| Ajay Industrial Corporation Limited | ||||||
| Rating outlook revised to 'Negative'; Ratings Reaffirmed | ||||||
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| Note: None of the Directors on Crisil Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||||
| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale Crisil Ratings has revised its outlook on the long-term bank facilities of Ajay Industrial Corporation Limited (AICL) to ‘Negative’ from ‘Stable’ while reaffirming the rating at ‘Crisil BBB’. The short-term rating has been reaffirmed at ‘Crisil A3+’.
The negative outlook reflects Crisil Ratings’ belief that the business risk profile of the company will remain under pressure amid weak pricing trends in the polyvinyl chloride (PVC) resin and sluggish demand. The company witnessed subdued performance in the first nine months of fiscal 2025, as reflected in revenue of Rs 230 crore and modest profitability of 2.76%, owing to lower pricing of products, resulting in inventory loss. Revenue and profitability stood at ~Rs 340 crore and 6.2% during fiscal 2024. Recovery in demand, supported by improving real estate activity pickup in infrastructure & government spending, will likely lead to improvement in revenue, however sustained revenue growth amidst steady operating margin will remain a key monitorable.
The financial risk profile of the company will likely remain comfortable, supported by expected increase in networth to over Rs 153-155 crore as on March 31, 2025 (Rs 150 crore as on March 31, 2024), and lower external debt in the absence of any major debt-funded capital expenditure (capex) and limited working capital debt. However, with expected decline in the operating margin in fiscal 2025, debt protection metrics will likely moderate, with interest coverage and net cash accrual to adjusted debt (NCAAD) ratios expected at 2.5-3.0 times and 0.5-0.7 time, respectively, as against 6 times and 3.2 times, respectively, during fiscal 2024. Liquidity remains supported by nil term debt repayments and cushion in bank lines.
The ratings continue to reflect the company’s established position in the niche and fast-growing chlorinated polyvinyl chloride (CPVC) pipes and fittings market and comfortable financial risk profile. These strengths are partially offset by low operating profitability due to susceptibility to fluctuations in resin prices and modest scale of operations. |
Analytical Approach: Crisil Ratings has considered the standalone business and financial risk profiles of AICL. Expected unsecured loan of Rs 39 crores as on Mar 31, 2025 extended by the promoters has been treated as neither debt nor equity. |
Key Rating Drivers & Detailed Description Strengths:
Weaknesses:
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Liquidity: Adequate Bank limit utilisation was low at 20% on average for the 12 months through January 2025. Cash accrual is expected at a modest Rs 6-7 crore in fiscal 2025 but is expected to improve to Rs 15-16 crore over the medium term, which will be sufficient in the absence of term debt obligation. Current ratio was healthy at 4.59 times as on March 31, 2024. The promoters will likely extend equity and unsecured loans to meet working capital requirement and debt obligation. |
Outlook: Negative Crisil Ratings believes the credit risk profile of AICL will remain under pressure on account of subdued operating performance with falling operating margin. |
Rating sensitivity factors Upward factors
Downward factors
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About the Company AICL was set up in 1961 as a partnership between Mr Devendra Chandra Jain, Mr Sharat Chandra Jain, and Mr Ajay Kumar Jain, and was reconstituted as a limited company in 2008. AICL manufactures PVC pipes, CPVC pipes and fittings, hand pumps and their spare parts, drip irrigation systems, and solar water pumping systems. The company also started manufacturing reusable sanitary pads since past three years. Mr Sharat Chand Jain along with his two sons, Mr Akhil Jain and Mr Anuj Jain, manages the business. |
Key Financial Indicators
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Any other information: Not Applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
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| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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* - Issuer did not cooperate; based on best-available information
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| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||||||
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Criteria Details
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