Rating Rationale
June 17, 2020 | Mumbai
ASI Industries Limited
Ratings migrated to 'CRISIL BB+/Positive/CRISIL A4+'
 
Rating Action
Total Bank Loan Facilities Rated Rs.130 Crore
Long Term Rating CRISIL BB+/Positive (Migrated from 'CRISIL BB/Negative ISSUER NOT COOPERATING'*)
Short Term Rating CRISIL A4+ (Migrated from 'CRISIL A4+ ISSUER NOT COOPERATING'*)
1 crore = 10 million
Refer to annexure for Details of Instruments & Bank Facilities
*Issuer did not cooperate; based on best-available information
Detailed Rationale

Due to inadequate information, CRISIL had migrated its rating on the bank facilities of ASI Industries Limited (ASIL; part of ASI group) to 'CRISIL BB/Negative/CRISIL A4+ Issuer Not Cooperating'. However, the company has subsequently begun sharing information necessary for a comprehensive rating review. CRISIL is, therefore, migrating its rating from 'CRISIL BB/Negative/CRISIL A4+ Issuer Not Cooperating' to 'CRISIL BB+/Positive/CRISIL A4+'.
 
The revision in outlook and upgrade in rating are based on expected improvement in ASIL's business risk profile on account of resumption of the mining business and start of the engineered stone division in fiscal 2021. Also, the ASI group's financial risk profile is expected to remain adequate on account of healthy networth. Liquidity should remain adequate, with sufficient net cash accrual vis-a-vis debt obligation, and is further supported by unsecured loans provided by the promoters (Rs 63.68 crore as on March 31, 2020).
 
The ratings reflect the ASI group's strong market position in the stone mining and marketing industry and an above-average financial risk profile. These strengths are partially offset by large working capital requirement and susceptibility to regulatory changes and project-related risks.  

Analytical Approach

For arriving at its ratings, CRISIL has combined the business and financial risk profiles of ASIL with its wholly owned subsidiaries, Al Rawasi Rock and Aggregates LLC (RRA) and ASI Global Ltd (ASIGL). These entities are collectively referred to as the ASI group.

Please refer Annexure - Details of Consolidation, which captures the list of entities considered and their analytical treatment of consolidation.

Key Rating Drivers & Detailed Description
Strengths
* Strong market position: The three-decade-long experience of the promoters in the Kota stone-mining business has resulted in healthy relationships with over 1,000 diversified customers. The group is among the largest miners of Kota stone in India.
 
* Above-average financial risk profile: Networth is estimated to be healthy at Rs 179.14 crore as on March 31, 2020 (Rs 148.54 crore a year earlier), while total outside liabilities to adjusted networth ratio should be around 2.07 times. Debt protection metrics, however, are modest, with interest coverage ratio estimated at 1.66 times in fiscal 2020.
 
Weaknesses
* Large working capital requirement: Operations are working capital-intensive, with gross current assets estimated to be have increased to 334 days as on March 31, 2020 (from 255 days a year earlier) due to increase in receivables to 174 days (from 125 days a year earlier). However, diversified customers and advances from dealers provide insulation against receivables risk.
 
* Susceptibility to regulatory changes: The mining industry in India is highly regulated and plagued by irregularities. However, the group's business has not been significantly affected by regulatory changes until now, although the last ban by National Green Tribunal on mining activity was for short duration and now company got consent to operate for next five years.
Liquidity Adequate

In the absence of any major capital expenditure over the medium term, cash accrual, expected at Rs 28-44 crore each in fiscals 2021 and 2022, should sufficiently cover yearly debt obligation of Rs 16-17 crore. Bank limit utilisation averaged 86% over the 12 months through March 2020. The company receives funding support from the promoters through unsecured loans.

Outlook: Positive

CRISIL believes the ASI group will continue to benefit from the promoters' extensive experience and healthy relationships with customers.
 
Rating sensitivity factors
Upward factors
* Improvement in operating income by 45%
* Significant increase in cash accrual
 
Downward factors
* Decline in operating income by more than 15% per fiscal
* Fall in operating profitability
* Reduced cushion between accrual and debt obligation weakening liquidity

About the Group

Incorporated in 1945 by Mr Jatia and his family members, Kota-based ASIL mines natural stone (Kota stone) on its 10 square kilometre land in Ramganj Mandi, Rajasthan. The company also generates wind power and trades in steel coils and fabrics.
 
RRA produces hard limestone rock products, which it supplies to various companies in the infrastructure, steel, cement and real estate sectors in Dubai and India.
 
ASIGL, based in Mauritius, acts as the group's marketing arm in the Mauritius market.

Key Financial Indicators (Consolidated)
Particulars Unit 2019 2018
Revenue Rs crore 260.05 314.2
Profit After Tax (PAT) Rs crore 22.97 19.2
PAT Margin % 8.8 6.1
Adjusted debt/adjusted networth Times 1.5 1.4
Interest coverage Times 4.7 4.4

Status of non cooperation with previous CRA
ASIL has not cooperated with Credit Analysis & Research Ltd, which has marked it as 'non-cooperative' through rationales dated November 22, 2019, and June 27, 2019. The reason provided by the credit rating agency is non-furnishing of information by ASIL. Subsequently, the rating got withdrawn via a rationale dated December 06, 2019.

Any other information: Not applicable

Note on complexity levels of the rated instrument:
CRISIL complexity levels are assigned to various types of financial instruments. The CRISIL complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL complexity levels for instruments that they consider for investment. Users may also call the Customer Service Helpdesk with queries on specific instruments.
Annexure - Details of Instrument(s)
ISIN Name of Instrument Date of Allotment Coupon
Rate (%)
Maturity Date Issue Size
(Rs Crore)
Rating Assigned with Outlook
NA Cash Credit NA NA NA 38 CRISIL BB+/Positive
NA External Commercial Borrowing NA NA May-23 27.05 CRISIL BB+/Positive
NA Term Loan NA NA Jun-24 11.09 CRISIL BB+/Positive
NA FCNR Loan NA NA Mar-30 28.86 CRISIL BB+/Positive
NA Letter of Credit NA NA NA 25 CRISIL A4+

Annexure - List of entities consolidated
Names of entities consolidated Extent of consolidation Rationale for Consolidation
ASI Industries Ltd Full Parent company; all companies are together referred to as the ASI group
Al Rawasi Rock and Aggregates LLC Full Wholly owned subsidiary of ASI Industries Ltd
ASI Global Ltd Full Wholly owned subsidiary of ASI Industries Ltd
Annexure - Rating History for last 3 Years
  Current 2020 (History) 2019  2018  2017  Start of 2017
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Fund-based Bank Facilities  LT/ST  105.00  CRISIL BB+/Positive  15-04-20  CRISIL BB/Negative (Issuer Not Cooperating)*  06-12-19  CRISIL BBB/Watch Negative  30-11-18  CRISIL BBB+/Stable  31-10-17  CRISIL BBB+/Stable  -- 
        09-03-20  CRISIL BB+/Watch Negative               
Non Fund-based Bank Facilities  LT/ST  25.00  CRISIL A4+  15-04-20  CRISIL A4+ (Issuer Not Cooperating)*  06-12-19  CRISIL A3+/Watch Negative  30-11-18  CRISIL A2  31-10-17  CRISIL A2  -- 
        09-03-20  CRISIL A4+/Watch Negative               
All amounts are in Rs.Cr.
*Issuer did not cooperate; based on best-available information
Annexure - Details of various bank facilities
Current facilities Previous facilities
Facility Amount (Rs.Crore) Rating Facility Amount (Rs.Crore) Rating
Cash Credit 38 CRISIL BB+/Positive Cash Credit 42 CRISIL BB/Negative/Issuer Not Cooperating
External Commercial Borrowings 27.05 CRISIL BB+/Positive External Commercial Borrowings 37.85 CRISIL BB/Negative/Issuer Not Cooperating
FCNR Loan 28.86 CRISIL BB+/Positive Letter of Credit 25 CRISIL A4+/Issuer Not Cooperating
Letter of Credit 25 CRISIL A4+ Proposed Long Term Bank Loan Facility 4.08 CRISIL BB/Negative/Issuer Not Cooperating
Term Loan 11.09 CRISIL BB+/Positive Term Loan 21.07 CRISIL BB/Negative/Issuer Not Cooperating
Total 130 -- Total 130 --
Links to related criteria
CRISILs Approach to Financial Ratios
CRISILs Bank Loan Ratings - process, scale and default recognition
Rating criteria for manufaturing and service sector companies
Rating Criteria for Mining Industry
CRISILs Bank Loan Ratings
CRISILs Criteria for Consolidation
CRISILs Criteria for rating short term debt
The Rating Process
Understanding CRISILs Ratings and Rating Scales

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