Rating Rationale
August 21, 2019 | Mumbai
Everest Industries Limited
Ratings Reaffirmed
Rating Action
Total Bank Loan Facilities Rated Rs.575.5 Crore
Long Term Rating CRISIL A+/Stable (Reaffirmed)
Short Term Rating CRISIL A1+ (Reaffirmed)
Rs.30 Crore Commercial Paper Programme CRISIL A1+ (Reaffirmed)
1 crore = 10 million
Refer to annexure for Details of Instruments & Bank Facilities
Detailed Rationale

CRISIL has reaffirmed its 'CRISIL A+/Stable/CRISIL A1+' ratings on the bank facilities and commercial paper programme of Everest Industries Limited (Everest).

CRISIL ratings on bank facilities of Everest continue to reflect Everest's established position in the domestic asbestos cement (AC) roofing market, diversified revenue mix, and healthy financial risk profile. These strengths are partially offset by exposure to intense competition in the AC roofing and pre-engineered building (PEB) businesses in India, and volatility in operating margin. Besides, the AC roofing business is subject to regulatory risks pertaining to the manufacture/use of asbestos in India as well as in key asbestos-producing nations (as asbestos is fully imported).

Everest's business performance is likely to benefit over the medium term from new product launch and increase in market penetration, supported by steady rural demand for AC roofing products and steady order levels for PEB business. Revenue grew around 10% year-on-year in fiscal 2019, supported by 12.8% growth in the building products segment. Operating margin, which improved to 7.5% in fiscal 2019 from 7.1% in fiscal 2018 because of cost efficiencies and higher capacity utilisation, will sustain over the medium term.

Analytical Approach

For arriving at its rating, CRISIL has considered the standalone business and financial risk profiles of Everest.

Key Rating Drivers & Detailed Description
* Established position in the domestic AC roofing segment: With wide pan India presence and industry experience of around 75 years, Everest is among the largest manufacturer of AC roofing sheets in India. It has a well-established brand in the rural market, supported by a strong distribution network of about 6000 retail outlets and more than 32 sales depot. Strategically located plants across the country help increase market penetration and compete effectively with regional players.
* Diversified revenue mix
With healthy growth in the AC roofing and sustained performance in PEB business, revenue dependence on the AC roofing business has reduced over the years; the share of building products contributed 100% to the total revenue in fiscal 2008, compared with 65% in fiscal 2019. However, AC roofing is likely to remain the mainstay of the business over the medium term.
 * Healthy financial risk profile
Financial risk profile remains healthy with networth of Rs 450 as of March, 2019, comfortable gearing, and adequate debt protection indicators, supported by steady cash accrual and prudent capex. Debt protection metrics continued to remain healthy with Interest coverage ratio of 14.32 and comfortable NCATD of 0.78 time for the fiscal 2019. Its key credit metrics should improve gradually, supported by better business performance, continued modest capex, and control over working capital.
* Exposure to intense competition in the AC roofing market and volatile operating margin
The domestic market for AC roofing is fragmented with 18 players in the fray. Players also face stiff competition from manufacturers of galvanised iron roofing sheets as these are easily transportable and accessible. This is compounded by limited ability to pass on input price increases to end users because of intense competition.
Key raw materials for AC roofing and PEBs, asbestos fibre and steel, respectively, account for over half of total input cost. Hence, any significant increase in input prices adversely impacts the operating margin. Input prices movements in the PEB business are passed on only when permitted by contracts.
* Exposure to regulatory threat of ban on manufacture or use of asbestos
More than 50% of revenue is from the sale of all roofing products, which exposes the company to risk of ban on the use of asbestos in India or on mining of asbestos in Russia, Canada, Kazakhstan, or Brazil (largest exporters of asbestos). In India, only white asbestos (known as crysotile) fibre is used as blue and brown asbestos have been banned. Furthermore, all forms of asbestos mining are banned in the country.

Liquidity is adequate, with cash accrual likely to be sufficient to cover obligations of about Rs 6.9 crore in fiscals 2020 and to fund capex. Cash surplus was about Rs 24 crore as of March 31, 2019, and average bank limit utilisation was less than 10% in the twelve months through February, 2019. Furthermore, working capital management has been efficient, and dependence on short-term borrowings reduced in fiscal 2019.

Outlook: Stable

CRISIL believes Everest's business growth and operating margin will remain steady over the medium term, supported by improving rural demand and better operating efficiency. Financial risk profile is expected to remain strong because of steady cash generation, prudent working capital management, and moderate capex.

Upside scenario
* Sustained revenue growth of over 8-10% and improvement in operating profitability to over 8%
*Sustaining comfortable capital structure and other key credit metrics, supported by prudent capex and working capital management

Downside scenario
* Lower-than-expected accrual due to weakening of business performance
* Significant increase in debt due to higher capex or stretched working capital cycle, leading to a sharp weakening of gearing.

About the Company

Incorporated in 1934, Everest is one of India's largest manufacturers of AC roofing. The company has also diversified into non-asbestos building products (roofing sheets, flooring, cladding, and other boards); and design, manufacture, and erection of PEBs. It has eight plants across India.

Income from AC roofing and non-asbestos building products currently accounts for around 65% of total revenue, while the PEB segment accounts for the balance. The company has an installed production capacity of 0.88 million tonne per annum (tpa) for conventional building products (including AC roofing) and 72,000 tpa for PEBs. In December 2014, Everest commissioned a 30,000-tpa capacity for its PEB business in Dahej, Gujarat. Promoters held 48.1% stake as on June 30, 2019, followed by mutual funds with 2.85%, and foreign portfolio investors with 2.59%; the balance was with the public and others.

For the three months ended June 30, 2019, revenue was Rs 434 crore and PAT Rs 25.1 crore, against Rs 418 crore and Rs 29.3 crore, respectively, for the corresponding period of the previous fiscal.

Key Financial Indicators*
As on March 31, Unit 2019 2018
Revenue Rs .Cr 1404 1271
Profit After Tax (PAT) Rs. Cr 64 53
PAT Margins % 4.6 4.2
Adjusted debt/adjusted networth Times 0.19 0.21
Interest Coverage Times 14.31 7.73
*CRISIL adjusted numbers

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 size (Rs.Cr) Rating Assigned with Outlook
NA Cash Credit NA NA NA 135.0 CRISIL A+/Stable
NA Letter of Credit* NA NA NA 245.0 CRISIL A1+
NA Long Term Loan NA NA Dec-20 13.85 CRISIL A+/Stable
NA Long Term Loan NA NA Sept-22 39.02 CRISIL A+/Stable
NA Commercial Paper NA NA 7-365 days 30 CRISIL A1+
NA Proposed Long Term Bank Loan Facility NA NA NA 142.63 CRISIL A+/Stable
*Fully Interchangeable with bank guarantee
Annexure - Rating History for last 3 Years
  Current 2019 (History) 2018  2017  2016  Start of 2016
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Commercial Paper  ST  30.00  CRISIL A1+      12-09-18  CRISIL A1+  21-12-17  CRISIL A1    --  -- 
            01-08-18  CRISIL A1+  06-09-17  CRISIL A1       
Fund-based Bank Facilities  LT/ST  330.50  CRISIL A+/Stable      12-09-18  CRISIL A+/Stable  21-12-17  CRISIL A+/Stable  11-05-16  CRISIL A+/Stable  CRISIL A+/Stable 
            01-08-18  CRISIL A+/Stable  06-09-17  CRISIL A+/Negative       
                29-04-17  CRISIL A+/Negative       
Non Fund-based Bank Facilities  LT/ST  245.00  CRISIL A1+      12-09-18  CRISIL A1+  21-12-17  CRISIL A1  11-05-16  CRISIL A1  CRISIL A1 
            01-08-18  CRISIL A1+  06-09-17  CRISIL A1       
                29-04-17  CRISIL A1       
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
Cash Credit 135 CRISIL A+/Stable Cash Credit 180 CRISIL A+/Stable
Letter of Credit* 245 CRISIL A1+ Letter of Credit* 265 CRISIL A1+
Long Term Loan 52.87 CRISIL A+/Stable Long Term Loan 56.33 CRISIL A+/Stable
Proposed Long Term Bank Loan Facility 142.63 CRISIL A+/Stable Proposed Long Term Bank Loan Facility 74.17 CRISIL A+/Stable
Total 575.5 -- Total 575.5 --
*Fully Interchangeable with bank guarantee
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 Construction Industry
CRISILs Criteria for rating short term debt

For further information contact:
Media Relations
Analytical Contacts
Customer Service Helpdesk
Saman Khan
Media Relations
CRISIL Limited
D: +91 22 3342 3895
B: +91 22 3342 3000

Naireen Ahmed
Media Relations
CRISIL Limited
D: +91 22 3342 1818
B: +91 22 3342 3000

Vinay Rajani
Media Relations
CRISIL Limited
D: +91 22 3342 1835
M: +91 91 676 42913
B: +91 22 3342 3000

Anuj Sethi
Senior Director - CRISIL Ratings
CRISIL Limited
B:+91 44 6656 3100

Sameer Charania
Director - CRISIL Ratings
CRISIL Limited
D:+91 22 4097 8025

Preetham Sharma
Rating Analyst - CRISIL Ratings
CRISIL Limited
B:+91 44 6656 3100
Timings: 10.00 am to 7.00 pm
Toll free Number:1800 267 1301

For a copy of Rationales / Rating Reports:
For Analytical queries:


Note for Media:
This rating rationale is transmitted to you for the sole purpose of dissemination through your newspaper / magazine / agency. The rating rationale may be used by you in full or in part without changing the meaning or context thereof but with due credit to CRISIL. However, CRISIL alone has the sole right of distribution (whether directly or indirectly) of its rationales for consideration or otherwise through any media including websites, portals etc.

About CRISIL Limited

CRISIL is a leading agile and innovative, global analytics company driven by its mission of making markets function better. We are India’s foremost provider of ratings, data, research, analytics and solutions. A strong track record of growth, culture of innovation and global footprint sets us apart. We have delivered independent opinions, actionable insights, and efficient solutions to over 1,00,000 customers.
We are majority owned by S&P Global Inc., a leading provider of transparent and independent ratings, benchmarks, analytics and data to the capital and commodity markets worldwide.
For more information, visit www.crisil.com 


About CRISIL Ratings
CRISIL Ratings is part of CRISIL Limited (“CRISIL”). We pioneered the concept of credit rating in India in 1987. CRISIL is registered in India as a credit rating agency with the Securities and Exchange Board of India (“SEBI”). With a tradition of independence, analytical rigour and innovation, CRISIL sets the standards in the credit rating business. We rate the entire range of debt instruments, such as, bank loans, certificates of deposit, commercial paper, non-convertible / convertible / partially convertible bonds and debentures, perpetual bonds, bank hybrid capital instruments, asset-backed and mortgage-backed securities, partial guarantees and other structured debt instruments. We have rated over 24,500 large and mid-scale corporates and financial institutions. CRISIL has also instituted several innovations in India in the rating business, including rating municipal bonds, partially guaranteed instruments and microfinance institutions. We also pioneered a globally unique rating service for Micro, Small and Medium Enterprises (MSMEs) and significantly extended the accessibility to rating services to a wider market. Over 1,10,000 MSMEs have been rated by us.

CRISIL respects your privacy. We may use your contact information, such as your name, address, and email id to fulfil your request and service your account and to provide you with additional information from CRISIL.For further information on CRISIL’s privacy policy please visit www.crisil.com.


This disclaimer forms part of and applies to each credit rating report and/or credit rating rationale that we provide (each a “Report”). For the avoidance of doubt, the term “Report” includes the information, ratings and other content forming part of the Report. The Report is intended for the jurisdiction of India only. This Report does not constitute an offer of services. Without limiting the generality of the foregoing, nothing in the Report is to be construed as CRISIL providing or intending to provide any services in jurisdictions where CRISIL does not have the necessary licenses and/or registration to carry out its business activities referred to above. Access or use of this Report does not create a client relationship between CRISIL and the user.

We are not aware that any user intends to rely on the Report or of the manner in which a user intends to use the Report. In preparing our Report we have not taken into consideration the objectives or particular needs of any particular user. It is made abundantly clear that the Report is not intended to and does not constitute an investment advice. The Report is not an offer to sell or an offer to purchase or subscribe for any investment in any securities, instruments, facilities or solicitation of any kind or otherwise enter into any deal or transaction with the entity to which the Report pertains. The Report should not be the sole or primary basis for any investment decision within the meaning of any law or regulation (including the laws and regulations applicable in the US).

Ratings from CRISIL Rating are statements of opinion as of the date they are expressed and not statements of fact or recommendations to purchase, hold, or sell any securities / instruments or to make any investment decisions. Any opinions expressed here are in good faith, are subject to change without notice, and are only current as of the stated date of their issue. CRISIL assumes no obligation to update its opinions following publication in any form or format although CRISIL may disseminate its opinions and analysis. CRISIL rating contained in the Report is not a substitute for the skill, judgment and experience of the user, its management, employees, advisors and/or clients when making investment or other business decisions. The recipients of the Report should rely on their own judgment and take their own professional advice before acting on the Report in any way.CRISIL or its associates may have other commercial transactions with the company/entity.

Neither CRISIL nor its affiliates, third party providers, as well as their directors, officers, shareholders, employees or agents (collectively, “CRISIL Parties”) guarantee the accuracy, completeness or adequacy of the Report, and no CRISIL Party shall have any liability for any errors, omissions, or interruptions therein, regardless of the cause, or for the results obtained from the use of any part of the Report. EACH CRISIL PARTY DISCLAIMS ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE. In no event shall any CRISIL Party be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of any part of the Report even if advised of the possibility of such damages.

CRISIL Ratings may receive compensation for its ratings and certain credit-related analyses, normally from issuers or underwriters of the instruments, facilities, securities or from obligors. CRISIL’s public ratings and analysis as are required to be disclosed under the regulations of the Securities and Exchange Board of India (and other applicable regulations, if any) are made available on its web sites, www.crisil.com (free of charge). Reports with more detail and additional information may be available for subscription at a fee – more details about CRISIL ratings are available here: www.crisilratings.com.

CRISIL and its affiliates do not act as a fiduciary. While CRISIL has obtained information from sources it believes to be reliable, CRISIL does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives and / or relies in its Reports. CRISIL keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of the respective activity. As a result, certain business units of CRISIL may have information that is not available to other CRISIL business units. CRISIL has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with each analytical process. CRISIL has in place a ratings code of conduct and policies for analytical firewalls and for managing conflict of interest. For details please refer to: https://www.crisil.com/en/home/our-businesses/ratings/regulatory-disclosures/highlighted-policies.html

CRISIL’s rating criteria are generally available without charge to the public on the CRISIL public web site, www.crisil.com. For latest rating information on any instrument of any company rated by CRISIL you may contact CRISIL RATING DESK at CRISILratingdesk@crisil.com, or at (0091) 1800 267 1301.

This Report should not be reproduced or redistributed to any other person or in any form without a prior written consent of CRISIL.

All rights reserved @ CRISIL