| Goldstab Organics Private Limited | ||||||
| Ratings reaffirmed at 'CRISIL A- / Stable / CRISIL A2+ ' | ||||||
| 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 ratings on the bank facilities of Goldstab Organics Pvt Ltd (GOPL; previously, Kalpataru Organics Pvt Ltd) at ‘CRISIL A-/Stable/CRISIL A2+’.
The ratings continue to reflect the company’s strong market position in the domestic polyvinyl chloride (PVC) stabilizer industry and strong financial risk profile because of healthy capital structure and robust debt protection metrics. These strengths are partially offset by product concentration in revenue, and susceptibility to fluctuations in raw material prices and to stringent regulations. |
Key Rating Drivers & Detailed Description Strengths:
GOPL is ranked second after Baerlocher India Additives Pvt Ltd in terms of market share in the PVC stabilizer segment in India. GOPL and Baerlocher together dominate half of the total market, while the rest is fragmented due to several unorganised players. GOPL is also diversifying its product base through paint and specialty additives.
Financial risk profile is expected to remain strong supported by healthy capital structure, as reflected in low total outside liability to tangible net worth ratio (TOLTNW) of 0.18 times and healthy networth of Rs 133 crore, estimated as on March 31, 2021. Debt protection metrics are also expected to remain robust, indicated by estimated net cash accrual to total debt ratio and interest coverage of over 6 time and 50 times, respectively, for fiscal 2021.
Weaknesses:
The company derives around 80% of revenue from PVC stabilizers. Hence, it faces high product concentration risk. Though it has a diversified customer base, around 60% of its revenue comes from the PVC pipes and fittings industry, and any slowdown in this industry, both domestically and internationally, can hit the company’s topline. GOPL’s key raw materials, that is, lead have volatile prices, which can affect also operating margin.
However focus on product diversification and monthly pass through pricing mechanism mitigates these risks to a certain extent.
Government has notified regulations with respect to phasing out lead based stabilizer used in PVC pipes. The industry was already slowly moving towards calcium-zinc stabilisers, which cause significantly less pollution but are expensive to produce. GOPL is also following the trend, and thus sales from Calcium – Zinc (Ca-Zn) based stabilizer has grown substantially in past 5 years. GOPL is also continuously increasing its Ca-Zn capacity as per demand scenario. However this transition from lead to Ca-Zn stabilizer and its actual impact on overall business risk profile of GOPL would remain a key monitorable over the medium term. |
Liquidity: Strong Annual accrual is expected at Rs 23-25 crore against no major term debt obligation, over the medium term. Utilisation of cash credit limit of Rs 10 crore averaged 10% over the trailing 12 months through March 2021. Capex of around Rs 7-10 crore for fiscals 2022 is to be funded through internal accrual. Cash accrual would be sufficient to meet capex and any incremental working capital need over the medium term. Cash and cash equivalents of around Rs 20 crore estimated as on March 31, 2021, also underpin liquidity. |
Outlook Stable CRISIL Ratings believes GOPL will continue to benefit from its strong market position and promoters’ extensive industry experience. |
Rating Sensitivity factors Upward factors:
Downward factors:
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About the Company Incorporated in 1997 and promoted by Mr Sandeep M Shah and Mr Rajiv Mehendale, GOPL is the largest manufacturer of PVC heat stabilisers, metallic stearates, and polymer additives in India. Facilities are at Sarigam in Gujarat. |
Key Financial Indicators
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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)
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| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of various bank facilities | ||||||||||||||||||||||||||||||||||||
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Criteria Details
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