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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 55.00 | ACUITE A- | Stable | Assigned | - |
| Bank Loan Ratings | 45.00 | - | ACUITE A2+ | Assigned |
| Total Outstanding Quantum (Rs. Cr) | 100.00 | - | - |
| Rating Rationale |
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Acuite has assigned its long term rating of 'ACUITE A-' (read as ACUITE A minus) and the short term rating of 'ACUITE A2+' (read as ACUITE A two plus) on the Rs. 100.00 Cr bank facilities of Welspun BAPL Private Limited (WBPL). The outlook is 'Stable'.
The rating derives comfort from the significant support from the Welspun group apart from the common management. Acuité believes that WBPL, aided by its comprehensive product portfolio, backed by strong group support, remains well positioned to benefit from a likely uptick in demand in the domestic CV industry, going forward. The rating also factors an expected improvement in the financial risk profile and scale of operation of WBPL over the medium term as new management has settled the external financial obligations. However, these strengths are partly offset by the susceptibility to volatility in raw material prices and high client concentration. Acuité notes that the company’s revenues and earnings being susceptible to the inherent cyclicality of the domestic CV industry, with earnings and return indicators moderating during periods of downturns and improving thereafter as the industry volumes revive. |
| About the Company |
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Welspun BAPL Private Limited (erstwhile Plastauto Private Limited) was incorporated on July 12, 2021 as Tubular Pipes Private Limited. The name of the Company was subsequently changed to Plastauto Private Limited on October 18, 2022. The Company is engaged in the business of manufacture of injection moulded plastic components for the automotive industry. The Company's business was earlier part of auto division of Sintex BAPL Limited (Sintex BAPL). Sintex BAPL had been admitted under Insolvency & Bankruptcy Code and Resolution Plan for acquisition of Sintex BAPL by Welspun Group, approved by NCLT vide its order dated March 17th 2023. Post the scheme becoming effective, SABPL transferred automotive business to - Welspun BAPL Private Limited (erstwhile Plastauto Private Limited) for Rs. 110 Cr as on 29th of March 2023.
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| Standalone (Unsupported) Rating |
| Not applicable |
| Analytical Approach |
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Acuité has taken a standalone view of the business and financial risk profile of WBPL to arrive at the rating. While arriving at the rating of WBPL, Acuité has taken into account a strong level of support from the Welspun group with 100 per cent of the stake being held by trustee Mr. B.K. Goenka on behalf of the Welspun Group Master Trust.
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Key Rating Drivers
| Strengths |
| Strong parentage and resourceful promoters
Welspun BAPL Private Limited (erstwhile Plastauto Private Limited) is a part of the Welspun Group, with 100 per cent of the stake being held by trustee Mr. B.K. Goenka on behalf of the Welspun Group Master Trust. Welspun Group, promoted by Mr. Balkrishnan G Goenka and Mr. Rajesh R Mandawewala since 1985, is headquartered in Mumbai and has presence across varied business segment such as Home Textiles, Line Pipes, Infrastructure, Steel, Oil & Gas, Retail and Flooring Solutions. Expected ramp up in operations The company commenced operations in April 2023, since till March 29, 2023, the company was one of the divisions (auto division) of Sintex BAPL Limited. WBPL is likely to benefit from strong reputation and financial flexibility of the Welspun Group, besides the extensive experience of its management team. Acuité also expects the group to extend need-based support to WBPL going forward. The company’s revenues are estimated to be around Rs. 320-340 Cr in FY2024, which will be its first full year of operations. Further, the company possess an extensive pan-India manufacturing footprint with 6 strategically located unit across the country catering to all major OEMs. The strategic location provides an advantage to the company in terms of proximity to key customers namely Tata Motors, Maruti Suzuki, Hyundai, Force Motors, etc, respectively. Further, manufacturing units are located close to steel suppliers manufacturing locations or their key distribution hubs. Improving financial risk profile In FY23 new management has settled entire previous financial obligation, improving the overall financial risk profile. Post the infusion of Rs. 30 Cr of non-interest bearing compulsorily convertible debentures (shall be converted anytime on or before December 31st, 2031) in FY23, the networth stood healthy at Rs. 124.86 Cr as on 31st March 2023. WBPL does not have any bank borrowings, as the previous debt of Sintex BAPL were settled. The gearing of the company is expected to remain comfortable in FY24 even though WBPL has planned to avail working capital limits in the near term. The company will incur regular modernization capex in FY24 which will improve operational efficiencies of manufacturing units and reduce the overheads going forward. This will help the company to improve its operating margins, which in turn will help the company to maintain comfortable coverage metrics. Hence, Acuité does not foresee any material impact on company’s capital structure and debt metrics, in absence of any debt funded capex. |
| Weaknesses |
| Profitability susceptible to macro-economic factors, industry cyclicality and raw material prices
The automobile industry is subjected to macro-economic headwinds emanating from inflationary pressure and economic slowdown. Economic downturns impact consumer spending on discretionary items, and hence slowdown in economic activity can impact industry sales and thus impact the company. Raw materials and components prices constituting more than 70 per cent of revenues are directly influenced by international commodity prices. However, Acuité believes the risk is mitigated to some extent as the increase in raw material prices are passed on to end customers, although with a lag. |
| Rating Sensitivities |
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| All Covenants |
| None |
| Liquidity Position: Adequate |
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Net cash accrual is expected to be adequate in FY24 with the current fiscal marking its first full year of operation. The promoters are expected to infuse need based equity and unsecured loans to support the business. The sanctioned fund based limits are expected to provide cushion to the working capital cycle post disbursal. However, generation of expected cash accrual will be key rating sensitivity factor.
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| Outlook: Stable |
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Acuité believes that WBPL will continue to benefit over the medium term due to its experienced management, strong parentage and operational support from Welspun group. The outlook may be revised to 'Positive', in case of higher- than-expected revenues and profitability, while maintaining its capital structure. Conversely, the outlook may be revised to 'Negative' in case of lower-than-expected revenues and profitability or any significant stretch in its working capital management or larger-than-expected debt-funded capital expenditure leading to deterioration of its financial risk profile and liquidity.
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| Other Factors affecting Rating |
| NA |
| Particulars | Unit | FY 23 (Actual) | FY 22 (Actual) |
| Operating Income | Rs. Cr. | 1.27 | 0.00 |
| PAT | Rs. Cr. | (0.11) | 0.00 |
| PAT Margin | (%) | (8.63) | 0.00 |
| Total Debt/Tangible Net Worth | Times | 0.00 | 0.00 |
| PBDIT/Interest | Times | (6.88) | 0.00 |
| Status of non-cooperation with previous CRA (if applicable) |
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Brickworks vide its press release dated 9th Sept 2022, ahd rated the company to BWR D/D; Issuer Not Cooperating Care Ratings vide its press release dated 16th May 2022, ahd rated the company to CARE D/D; Issuer Not Cooperating |
| Any other information |
| Revenue is accounted from 29th March to 31st March 2023 i.e. only for 3 working days in FY23, since acquisition was completed on 29th of March 2023. |
| 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 • Group And Parent Support: https://www.acuite.in/view-rating-criteria-47.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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| Rating History : |
| Not Applicable |
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