| Axel Polymers Limited | ||||||
| Rated amount enhanced | ||||||
| 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 B/Stable/CRISIL A4’ ratings on the bank facilities of Axel Polymers Limited (APL).
The ratings continue to reflect an improving, but leverage financial risk profile, and working capital intensive operations. These weaknesses are partially offset by the extensive experience of the promoters and moderate scale of operations amid intense competition. |
Key Rating Drivers & Detailed Description Weakness: Improving, but leverage financial risk profile The financial risk profile of company has been improving continuously during past few years ended on March 31, 2022. The gearing estimated 3.04 times as on March 31, 2022 (against 3.99 times as on March 31, 2021). Furthermore, TOL/ANW ratio was also improved from 8.84 times as on March 31, 2021 to 5.02 times as on March 31, 2022. Despite improvement, the financial risk profile remain leverage mainly on account of modest networth of Rs 8.54 crore. The debt protection metrics were satisfactory with interest coverage of 1.5 times in FY22 (against 1.4 times in FY21). Over the medium term, financial risk profile expected to improve, although expected to remain leverage due to modest networth.
Working capital intensive operations Gross current assets (GCA) were high at 200 days, driven by sizeable inventory of around 150 days and moderate receivables of 68 days in FY22. Company maintains high inventory to support repeat orders from existing customers. However, portion of working capital requirement is being met through creditors of 95 days. Over the medium term, operations are expected to remain working capital intensive.
Strengths: Extensive experience of the promoters The promoter, 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 recent amalgamation with Dhara Petrochemicals Pvt Ltd and resultantly merged entity to get benefit from experience of Gaurav Thanky (MD and CEO of DPPL).
Moderate scale of operations amid intense competition Although revenue of company has increased to over Rs 72.91 crore in fiscal 2022 but remain moderate in intensely competition industry which limits pricing power with suppliers and customers, thereby constraining profitability. However, benefit of merger expected to derive from FY23 onwards remain key monitorable for company. |
Liquidity: Stretched The liquidity is stretched reflected in highly drawn limits, modest cash accruals and low financial flexibility. The reliance on external bank borrowings remains high at 99% during past six months ended March 2022. |
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. The company manufactures compounds, blends, and alloys of engineering and specialty polymers. It is listed on the Bombay Stock Exchange. The Axel Polymers Limited has been merged with Dhara Petrochemicals Pvt Ltd (established in 2009) promoted by Mr Gaurav Thanky with effect from Sep 1, 2021. |
Key Financial Indicators
^^Consolidated ^Standalone |
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 04-Jul-2022 in line with the lender-wise facility details as on 04-Jul-2022 received from the rated entity.
Criteria Details
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