walchand Hirachand Doshi. Over the last 3-4 years, WIL has focused on exiting the EPC business by completing orders in hand and aggressively expanding into DNAM and Specialized OEM business. The present Chairman of the company is Mr. Chakor Doshi who possesses extensive industry experience of more than three decades in the said industries. Some of the landmark projects of WIL include key critical equipment in India's maiden mission to moon, i.e., 'Chandrayan I' and ‘Chandrayan II’, contribution towards 'Akash Missile', among others. The extensive experience of the promoters in the industry has helped the company to build strong a market presence in the aforementioned industries. Acuité believes that the company will continue to benefit from its extensive experience of the promoters over the medium term. Financial Risk Profile The company has a moderate financial risk profile mainly marked by net worth, gearing and coverage indicators. The tangible net worth of the company stood at Rs. 360.63 Cr. in FY 24 against Rs. 259.97 Cr. in FY 23. The net worth has been improved despite net loss is due to infusion of capital in the business by prominent investors. Gearing Ratio (Debt to Equity) improved by 46 bps and stood at 0.67 times in FY 24 as against 1.13 times in FY 23. The gearing ratio has come down to below unity. The total outside liabilities to total net worth (TOL/TNW) stood at 1.42 times as on FY 24 against 2.18 times as on FY 23. Healthy Order Book The established presence of WIL in the aforementioned industries for over 100 years helped the company to build esteemed client profile spanning both in private as well as reputed Government agencies. The company has a strong customer base such as Bharat Dynamics Limited, Indian Space Research Organisation (ISRO), Defence Research and Development Organisation (DRDO). The company has a current order book of ~Rs. 543 Cr. as on date which includes long term as well as short term (recurring nature). Issue of Share Warrant The company has issued fresh share warrants for Rs. 216 Cr. at Rs. 114 per warrant out of which Rs. 30 Crs. will be infused by promoters and balance Rs. 186 Cr. from prominent investors. The company has already received the first tranche for Rs. 62 Cr. in November 2023 and second tranche of Rs. 60.34 Cr. in March 2024. The company is expecting final tranche of Rs. 63.66 Cr. from prominent investors and Rs. 30 Cr. from promoters before March 2025. With this infusion liquidity profile of the company is likely to improve in near future. |
| Weaknesses |
| Working Capital Operations
The operations of the company are working capital intensive in nature owing to a majority of the funds blocked in debtors and inventory. The collection period stood highly elongated at 236 days in FY23 and 210 days in FY24. Rs. 90 Cr. of Trade Receivable from TNEB project is stuck till now. The inventory holding also stood high at 168 days in FY24 as against 137 days in FY23. The creditors’ period also stood high at 158 days in FY24, owing to a credit period of over 150-180 days extended by the suppliers to the company as per the information shared by the company. The working capital cycle of the business is 220 days for FY 24. Decline in Scale of Operations The revenue from operations of the company have declined by 7.44%, thereby reducing the topline from Rs. 326.67 Crs. in FY 23 to Rs. 302.35 Crs. in FY 24. The revenue declined due to to the strike within the company for 43 days in Q3 of FY 23-24 which costed for Rs. 30 Crs. (Approx.) in revenue to the company. There is no business loss as such during the period. |
| Rating Sensitivities |
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| Liquidity Position |
| Adequate |
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The company has adequate liquidity marked by net cash accruals, current ratio, cash and bank balance. The company generated the net cash accruals of Rs. (27.03) Cr. for FY 24. The debt obligation has been fully repaid in July 2024 through issue of NCD (Non Convertable Debentures) as per the NDC (No Due Certificate) from ACRE. The current ratio of the company stood at 1.25 times as on 31 March 2024. The company has Cash and Bank Balances of Rs. 55.74 crore. The average utilization of fund based and non-fund-based limits for last 17 months ending April 2024 is 80.89% & 59.35% respectively. Acuite believes that liquidity profile of the company will improve in near future indicating availability of funds for any future endeavours.
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| Outlook: Stable |
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Acuite believes that the company will maintain a 'Stable' outlook and benefit over the medium term from its experienced management. The outlook may be revised to 'Positive', if the firm achieves more than expected growth in terms of revenue and profitability. The outlook would be revised to negative, if there is decline in financial performance of the company.
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| Other Factors affecting Rating |
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None
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| Particulars | Unit | FY 24 (Actual) | FY 23 (Actual) |
| Operating Income | Rs. Cr. | 302.35 | 326.67 |
| PAT | Rs. Cr. | (41.83) | 19.58 |
| PAT Margin | (%) | (13.83) | 5.99 |
| Total Debt/Tangible Net Worth | Times | 0.67 | 1.13 |
| PBDIT/Interest | Times | 0.45 | 1.69 |
| Status of non-cooperation with previous CRA (if applicable) |
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None
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| Any other information |
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None
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| Applicable Criteria |
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• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm • Infrastructure Sector: https://www.acuite.in/view-rating-criteria-51.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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