| Accurate Products Corporation Private Limited | ||||||
| Ratings reaffirmed at 'CRISIL BBB / Stable / CRISIL A3+ ' | ||||||
| Rating Action | ||||||
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| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed rationale CRISIL Ratings has reaffirmed its 'CRISIL BBB/Stable/CRISIL A3+' ratings on the bank facilities of Accurate Products Corporation Pvt Ltd (APCPL; part of the Groz group).
The ratings continue to reflect above-average financial risk profile because of adequate debt protection matrices and comfortable leverage and extensive experience of the promoters in the automobile component industry. These strengths are partially offset by modest scale and working-capital-intensive operations.
The nationwide lockdown announced by the Central government in March 2020 to contain the spread of Covid-19 impacted the company, which reported lower revenue in the first quarter of fiscal 2021. However, recovery has been healthy since then, as indicated by net sales of above Rs 67.9 crore in fiscal 2021 (against Rs 57.7 crore in fiscal 2020). Strong order flow indicates revenue visibility for the medium term. |
Analytical approach To arrive at its ratings, CRISIL Ratings has combined the business and financial risk profiles of Groz Engineering Tools Pvt Ltd (GETPL, 'CRISIL A+/Stable/CRISIL A1+') and APCPL. This is because the two entities, together referred to as the Groz group, have strong operational and financial linkages and are under a common management.
Of the estimated unsecured loans of Rs 25.6 crore (as on March 31, 2021) from the promoters, Rs 7.9 crore is treated as equity as this amount has been in the business for the past five fiscals and is expected to remain so over the medium term as well. The remaining loans have been treated as debt.
Please refer Annexure - List of entities consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key rating drivers & detailed description Strengths: Above-average financial risk profile Total outside liabilities to tangible networth ratio has been 2.4-1.7 times for the five fiscals through 2021 (estimated at 2.3 times as on March 31, 2021). Debt protection metrics were robust, with estimated interest coverage and net cash accrual to total debt ratios of 10.7 times and 26%, respectively, for 2021. Financial risk profile is expected to improve over the medium term on the back of absence of significant debt-funded capital expenditure, and moderate dependence on working capital debt.
Extensive experience of the promoters Presence of around six decades in the automotive components industry has enabled the promoters to establish healthy relationships with large original equipment manufacturers such as Ashok Leyland Ltd and Brakes India Ltd, and helped to strengthen market position.
Weaknesses: Modest scale of operations Revenue is estimated to be subdued at Rs 67.9 crore for fiscal 2021 due to intense industry competition and limited bargaining power with suppliers and customers. Turnover is also susceptible to cyclicality in the automobile sector. However, revenue is expected to increase steadily over the medium term with revival in demand.
Working capital-intensive operations Gross current assets (GCAs) are estimated at 246 days as on March 31, 2021, because of stretched receivables of around 60 days and large inventory of 60-90 days. Bank limit utilisation averaged 81% over the 12 months through March 2021. |
Liquidity: Adequate Cash accrual is expected to be Rs 7-9 crore per annum against yearly debt obligation of Rs 0.5-0.6 crore, over the medium term. Liquidity is also supported by unsecured loans of Rs 25.6 crore from the promoters. |
Outlook: Stable CRISIL Ratings believes APCPL will continue to benefit from the extensive experience of its promoters, and the managerial and financial support extended by GETPL. |
Rating sensitivity factors Upward factors
Downward factors
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About the group Incorporated in 1999 and promoted by Mr Anil Bammi and his son, Mr Dhiren Bammi, GETPL manufactures lubrication equipment, precision engineering tools, and professional hand tools. The company exports to the US, Australia, South Africa, and countries in the Middle East and the Far East.
Set up in 1960, APCPL manufactures automobile components such as lubricant fittings and precision turned parts such as thread fittings, leak-proof grease fittings and brake parts. Facility is in Chennai, Tamil Nadu. |
Key financial indicators: APCPL
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| Note on complexity levels of the rated instrument: CRISIL Ratings' complexity levels are assigned to various types of financial instruments. The CRISIL Ratings' complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL Ratings' 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)
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Annexure – List of entities consolidated
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| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of various bank facilities | |||
| Facility | Amount (Rs.Crore) | Name of Lender | Rating |
| Bank Guarantee | 0.7 | Kotak Mahindra Bank Limited | CRISIL A3+ |
| Cash Credit | 11.5 | Kotak Mahindra Bank Limited | CRISIL BBB/Stable |
| Proposed Long Term Bank Loan Facility | 7.8 | Not Applicable | CRISIL BBB/Stable |
This Annexure has been updated on 19-Aug-22 in line with the lender-wise facility details as on 22-Jul-22 received from the rated entity.
Criteria Details
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