| Axel Polymers Limited | ||||||
| Ratings upgraded to 'CRISIL B/Stable/CRISIL A4’ | ||||||
| Rating Action | ||||||
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| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has upgraded its ratings on the bank facilities of Axel Polymers Limited (APL) to ‘CRISIL B/Stable/CRISIL A4’ from ‘CRISIL D/CRISIL D’.
The upgrade reflects sufficient track record of timely servicing of debt obligations and regular account conduct.
The ratings also reflect a below-average financial risk profile, large working capital requirement, and a modest scale of operations in the competitive engineering polymer compounding industry. These weaknesses are partially offset by the industry experience of the promoters. |
Key Rating Drivers & Detailed Description Weaknesses Below-average financial risk profile: The networth was modest at Rs 1.99 crore, while the TOLTNW ratio was high at 7.02 times, as on March 31, 2020. The interest coverage and net cash accrual to total debt ratios were 1.43 times and 0.06 time, respectively, in fiscal 2020. With losses estimated in fiscal 2021, the financial profile remained constrained during the year.
Large working capital requirement: Gross current assets (GCA) were high at 177 days, driven by sizeable inventory of around 148 days and moderate receivables of 41 days, as on March 31, 2020. GCA days are estimated around 6-7 months as on March 31, 2021.
Modest scale of operations amid intense competition: Modest revenue of Rs 22.90 crore in fiscal 2020 amid intense competition limits pricing power with suppliers and customers, thereby constraining profitability. Revenue in fiscal 2021 is estimated at Rs. 23 cr remaining steady despite the initial disruptions on account of lockdown in Q1FY21. The scale up in operations and benefits from ongoing merger remain key monitorables for company.
Strength Industry experience of the promoters The chairman, Mr B K Bodhanwala, and director, Mr A B Bodhanwala, have more than two decades of experience in manufacturing polymer compounds. Benefits from their extensive experience, their keen understanding of local market dynamics, and healthy relationship with customers and suppliers should continue to support the business. CRISIL also takes note of the ongoing amalgamation with Dhara Petrochemicals Pvt Ltd, which awaits the final approval from NCLT. |
Liquidity: StretchedThe liquidity is stretched reflected in highly drawn limits, modest cash accruals and low financial flexibility. The company has high bank limit utilization of 98%, over the 6 months to February 2021, driven by high working capital requirements. Company is estimated to have made cash profit in fiscal 2021 however its financial flexibility is constrained by modest networth and leverage capital structure. |
Outlook Stable CRISIL Ratings believes that the company shall continue to benefit from extensive promoter experience. |
Rating Sensitivity factors Upward factors
Downward factors
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About the Company APL, incorporated in 1992 at Vadodara, Gujarat, is promoted by Mr B K Bodhanwala and his family members. Mr. Gaurav Thanky is the managing director for company. APL manufactures compounds, blends, and alloys of engineering, specialty, and commodity polymers. It is listed on the Bombay Stock Exchange. |
Key Financial Indicators
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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)
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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 | ||||||||||||||||||||||||||||||
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Criteria Details
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