January 23, 2015
Mumbai
Alfa Chemo Plast Private Limited
 
Long-term rating downgraded to 'CRISIL B-/Stable' ; short-term rating reaffirmed
 
Total Bank Loan Facilities Rated Rs.100 Million
Long Term Rating CRISIL B-/Stable (Downgraded from 'CRISIL B/Stable')
Short Term Rating CRISIL A4 (Reaffirmed)
(Refer to Annexure 1 for Facility-wise details)

CRISIL has downgraded its rating on the long-term bank facilities of Alfa Chemo Plast Pvt Ltd (ACPPL) to 'CRISIL B-/Stable' from 'CRISIL B/Stable' while reaffirming its rating on the company's short-term bank facilities at 'CRISIL A4'.

The rating downgrade reflects weakening of ACPPL's liquidity with instances of devolvement of letter of credit and extensive utilization of bank line at an average of around 94 per cent over the 10 months through December 2014. The weak liquidity is driven by the company's below-average operating performance, with operating margin declining to around 0.5 per cent during 2013-14 (refers to financial year, April 1 to March 31) from 2.8 per cent during 2012-13. The liquidity is also constrained by ACPPL's stretched receivables, with debtors at 118 days as on March 31, 2014. Furthermore, the promoters withdrew unsecured loans of Rs.22 million from the company in 2013-14. The withdrawal of the unsecured loan however followed liquidation of additional business premises of ACPPL and hence led to lower interest liability on the company.

The ratings reflect ACPPL's weak financial risk profile, marked by moderate gearing and weak debt protection metrics. The ratings also factor in the company's large working capital requirements, small scale of operations, and the susceptibility of its operating margin to volatility in raw material prices and fluctuations in foreign exchange rates. These rating weaknesses are partially offset by the extensive experience of ACPPL's promoters in the chemicals trading business.

Outlook: Stable

CRISIL believes that ACPPL will continue to benefit over the medium term from its promoters' extensive industry experience. The outlook may be revised to 'Positive' if the company registers increase in its scale of operations and sustainable improvement in its operating margin, leading to better liquidity. Conversely, the outlook may be revised to 'Negative' if ACPPL's working capital cycle lengthens, constraining its liquidity, or if the company undertakes a large debt-funded capital expenditure programme, weakening its financial risk profile. 

About the Company

ACPPL was set up in 2005-06 by Mr. Ambrish Mehta and his wife, Mrs. Jigna Mehta. The company trades in speciality chemicals. Its office is in Mumbai and it has a godown at Bhiwandi in Thane (Maharashtra). PU is used in cold storage, refrigeration, and other insulation applications. Till 2012-13 ACPPL was acting as a distributor of Germany based Multi-National Company, BASF. However the distributorship was discontinued and ACPPL was appointed as distributor by Singapore based, Asian Polyurethane Pvt Ltd and Korea based Kumho ' Mistubishi.

Annexure 1 - Details of various bank facilities
Current facilities Previous facilities
Facility Amount (Rs.Million) Rating Facility Amount (Rs.Million) Rating
Cash Credit 25 CRISIL B-/Stable Cash Credit 20 CRISIL B/Stable
Letter of Credit 55 CRISIL A4 Letter of Credit 80 CRISIL A4
Proposed Long Term Bank Loan Facility 20 CRISIL B-/Stable -- 0 --
Total 100 -- Total 100 --
Media Contacts
 Analytical Contacts
 Customer Service Helpdesk
Tanuja Abhinandan
Communications and Brand Management
CRISIL Limited
Phone: +91 22 3342 1818
Email:tanuja.abhinandan@crisil.com

Jyoti Parmar
Communications and Brand Management
CRISIL Limited
Phone: +91 22 3342 1835
E-mail: jyoti.parmar@crisil.com
Vasudevan R
Director - CRISIL Ratings
Phone:+91 44 6656 3100
Email: vasudevan.r@crisil.com

Mohit Makhija
Director - CRISIL Ratings
Phone:+91 124 672 2000
Email: mohit.makhija@crisil.com 		Timings: 10.00 am TO 7.00 pm
Toll free Number:1800 267 1301
Email: CRISILratingdesk@crisil.com

 

Note:
This rating rationale is transmitted to you for the sole purpose of dissemination through your newspaper / magazine / agency. The rating rationale may be used by you in full or in part without changing the meaning or context thereof but with due credit to CRISIL. However, CRISIL alone has the sole right of distribution of its rationales for consideration or otherwise through any media including websites, portals etc.

Crisil complexity levels are assigned to various types of financial instruments. The crisil complexity levels are available on www.crisil.com/complexity-levels.investors are advised to refer to the crisil complexity levels for instruments that they desire to invest in. Investors may also call the Customer Service Helpdesk with queries on specific instruments.


About CRISIL LIMITED
CRISIL is a global analytical company providing ratings, research, and risk and policy advisory services. We are India's leading ratings agency. We are also the foremost provider of high-end research to the world's largest banks and leading corporations.

About CRISIL Ratings
CRISIL Ratings is India's leading rating agency. We pioneered the concept of credit rating in India in 1987. With a tradition of independence, analytical rigour and innovation, we have a leadership position. We have rated over 75,000 entities, by far the largest number in India. We are a full-service rating agency. We rate the entire range of debt instruments: bank loans, certificates of deposit, commercial paper, non-convertible debentures, bank hybrid capital instruments, asset-backed securities, mortgage-backed securities, perpetual bonds, and partial guarantees. CRISIL sets the standards in every aspect of the credit rating business. We have instituted several innovations in India including rating municipal bonds, partially guaranteed instruments and microfinance institutions. We pioneered a globally unique and affordable rating service for Small and Medium Enterprises (SMEs).This has significantly expanded the market for ratings and is improving SMEs' access to affordable finance. We have an active outreach programme with issuers, investors and regulators to maintain a high level of transparency regarding our rating criteria and to disseminate our analytical insights and knowledge.

CRISIL PRIVACY NOTICE
CRISIL respects your privacy. We use your contact information, such as your name, address, and email id, to fulfil your request and service your account and to provide you with additional information from CRISIL and other parts of McGraw Hill Financial you may find of interest.
For further information, or to let us know your preferences with respect to receiving marketing materials, please visit www.crisil.com/privacy. You can view McGraw Hill Financial's Customer Privacy Policy at http://www.mhfi.com/privacy.
Last updated: August, 2014

Disclaimer:A CRISIL rating reflects CRISIL's current opinion on the likelihood of timely payment of the obligations under the rated instrument and does not constitute an audit of the rated entity by CRISIL. CRISIL ratings are based on information provided by the issuer or obtained by CRISIL from sources it considers reliable. CRISIL does not guarantee the completeness or accuracy of the information on which the rating is based. A CRISIL rating is not a recommendation to buy, sell, or hold the rated instrument; it does not comment on the market price or suitability for a particular investor. All CRISIL ratings are under surveillance. Ratings are revised as and when circumstances so warrant. CRISIL is not responsible for any errors and especially states that it has no financial liability whatsoever to the subscribers / users / transmitters / distributors of this product. CRISIL Ratings rating criteria are available without charge to the public on the CRISIL web site, www.crisil.com. For the latest rating information on any instrument of any company rated by CRISIL, please contact CRISIL RATING DESK at CRISILratingdesk@crisil.com, or at (+91 22) 3342 3000.

January 23, 2015

http://www.crisil.com