| Jaipan Industries Limited | ||||||
| Ratings reaffirmed at 'CRISIL BB-/Stable/CRISIL A4+' | ||||||
| Rating Action | ||||||
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| Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||||
| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has reaffirmed its 'CRISIL BB-/Stable/CRISIL A4+' ratings on the bank facilities of Jaipan Industries Limited (JIL).
The rating continues to reflect extensive experience of JIL’s promoters in the home appliances industry and its comfortable capital structure. These rating strengths are partially offset by modest scale of operations amidst intense competition, its working capital-intensive nature of operations and below average debt protection metrics |
Analytical Approach Unsecured loans of Rs 6.53 Lakhs as on March 31, 2022 has been treated as debt |
Key Rating Drivers & Detailed Description Strengths: Extensive industry experience of promoter: The promoters have an experience of over 2 decades in the home appliance segment, this has enabled them to understand the business and industry dynamics and helped establish strong relationship with customers and suppliers. The company has wide range of product portfolio which includes mixers & grinders, air fryers, pressure cooker, toasters, irons, lunch boxes, dinnerware which would help in sustaining the revenue growth over the medium term.
Comfortable capital structure: Due to limited reliance on the outside borrowing the capital structure is marked by comfortable gearing and total outside liabilities to adjusted networth ratios estimated below 0.35-0.4 times and 0.7-0.75 times, respectively, as on March 31, 2023, compared to 0.31 and 0.53 times, respectively, as on March 31, 2022. In absence of any debt funded capital expenditure and steady increase in the scale of operations the capital structure is expected to be at comfortable levels over the medium term.
Weaknesses: Modest scale of operations amidst intense competition: Despite being in the business since last 2 decades the scale of operations of JIL remains modest as highlighted by the revenues of Rs 23 Crores in fiscal 2022. The revenues are expected to be sustained in fiscal 2023 backed by the steady order flow from the customers as the company has generated a revenue of Rs 23 crores till September 2022. JIL is yet to establish presence in other product segments, besides mixer grinder, resulting in a small scale of operations. Intense competition in the home appliances segment dominated by large, branded players, will constrain scalability.
Working capital-intensive operations: The operations of the company remain working capital intensive as highlighted by gross current asset of 298 days as on March 31, 2022. This is majorly driven by high receivable as the company offers a credit period of around 60 to 90 days to its customers. The company also maintains on an average inventory of around 90 to 100 days due to the business requirements. The overall working capital cycle is expected to remain large.
Below average debt protection metrics: Due to the modest scale of operations the debt protections metrics have been below average as highlighted by the estimated interest cover of above 1.6 - 1.7 times for fiscal 2023 compared to 1.58 times for fiscal 2022. With the increase in the scale of operations the debt protection metrics are expected to improve over the medium term |
Liquidity: Adequate Cash accruals are expected of Rs. 40 to 50 lakhs for the fiscal 2024 and 2025 which will be sufficient against the repayment obligation of Rs. 31.2 lakhs and Rs. 20.55 lakhs respectively. Bank limit utilisation is moderate at around 60% for the past 12 months ended October 2022. The cash and bank balance stood at Rs 89 lakhs as on March 31, 2022. Current ratio is healthy at 2.78 times on March 31, 2022. |
Outlook: Stable CRISIL Ratings believes JIL will continue to benefit from the extensive experience of its promoters. |
Rating Sensitivity factors Upward factors
Downward factors
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About the Company JIL, incorporated in 1981 by Mr J N Agrawal, markets various home appliance which includes products such as includes mixers & grinders, air fryers, pressure cooker, toasters, irons, lunch boxes, dinnerware under the Jaipan brand. It is based in Mumbai and is listed on the Bombay Stock Exchange. |
Key Financial Indicators
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Status of non cooperation with previous CRA: JIL has not co-operated with India Ratings and Research Private Limited which has marked it Non-cooperative vide its circular dated November 1, 2017. The reason provided by India Ratings and Research Private Limited is non furnishing of information by JIL |
Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
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 Bank Lenders & Facilities | |||
| Facility | Amount (Rs.Crore) | Name of Lender | Rating |
| Cash Credit | 4 | Bank of Baroda | CRISIL BB-/Stable |
| Packing Credit | 1 | Bank of Baroda | CRISIL A4+ |
This Annexure has been updated on 08-Mar-23 in line with the lender-wise facility details as on 15-Feb-23 received from the rated entity.
Criteria Details
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