| Consolidated Coin Company Private Limited | ||||||
| Ratings migrated to 'CRISIL A- / Stable / CRISIL A2+ '; rated amount enhanced for Bank Debt | ||||||
| Rating Action | ||||||
| ||||||
| & * Issuer did not cooperate; based on best-available information^ * Issuer did not cooperate; based on best-available information | ||||||
| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale Due to inadequate information, CRISIL, in line with Securities and Exchange Board of India guidelines, had migrated its ratings on bank facilities of Consolidated Coin Company Private Limited (3C) to ‘CRISIL BB+/Stable/CRISIL A4+ Issuer Not Cooperating'. However, the management has subsequently started sharing requisite information for carrying out a comprehensive review of the ratings. Consequently, CRISIL is migrating the ratings to ‘CRISIL A-/Stable/CRISIL A2+’.
The ratings continue to reflect the extensive experience of 3C’s promoters and its strong clientele, comprising mints of the Indian Government, and Peru, Colombia and other central banks around the world. Revenue for fiscal 2021 may decline by 20-25% to Rs 330-340 crore owing to the Covid-19 pandemic and the ensuing nationwide lockdown in the first quarter. Revenue of Rs 138.56 crore was booked in the first half of fiscal 2021. The healthy order pipeline provides adequate revenue visibility over the medium term. Operating margin are expected to rebound to previous levels over the medium term, though it did drop in fiscal 2020, due to the break-down of the rolling mill and increase in job-work expenses. Sustenance of operating revenue and improvement in margins to previous levels remains a key monitorable.
CRISIL’s ratings also factor in 3C’s strong financial risk and liquidity profiles. Networth remains healthy, expected over Rs 172 crore as on March 31, 2021. These strengths are partially offset by susceptibility to risks inherent in tender-based business, volatility in raw material prices, and high dependence on a single customer. Also, operations are moderately working capital intensive. |
Analytical Approach
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 promoter, Mr Goyal Chopra, set up 3C around 25 years ago. Over the years, he has diversified business operations within the domestic and overseas markets. He has also supported operations by extending regular unsecured loans. His extensive knowledge of coin blanks and strips, strong understanding of the nuances of the industry, and strong relationships with suppliers as well as customers, will continue to support the business risk profile.
3C's clients include Indian Government Mints as well mints in Peru and Colombia. The company also has longstanding relationships with all major copper, zinc and aluminium suppliers in India, as well as a few major international manufacturers. Healthy order pipeline provides medium-term revenue visibility. Timely execution of orders and payment realisations without hindrances remain a monitorable.
Total outside liabilities to tangible networth (TOLTNW) ratio improved to 0.38 time as on March 31, 2020, from 0.67 time as on March 31, 2019. Networth was strong at Rs.161 crore and may increase to over Rs 172 crore over the medium term, driven by sufficient accretion to reserves. Debt protection metrics remained robust, with interest coverage and net cash accrual to adjusted debt ratios of 4.8 times and 1.85 time, respectively, for fiscal 2020. The financial risk profile may further improve, backed by a healthy margin, low reliance on external debt, and absence of any debt-funded capital expenditure (capex) plans.
The company maintains a large cash reserve in the form of fixed deposits and unencumbered cash and bank balance (Rs 49.70 crore as on March 31, 2020). The unencumbered cash portion was over Rs 26 crore. Furthermore, it receives funding support from the promoters in the form of unsecured loan (Rs 31.96 crore as on March 31, 2020).
Weaknesses:
3C casts nonferrous alloys for manufacturing coin strips and coin blanks, which are ready for striking by mints. It secures projects through tenders floated by the government, central banks and mints. Revenue and profitability depend entirely on the ability to win tenders, and players need to bid aggressively to counter intense competition. Furthermore, the prices of raw materials such as copper and nickel, which account for around 80% of production cost, are volatile and linked to prices prevailing on the London Metal Exchange (LME). Operating margin has been volatile because of sharp fluctuations in raw material prices and currency exchange rates. To mitigate the foreign exchange risk, the company hedges 100% of its net exposure. Profitability is also susceptible to changes in market prices according to demand-supply situations. Intense competitive pressure and the tender-based business may continue to constrain scalability, pricing power, and profitability (expected at 7.5-9.0% over the medium term).
Gross current assets stood at 76 days as on March 31, 2020 (100-120 days over the last three years), driven by receivables of 22 days and inventory of 20-40 days, and large fixed deposits kept as margin money to avail non-fund-based working capital lines. However, credit of 25-50 days offered by suppliers, given 3C's reputation and longstanding relationships, supports working capital partially. Cash accrual could also be used to cover the incremental working capital in the absence of any debt obligation. Working capital cycle may remain constrained in fiscal 2021, due to the lockdown imposed across the country. |
Liquidity: Strong Liquidity remains strong, marked by net cash accrual of Rs 16-20 crore expected per fiscal in 2021 and 2022, sufficient to cover the incremental working capital requirement in absence of any maturing debt. Utilisation of fund-based limit of Rs 5 crore averaged 6.09% and the non-fund based limit of Rs 170 crore averaged 91.97%% in the 12 months through October 2020. Liquid reserves maintained in the form of cash and bank balance stood around Rs 35 crore as on September 30, 2020 (Rs 49 crore as on March 31, 2020). Current ratio was 2.43 times as on March 31, 2020. |
Outlook: Stable CRISIL believes 3C will continue to benefit from the extensive experience of its promoter, and its healthy financial risk profile. |
Rating Sensitivity factors Upward factors
Downward factors:
|
About the Company Incorporated in 1994, 3C casts non-ferrous alloys for manufacturing non-ferrous strips and coin blanks, which are ready for striking by the mints. The company’s plant is in Faridabad, Haryana. Its major customers are Indian mints and central banks of countries such as Peru, Malaysia and Colombia. Operations are managed by Mr Gautam Chopra.
JSR Buildwell Pvt Ltd was incorporated on 8 February, 2011, while SCEE Infrastructure Pvt Ltd was set up on 1 February, 2011. Both the companies undertake building completion activities. Mr Gautam Chopra, Ms Saroj Chopra, and Ms Gauri Chopra are the promoters. |
Key Financial Indicators
|
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)
|
Annexure – List of entities consolidated
|
| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
|
* - Issuer did not cooperate; based on best-available information
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of various bank facilities | |||
| Facility | Name of Lender | Amount (Rs.Crore) | Rating |
| Bank Guarantee | Allahabad Bank | 170 | CRISIL A2+ |
| Bank Guarantee | Allahabad Bank | 15 | CRISIL A2+ |
| Cash Credit | Allahabad Bank | 5 | CRISIL A-/Stable |
| Foreign Letter of Credit | Allahabad Bank | 85 | CRISIL A-/Stable |
| Proposed Fund-Based Bank Limits | Not Applicable | 10 | CRISIL A-/Stable |
| Total | - | 285 | - |
This Annexure has been updated on 16-Aug-2021 in line with the lender-wise facility details as on 02-Aug-2021 received from the rated entity.
Criteria Details
|