| Baddi Foils Private Limited | ||||||
| Ratings reaffirmed at 'CRISIL BBB- / Stable / CRISIL A3' | ||||||
| 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 rating on the bank facilities of Baddi Foils Private Limited at ‘CRISIL BBB-/Stable/CRISIL A3’.
The rating reflects the extensive experience of the promoters of the group and its comfortable financial risk profile. These strengths are partially offset by working capital-intensive operations and Moderate scale of operations of the business. |
Analytical Approach For arriving at its ratings, CRISIL Ratings has combined the business and financial risk profiles of BFPL and its group concerns, Print N Wrap, Printman, and BFPL Inc. This is because all these entities, together referred to as the BFPL group, have management and operational linkages.
Unsecured loans from the promoters (Rs. 5.16 crores as on March 31, 2022) have been treated NDNE as these are expected to remain in the business over the medium term, do not carry any interest, and are subordinate to bank debt.
Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers & Detailed Description Strengths: Extensive promoter experience: The promoters have been into the in manufacturing of primary packaging material for the pharma industry for over more than 30 years. This has enabled them to get an in-depth understanding of the dynamics of the market and the industry which has helped them build strong relationships with both the customers as well as the suppliers. The same is reflected in the growth of the business over the years resulting in revenue of Rs. 221 crores in fy22. Entering the packaging segment for the FMCG companies will also further help in the growth of the business and hence the revenue growth. CRISIL believes that the group will continue to benefit from the promoter’s experience over the medium term.
Healthy financial risk profile: The financial risk profile of the company is healthy marked by moderate networth of Rs 40 crore and gearing at around 0.92 time, as on March 31, 2022. Debt protection metrics are also estimated to remain robust, with interest coverage and net cash accrual to total debt ratios of 3.8 times and 0.19 time, respectively, for fiscal 2022. Steady accretion to reserves supported by steady operating margins is expected to support financial risk profile in the presence of debt-funded capital expenditure planned by the company in the current fiscal.
Weaknesses: Working capital-intensive operations: The operations of the business are working capital intensive as reflected in the gross current asset days of 140 days as on March 31, 2022, due to stretched receivables of 94 days and moderate inventory of 38 days. This was because of a sharp rise in aluminum prices. However, the company has now started maintaining just in time inventory which is expected to moderate the working capital cycle to previous levels in the coming fiscals. Efficient management of working capital cycle leading to moderation in bank lines will remain key monitorable.
Moderate scale of operations: Though the revenue had increased in fy22 to Rs. 221 crores, the scale continues to remain modest owing to rise in prices and subsequent decline in units sold. Increase in sales was also supported by covid related sales which comprised a majority portion of sales of the group till February 2022. Though the quantity of sales have witnessed an increase in Q1 fy23, its sustained growth will remain monitorable over the medium term. Significant increase in revenue supported by volumetric growth will remain key rating sensitivity factor. |
Liquidity: Adequate Bank limit utilization was around 81% for the past twelve months ended March-22. Cash accruals are expected to be over Rs 9 crore which are sufficient against term debt obligation of Rs 2.5 crore over the medium term. In addition, it will be act as cushion to the liquidity of the company. Current ratio is healthy at 1.56 times on March31, 2022 The promoters are likely to extend support in the form of equity and unsecured loans to meet its working capital requirements and repayment obligations. |
Outlook Stable The BFPL group will continue to benefit from its long track record in the pharma packaging business and established client relationships. |
Rating Sensitivity factors Upward factors • Sustained growth in revenue by over 15-20% along with steady operating margins leading to cash accruals of more than Rs. 12-15 crores • Efficient working capital management leading to improvement in liquidity and financial profile
Downward factors • Sizeable stretch in working capital cycle leading to high bank limit utilisation • Decline in revenue or operation margins resulting in drop in net cash accrual below Rs. 4-5 crores |
About the Group The BFPL group was established in 1989 by Mr Aseem Khullar when he set up Print N Wrap. Current promoters include Ms Geeta Khullar, Mr Sanjay Khurana, Mr Satish Arora, Mr Gaurav Khullar and Mr Abhishek Ahuja. The group manufactures primary packaging material (aluminium pharma foils, aluminium blister foils, and ROPP caps and seals) for the pharma industry. Facilities are in Baddi (Himachal Pradesh), Bhiwadi (Rajasthan), and Sikkim.
BFPL was set up in 2005 and took over the business of Print N Wrap in 2008. It has manufacturing capacities in Baddi and Bhiwadi. Print N Wrap was reconstituted in 2010 and has capacities in Baddi. Printman, formed in 2010, has a unit in Baddi. BFPL Inc was set up in 2015 in Sikkim. |
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 – List of entities consolidated
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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 30-Sep-2022 in line with the lender-wise facility details as on 30-Jul-2021 received from the rated entity.
Criteria Details
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