| C J S Specialty Chemicals Private Limited | ||||
| Rating Reaffirmed | ||||
| Rating Action | ||||
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| Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||
| 1 crore = 10 million | ||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has reaffirmed its ‘CRISIL A2+’ rating on the short-term bank facilities of C J S Specialty Chemicals Private Limited (CJSSPL; part of the CJ Shah group).
The ratings reflect the stable operating performance in fiscal 2024 with relatively steady margins despite the chemical industry witnessing several headwinds during the fiscal. The rating also factors in the extensive experience of the promoters in the chemical trading business and their strong managerial support, the group’s longstanding relationships with customers, and diversified product profile and customer base. These strengths are partially offset by CJSSPL’s modest scale of operations at the standalone level and susceptibility to volatility in key commodity prices and exposure to inventory risks. Adequate risk management practices have helped to sustain profitability despite volatility in product realisations, foreign exchange (forex) rates and commodity (mainly crude) prices.
The company's strong presence in the specialty chemicals segment, varied product profile, diverse clientele and supplier network, and the promoters’ experience in the chemical business have helped sustain the business risk profile.
The financial profile remains comfortable, backed by nil long-term debt and adequate liquidity. While increase in the networth has been restricted by capital withdrawals, however, low capital expenditure (capex) needs and efficient working capital management also reduces dependence on external debt and helps in maintaining a comfortable financial risk profile. |
Analytical Approach In accordance with the homogeneous group criteria, CRISIL Ratings has combined the business and financial risk profiles of CJSSPLand its group companies , CJ Shah & Co (CJ Shah) and Shah CJ World LLP (SCJW), collectively referred to as the CJ Shah group.
The approach has been changed in this review to include SCJW in the homogeneous group as this firm has strong linkages with the group and the promoters have provided articulation to support all the group entities, if required. During the last rating exercise, SCJW was removed from the homogeneous group in the absence of similar articulation.
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:
The four-decade-long experience of the promoters in the chemicals trading industry and their established relationships with large suppliers and customers should continue to support the business.
Longstanding relationship with customers have helped the group build expertise regarding their requirements, which gives it a competitive advantage. The group also has a strong collection mechanism for timely recovery of dues from customers and supplies products across a variety of categories.
Strong managerial support from the promoters of the CJ Shah group will help CJSSPL grow its business over the long term.
Weaknesses:
CJSSPL operates primarily in the specialty chemicals segment, with varied product categories. The company’s scale of operations remains modest and its operating margin has fluctuated due to volatility in product prices given their commodity nature. Though the performance has improved over the years, the business risk profile will remain constrained by the company’s modest scale.
Most of the traded goods are imported, while domestic sales contribute the most to revenue, thus exposing the company to build-up of inventory. Although, it mitigates this risk through order-backed procurement, its profitability will remain susceptible to sudden sharp movements in forex rates or commodity prices. |
Liquidity: Strong Liquidity is strong, backed by minimum capex requirement and subsequently low dependence on external long-term debt. The company has healthy cash and equivalents. Utilisation of fund-based facilities was low, and that for non-fund based facilities averaged 60% for the 12 months through March, 2024. |
Rating Sensitivity factors Upward factors
Downward factors
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About the Group CJ Shah was set up by the late Mr Mahesh Shah in 1961, and is currently managed by his son, Mr. Apurva Shah. The firm imports petrochemicals and sells them to paints, agro-chemical and pharma companies. It is an exclusive distributor of certain chemicals of global companies for the Indian market.
In 2008, the Shah brothers promoted CJSSPL, which trades exclusively in specialty chemicals. The brothers have a majority holding in this company. Mr Dharmesh Mange and Mr Ashish Shah, two unrelated individuals with expertise in specialty chemicals, hold the remaining stake.
In 2019, a part of CJ Shah was demerged to form SCJW. This entity trades in drum packaging, chemicals and pharmaceuticals. It is owned and managed by Mr Ashit Shah, the younger brother of Mr Apurva Shah. SCJW has strong linkages with the CJ Shah group. |
Key Financial Indicators (consolidated; CRISIL Ratings-adjusted figures)
*Provisional
Key financial indicators (standalone)
*Provisional |
Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
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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Criteria Details
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