| Hamilton Writing Instruments Private Limited | ||||||
| Ratings Reaffirmed | ||||||
| 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 ‘CRISIL A-/Stable/CRISIL A2+’ ratings on the bank facilities of Hamilton Writing Instruments Private Limited (HWIPL; a part of the Hamilton group).
The outbreak of corona virus in the middle of March 2020 and delay in re-opening of schools, colleges and offices which were shut-down amidst the nation-wide lockdown resulted in sluggish demand from the domestic writing instruments and stationary products. This impacted the operating performance of the players belonging to the office equipment and writing instruments industry as a whole and accordingly HWIPL’s revenue also declined by ~40% in fiscal 2021. Lower operating leverage following lower sales volumes led to decline in operating margins to 9.1% in fiscal 2021 from 14.7% in the previous fiscal.
With gradual relaxation in lockdown restrictions performance has however gradually improved from second quarter of fiscal 2021. Sales should pick-up further as schools, colleges and offices start functioning. Normalisation of demand, continued focus on exports and launch of new products should aid performance over the medium term.
The ratings continue to reflect HWIPLs’ moderate-albeit-improving revenue profile, supported by rise in exports and better product mix, and the moderate financial risk profile. Besides, the ratings also factor in the expected need-based financial support to HWIPL from the Hamilton group and the promoters. These strengths are partially offset by large working capital requirement, susceptibility to fluctuations in raw material prices, and exposure to intense competition in the writing instruments and stationery markets. |
Analytical Approach The ratings of HWIPL factor in support from the promoter group. CRISIL Ratings believes that HWIPL will, in case of exigencies, receive distress support from the promoters for timely repayment of debt obligation. HWIPL also benefits from the operational, technical and managerial support extended by the promoter group. |
Key Rating Drivers & Detailed Description Strengths:
Weaknesses:
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Liquidity: Adequate HWIPL has adequate liquidity driven by expected cash accrual of over Rs 10-15 crore per annum over the medium term. HWIPL also has access to fund-based bank limit of Rs 27 crore, which have been sparsely utilised in the past 6 months ended July 2021. The company repaid its long term loan fully in the fourth quarter of fiscal 2021 and does not have any long term obligation now. At the same time, it does not have any major capex plan for the coming year. Internal accrual and unutilised bank lines should be sufficient to meet the yearly maturing debt, modest capex as well as the incremental working capital requirement. Promoters too are expected to provide timely, need-based support as demonstrated in the past. |
Outlook: Stable CRISIL Ratings believes HWIPL will continue to benefit from its increasing market reach with rising exports, and significant operational and financial support from promoters. |
Rating Sensitivity factors Upward factors
Downward factors
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About the Company HWIPL was incorporated in 2005 as Hamilton Networks Pvt Ltd, and got its current name in 2007. It began commercial operations in 2009. The company manufactures writing instruments such as ballpoint pens, gel pens, and refills, and files and folders. It also trades in stationery products, including files and folders, and office stationery such as tapes, glue and adhesives, correction products, cutters, and markers. The production unit is in Piparia in Dadra and Nagar Haveli. HWIPL has a pan India presence. However, exports still account for more than 75% of total sales, with majority coming from Middle East, North Africa, Latin America and CIS countries. |
About the Group The Hamilton group comprises two operating companies, HHPL and HWIPL.
HHPL sells plasticware, thermoware, glassware, and melamineware under the Milton and Treo brands. It also sells household cleaning article under the SpotZero brand. It was set up as a proprietorship firm named DG Glass in 2000 by Mr Ajay Vaghani, and was reconstituted as a private-limited company with the current name in 2003. It is one of the largest players in the household plasticware and glassware segment in India. It has production units at Silvassa, Guwahati and at Haridwar in Uttarakhand.
HWIPL manufactures writing instruments and other stationery products such as files and folders. It also trades in office stationery. |
Key Financial Indicators
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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)
## Includes sublimit of Rs 13 crore for export packing credit *Fully interchangeable with working capital demand |
| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||
| Facility | Amount (Rs.Crore) | Rating |
| Cash Credit## | 21 | CRISIL A-/Stable |
| Cash Credit* | 6 | CRISIL A-/Stable |
| Cash Credit | 18.04 | CRISIL A-/Stable |
| Letter of credit & Bank Guarantee | 6 | CRISIL A2+ |
| Letter of credit & Bank Guarantee | 3 | CRISIL A2+ |
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##Includes sublimit of Rs 13 crore for export packing credit
*Fully interchangeable with working capital demand
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Criteria Details
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