Rating Rationale
October 24, 2018 | Mumbai
JSL Industries Limited
Ratings Reaffirmed
 
Rating Action
Total Bank Loan Facilities Rated Rs.19.94 Crore
Long Term Rating CRISIL BB+/Stable (Reaffirmed)
Short Term Rating CRISIL A4+ (Reaffirmed)
1 crore = 10 million
Refer to annexure for Details of Instruments & Bank Facilities
Detailed Rationale

CRISIL has reaffirmed its ratings on the bank facilities of JSL Industries Limited (JSL) at 'CRISIL BB+/Stable/CRISIL A4+'.

The ratings continue to reflect the extensive experience of JSL's promoters in the electric equipment industry and moderate financial risk profile. These strengths are partially offset by modest scale of operations, stretched working capital cycle, and geographic concentration risk in revenue.

Analytical Approach

Of the Rs 4 crore preference share capital extended to JSL, 75% has been treated as equity and the remainder as debt. That is because these shares are non-cumulative, non-convertible, and deferrable with residual maturity of more than five years.

Key Rating Drivers & Detailed Description
Strengths
* Extensive experience of the promoters in the electric equipment industry: Promoters' experience of five decades, keen grasp of local market dynamics, and established relations with customers and suppliers should continue to support business risk profile.

* Moderate financial risk profile: Networth and total outside liabilities to adjusted networth were Rs 27.5 crore and 0.76 time, respectively, as on March 31, 2018. Debt protection metrics were healthy, with interest coverage and net cash accrual to total debt ratios at 3.16 times and 0.23 time, respectively, in fiscal 2018.

Weaknesses
* Modest scale of operations and geographic and customer concentration risk in revenue
Intense competition continues to constrain bargaining power with large customers and scalability: revenue was Rs 48 crore in fiscal 2018. Furthermore, sales are concentrated in Gujarat, with only a few customers contributing to the topline.

* Working capital-intensive operations: Operations are moderately working capital intensive, with gross current assets of 164 days as on March 31, 2018, mainly led by inventory and debtors of 89 and 58 days, respectively.

* Declining operating margin: Operating margin declined to 5.8% in fiscal 2018 from 8% in fiscal 2015 because of increase in competition and volatility in the prices of raw materials.
Outlook: Stable

CRISIL believes JSL will benefit over the medium term from its moderate financial risk profile and the extensive experience of its promoters. The outlook may be revised to 'Positive' if significant increase in revenue strengthens financial risk profile. The outlook may be revised to 'Negative' if any large debt-funded capital expenditure, lower-than-expected revenue and profitability, or substantial increase in working capital requirement weakens the financial risk profile.

About the Company

Set up in 1966, JSL is part of the Vadodara-based Jyoti group, which has been in the engineering equipment manufacturing industry since the 1940s. In 2006, the group companies, JEM Industries Ltd and Jyoti Pumps and Electricals Ltd, were amalgamated with JSL. 

Key Financial Indicators
As on/for the period ended March 31 Unit 2018 2017
Revenue Rs crore 48 45
Profit After Tax (PAT) Rs crore 0.2 0.4
PAT Margins % 0.4 0.9
Adjusted Debt/Adjusted Networth Times 0.28 0.25
Interest coverage Times 3.16 3.39

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 Bank Guarantee NA NA NA 9.7 CRISIL A4+
NA Cash Credit NA NA NA 5.0 CRISIL BB+/Stable
NA Letter of Credit NA NA NA 1.3 CRISIL A4+
NA Term Loan NA NA Apr-2020 1.03 CRISIL BB+/Stable
NA Proposed Long Term Bank Loan Facility NA NA NA 2.91 CRISIL BB+/Stable
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
Fund-based Bank Facilities  LT/ST  8.94  CRISIL BB+/Stable      16-11-17  CRISIL BB+/Stable  09-06-16  CRISIL BBB-/Stable  30-06-15  CRISIL BBB-/Stable  CRISIL BBB-/Stable 
            31-08-17  CRISIL BBB-/Negative      17-06-15  CRISIL BBB-/Stable   
Non Fund-based Bank Facilities  LT/ST  11.00  CRISIL A4+      16-11-17  CRISIL A4+  09-06-16  CRISIL A3  30-06-15  CRISIL A3  CRISIL A3 
            31-08-17  CRISIL A3      17-06-15  CRISIL A3   
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
Bank Guarantee 9.7 CRISIL A4+ Bank Guarantee 9.7 CRISIL A4+
Cash Credit 5 CRISIL BB+/Stable Cash Credit 5 CRISIL BB+/Stable
Letter of Credit 1.3 CRISIL A4+ Letter of Credit 1.3 CRISIL A4+
Proposed Long Term Bank Loan Facility 2.91 CRISIL BB+/Stable Proposed Long Term Bank Loan Facility 2.91 CRISIL BB+/Stable
Term Loan 1.03 CRISIL BB+/Stable Term Loan 1.03 CRISIL BB+/Stable
Total 19.94 -- Total 19.94 --
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
CRISILs Criteria for rating short term debt

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