Rating Rationale
November 28, 2018 | Mumbai
Dynemic Products Limited
Rating Reaffirmed; FD withdrawn
Rating Action
Total Bank Loan Facilities Rated Rs.32 Crore
Long Term Rating CRISIL BBB/Stable (Reaffirmed)
Rs.1 Crore Fixed Deposits FA-/Stable (Withdrawn)
1 crore = 10 million
Refer to annexure for Details of Instruments & Bank Facilities
Detailed Rationale

CRISIL has reaffirmed its 'CRISIL BBB/Stable' rating on the long term bank facilities of Dynemic Products Limited (DPL) and withdrawn its 'FA-/Stable' rating on the fixed deposit (FD) programme upon the company's request and repayment of FDs.

The rating continues to reflect the promoters' extensive experience in the food colour and dye industry, and DPL's healthy financial risk profile. These strengths are partially offset by modest scale of operations, and susceptibility to intense competition and volatility in raw material prices.

Given the sizeable capital expenditure (capex) to be undertaken in the medium term, ramp up and timely stabilisation of operations will remain key rating sensitivity factors.

Key Rating Drivers & Detailed Description
* Promoters' extensive experience: Benefits from the promoters' experience of two decades, and healthy relationships with customers and suppliers should continue to support the business. Customers include reputed players such as Modelez India Foods Ltd and Nestle India Ltd ('CRISIL AAA/Stable/CRISIL A1+').

* Healthy financial risk profile: Financial risk profile is marked by moderate networth and low gearing of 0.27 time and Rs 92 crore, respectively, as on March 31, 2018. Gearing is likely to remain below 0.8 time over the medium term despite the ongoing debt-funded capex. Debt protection metrics are healthy - with interest coverage and net cash accrual to total debt ratios of 26.4 times and 0.75 time, respectively, in fiscal 2018 - on account of moderate profitability and low gearing.

* Average, though improving, scale of operations: The company clocked a turnover of Rs.163 crore in fiscal 2018 which had remained constrained around Rs.130 cr amidst intense competition. Over the medium term, the turnover is expected to rise once the increased production capacity becomes operational.

* Susceptibility to volatility in raw material prices, and to intense competition: Exposure to the risk of volatility in raw material prices (including gas) and intense competition persists. Operating margin has remained volatile at 11-19% in the five fiscals through March 2018 due to decline in raw material prices and increase in revenue from exports.
Outlook: Stable

CRISIL believes DPL will continue to benefit from the extensive experience of its promoters. The outlook may be revised to 'Positive' if timely stabilisation of operations post the capex, significant increase in revenue, and stable profitability strengthen cash accrual. The outlook may be revised to 'Negative' if low inflow of orders, pressure on profitability, delay in capex, or stretch in working capital cycle weakens financial risk profile, especially liquidity.

About the Company

DPL was set up by Mr Bhagwandas Patel, Mr Dashrat Patel, Mr Ramesh Patel, and Mr Dixit Patel in 1990. It manufactures food colours, lake colours, and dyes, which are mainly used in the food, cosmetic, and pharmaceutical industries. The company has two manufacturing plants in Ankleshwar (Gujarat).

Key Financial Indicators
As on/for the period ended March 31 Unit 2018 2017
Revenue Rs crore 163 128
Profit After Tax (PAT) Rs crore 18 13.5
PAT Margins % 10.7 10.6
Adjusted Debt/Adjusted Networth Times 0.27 0.33
Interest coverage Times 26.4 16.84

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)
ISIN Name of instrument Date of allotment Coupon
rate (%)
Maturity date Issue
Rating assigned with outlook
NA Export Finance Limit NA NA NA 31.00 CRISIL BBB/Stable
NA Term Loan NA NA 31-Mar-2019 1.00 CRISIL BBB/Stable
NA Fixed Deposit NA NA NA 1.00 Withdrawn
Annexure - Rating History for last 3 Years
  Current 2018 (History) 2017  2016  2015  Start of 2015
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Fixed Deposits  FD  1.00  Withdrawn  07-05-18  FA-/Stable  28-12-17  FA-/Stable  14-11-16  FA-/Stable  30-11-15  FA-/Stable  FA-/Stable 
        26-04-18  FA-/Watch Developing          28-09-15  FA-/Stable   
                    27-08-15  FA-/Stable   
Fund-based Bank Facilities  LT/ST  32.00  CRISIL BBB/Stable  07-05-18  CRISIL BBB/Stable  28-12-17  CRISIL BBB/Stable  14-11-16  CRISIL BBB/Stable  30-11-15  CRISIL BBB/Stable  CRISIL BBB/Stable 
        26-04-18  CRISIL BBB/Watch Developing          28-09-15  CRISIL BBB/Stable   
                    27-08-15  CRISIL BBB/Stable   
All amounts are in Rs.Cr.
Annexure - Details of various bank facilities
Current facilities Previous facilities
Facility Amount (Rs.Crore) Rating Facility Amount (Rs.Crore) Rating
Export Finance Limit 31 CRISIL BBB/Stable Export Finance Limit 31 CRISIL BBB/Stable
Term Loan 1 CRISIL BBB/Stable Term Loan 1 CRISIL BBB/Stable
Total 32 -- Total 32 --
Links to related criteria
CRISILs Approach to Financial Ratios
CRISILs Bank Loan Ratings - process, scale and default recognition
Rating criteria for manufaturing and service sector companies
Rating Criteria for Chemical Industry
CRISILs Bank Loan Ratings
The Rating Process
Understanding CRISILs Ratings and Rating Scales

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