| Anupam Rasayan India Limited | ||||||
| Rating outlook revised to 'Positive'; Ratings reaffirmed; Rated amount enhanced for Bank Debt | ||||||
| Rating Action | ||||||
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| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has revised its outlook on long term bank facilities of Anupam Rasayan India Limited (ARIL) to ‘Positive’ from 'Stable' while reaffirming the rating at ‘CRISIL A’. Short term rating has been reaffirmed at ‘CRISIL A1’.
The revision in outlook reflects expectation of sustained improvement in business risk profile and sustained financial risk profile of company over the medium term. ARIL’s revenues grew at healthy rate while maintaining its improved operating margin. Company has reported revenue of around Rs 1081 crore with an operating margin of around 29% in fiscal 2022 as against Rs 825 crore in fiscal 2021. Increased revenue was driven by volume growth, which is expected to sustain over the medium term backed by healthy demand with significant orders in hand. Operating margin has remained above 26% over past 3 years through fiscal 2022 on back of better efficiencies at plant with increasing realisation. Consequently, financial risk profile as well as liquidity is expected to further improve with better accretion to reserves.
Rating reflects the company’s established market position in the specialty chemicals industry, diversified customer base across geographies and wide array of product offerings. Rating also factors in strong financial risk profile. The above strengths are partially offset by large working capital requirements and susceptibility of operating margins to volatility in raw material prices and foreign exchange rates. |
Analytical Approach CRISIL Ratings has treated ECBs outstanding of Rs. 250.80 crores as on March 31, 2022 has been treated as debt. |
Key Rating Drivers & Detailed Description Strengths: Established market position and strong relationship with large global customers: The company has an established market position in the specialty chemical business supported by healthy product mix, diversified client base and long-term contracts with the customers. The company has reputed clients such as UPL Limited, Sumitomo Chemical Company Limited, Syngenta Asia Pacific Pte Ltd. etc. and has global presence in Europe, Japan, Singapore, China, North America, etc. Exports' share was at 56% in fiscal 2022 and is expected to be at 50-55% over the medium term. The company has been adding new clients each year and the number of customers has increased from 53 in FY18 to 68 in FY22. The company has executed contracts/LOIs worth Rs. 2620 crores which are to be executed over next 3-5 years. The company commercialized 9 molecules till 9M FY22 and 6 new molecules are to commercialized in FY23.
Healthy financial risk profile: Improving operating efficiency resulting in healthy accretion of profits to reserves has helped networth and TOLANW of the company to improve to Rs. 1713 crores and 0.68 times respectively as on March 31, 2022. Debt protection metrics were also comfortable with interest coverage and NCAAD at 10 times and 0.26 times respectively for fiscal 2022. The company has an approval in place for raising QIP of Rs. 800 crores; part of which may be used to retire the long-term debt availed for acquisition of Tanfac Industries Limited and partly toward capex. Overall financial risk profile is expected to sustain at similar levels.
Weaknesses: Large working capital requirement: Gross current assets (GCAs) were high at 504 days as on March 31, 2022 (471 days a year earlier), driven by inventory and debtors of 409 days and 96 days, respectively. Inventory was higher at the year-end owing to inventory comprising of newer products and existing products to ensure timely and smooth supply to its customers. The company also had to maintain higher inventory to mitigate any supply chain constraints that would have arisen because of the Ukraine/Russia war. However, the same is expected to further improve with inventory days to revert at pre-pandemic levels.
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Liquidity: Strong Net Cash accruals are expected to be over Rs 260 crore per fiscal over the medium term against debt repayment of around Rs 90 crore per annum. Bank limit were moderately utilized at 42% during the 8 months through March 2022. While company has planned capex it would be funded from internal accruals and healthy cash and cash equivalents. Cash equivalents of around Rs 210 crore as on March 31 2022 also supports liquidity. The company has an approval in place for raising QIP of Rs. 800 crores; part of which may be used to retire the long-term debt availed for acquisition of Tanfac Industries Limited and partly toward capex. Limited reliance on external debt provides financial flexibility. |
Outlook: Positive CRISIL Ratings believes ARIL’s business risk profile will continue to benefit from its established market presence, reputed and diversified customer base and healthy profitability. |
Rating Sensitivity factors Upward factors
Downward factors
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About the Company ARIL, incorporated in 1977, is promoted by Mr Anand Desai. The company manufactures specialty chemicals used in the Crop Protection, pharmaceutical, polymer, pigment, and biocide industries. Its manufacturing units are at Sachin and Jhagadia, near Surat in Gujarat. The company has ISO 9001-2015, ISO 45001-2018 and ISO 14001-2015 certifications for quality, occupational health and safety and environmental management systems, respectively. The company is listed in BSE and NSE |
Key Financial Indicators
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Any other information: Not applicable |
| 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 - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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This Annexure has been updated on 07-Jul-2022 in line with the lender-wise facility details as on 07-Jul-2022 received from the rated entity.
Criteria Details
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