Rating Rationale
October 19, 2018 | Mumbai
Jiya Eco-Products Limited
'CRISIL BBB-/Stable' assigned to bank debt
Rating Action
Total Bank Loan Facilities Rated Rs.28.47 Crore
Long Term Rating CRISIL BBB-/Stable (Assigned)
1 crore = 10 million
Refer to annexure for Details of Instruments & Bank Facilities
Detailed Rationale

CRISIL has assigned its 'CRISIL BBB-/Stable' rating to the long-term bank facility of Jiya Eco-Products Limited (JEPL; part of Jiya group).
The rating reflects the moderate business risk profile, aided by ramp-up in operations, extensive experience of the group's promoters, the wide procurement network and moderate financial risk profile. These strengths are offset by working capital-intensive operations and risks associated with supply chain management.

Analytical Approach

CRISIL has consolidated the business and financial profile of JEPL with its subsidiaries as the entities are in same line of business, under a common management, and they operate in the same value chain with financial interlinkages.

Key Rating Drivers & Detailed Description
* Extensive experience of the promoters and strong procurement network: Being one of the first movers in the segment has helped the Jiya group's promoters develop a strong understanding of industry and market dynamics. The company has set up a strong procurement network, and maintained healthy relationships with customers, over the years. Turnover rose to Rs 92 crore in fiscal 2018, from Rs 52 crore in fiscal 2017, leading to cash accrual of Rs 10 crore (vis-a-vis Rs 6.5 crore), aided by better capacity utilisation and improved reach to customers. In the first quarter of fiscal 2019, the group has already clocked a turnover of Rs 48 crore.
* Moderate financial risk profile: Financial risk profile is marked by networth of Rs 33 crore and gearing of less than 1 time as on March 31, 2018. Debt protection metrics are also comfortable, with interest coverage and net cash accrual to total debt ratios at 6.3 times and 0.6 time, respectively, for fiscal 2018.
* Easy access to raw material: The group will continue to benefit from easy access to the key raw material, agricultural waste in the adjoining areas around Bhavnagar (Gujarat).
* Working capital-intensive nature of operations: Gross current assets were high at 257 days as on March 31, 2018, driven by large receivables of 216 days.
* Reliance on collection agents and exposure to geographic concentration risk: Jiya has significant reliance on the collection agents (around 20) for procurement of agri wastage. The continued availability of agriwaste and disruption free supply to its customers remain critical for relationship with its customers. Also, the company derives its entire revenue from Gujarat exposing it to high geographical concentration risk.
Outlook: Stable
CRISIL believes JEPL will continue to benefit from the extensive experience of its promoters, the advantage of being one of the first movers, and its moderate financial risk profile. The outlook may be revised to 'Positive' if liquidity profile of company improves sharply most likely through infusion of capital or enhancement in working capital limits together with correction in working capital cycle. The outlook may be revised to 'Negative' if increase in working capital requirement, or any large capital expenditure, weakens the financial risk profile, particularly liquidity.
About the Company

JEPL was incorporated in December 2011, by Mr Harshad Monpara, Mr Bhavesh Kakadiya, and Mr Yogesh Patel as a private limited company, to manufacture bio-briquettes and bio-pellets. In February 2014, the company was converted into a closely-held public limited company. It was listed on the SME stock exchange in June 2015, and subsequently moved to the Bombay Stock Exchange (main board) on February 8, 2018. The company has its ISO 9001:2008 certified manufacturing plant in Navagam, Bhavnagar. It has a manufacturing capacity of about 1.20 lakh million tonnes per annum (MTPA) and 1.8 MTPA for briquettes and pellets, respectively.
In fiscal 2018, JEPL acquired Jiya Eco India Ltd (JEIL) (originally incorporated by promoters in fiscal 2017). JEIPL was formed with the purpose of increasing overall group sales from sale of pellets and leasing of pellet burners to retail customers.
JEPL has formed another subsidiary called Jiya Eco (Gandhidham) Pvt Ltd (JEGPL),to set up a pellet manufacturing plant at Gandhidham, likely to be operational in the third quarter of fiscal 2019. It will have an installed capacity of around 2,60,000 tons per annum.

Key Financial Indicators
Particulars Unit 2018 2017
Revenue Rs crore 91 52
Profit after tax Rs crore 8.4 4.1
Profit after tax margin % 9.3 8
Adjusted debt/adjusted networth Times 0.40 0.56
Interest coverage Times 6.31 4.5

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 crore)
Rating assigned 
with outlook
NA Proposed Long Term Bank Loan Facility NA NA NA 17 CRISIL BBB-/Stable
NA Cash Credit NA NA NA 8 CRISIL BBB-/Stable
NA Long Term Loan NA NA Dec-2019 3.47 CRISIL BBB-/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  28.47  CRISIL BBB-/Stable    --    --    --    --  -- 
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
Proposed Long Term Bank Loan Facility 17 CRISIL BBB-/Stable -- 0 --
Cash Credit 8 CRISIL BBB-/Stable -- 0 --
Long Term Loan 3.47 CRISIL BBB-/Stable -- 0 --
Total 28.47 -- Total 0 --
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 Bank Loan Ratings
CRISILs Criteria for Consolidation

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