Rating Rationale
March 14, 2019 | Mumbai
Kamdhenu Limited
Ratings continues on 'Watch Developing'; Ratings withdrawn
 
Rating Action
Total Bank Loan Facilities Rated Rs.150 Crore
Long Term Rating CRISIL BBB+ (Continues on 'Rating Watch with Developing Implications'; Rating withdrawn)
Short Term Rating CRISIL A2 (Continues on 'Rating Watch with Developing Implications'; Rating withdrawn)
1 crore = 10 million
Refer to annexure for Details of Instruments & Bank Facilities
Detailed Rationale

CRISIL's ratings on the bank facilities of Kamdhenu Limited (KL) remain on 'Rating Watch with Developing Implications'. CRISIL had, on November 20, 2018, placed the ratings on watch following KL's announcement on November 13, 2018, that it has decided to hive off its paints division into a separate company through a scheme of arrangement on mirror-shareholding basis. However, the company is yet to receive the approvals for the same. CRISIL has withdrawn its ratings on the bank facilities KL. The ratings have been withdrawn after withdrawal request from KL and receipt of no-objection certificate from the State Bank of India and Allahabad Bank. The rating action is in-line with CRISIL's policy on withdrawal of bank loan ratings.

About the Company

Incorporated in September 1994, KL, a public listed company, commenced commercial operations in October 1995. The company has been manufacturing thermo mechanically treated (TMT) bars at its plant in Bhiwadi (Rajasthan), which has a capacity of 72,000 tonne per annum (tpa). At this facility, it also manufactures ingots (capacity of 22,500 tpa), which are used for captive consumption.
 
The company's steel business works on an asset light model wherein the products are largely manufactured by its franchisee units. The company ties up with small-to-medium scale units with good operating efficiency to produce products and sell under the 'Kamdhenu' brand. It has franchisee arrangements with more than 44 steel-rolling mills to produce and sell TMT bars; these mills have a combined production capacity of 25 lakh mtpa. KL also has 22 franchisees for colour-coated profile roofing sheets (pre-painted galvanized iron/galvanised sheets) used in roofing and industrial sheds. Further, around 10 franchisees are also for structural steel. In the franchisee business model, the company earns royalty on the sale of TMT bars and other products.
 
KL had also ventured into the paint business under the brand Kamdhenu Paints-Colour Dreamz. The manufacturing facility for paints, in Chopanki (Rajasthan) with an installed capacity of 46000 tpa, commenced commercial production in August 2008. KL is listed on the Bombay Stock Exchange and the National Stock Exchange.

Key Financial Indicators
Particulars Unit 2018 2017
Revenue Rs crore 1188.0 868.2
Profit after tax Rs crore 15.6 8.1
PAT margin % 1.3 0.9
Adjusted debt/adjusted networth Times 0.6 0.9
Interest coverage Times 3.5 2.4

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 Cash Credit NA NA NA 125 Withdrawn
NA Letter of Credit NA NA NA 20 Withdrawn
NA Proposed Long Term Bank Loan Facility NA NA NA 5 Withdrawn
 
Annexure - Rating History for last 3 Years
  Current 2019 (History) 2018  2017  2016  Start of 2016
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Fund-based Bank Facilities  LT/ST  130.00  Withdrawn 14-02-19  CRISIL BBB+/Watch Developing  21-11-18  CRISIL BBB+/Watch Developing  10-05-17  CRISIL BBB+/Stable  21-01-16  CRISIL BBB+/Negative  CRISIL BBB+/Stable 
            30-08-18  CRISIL BBB+/Positive           
Non Fund-based Bank Facilities  LT/ST  20.00  Withdrawn 14-02-19  CRISIL A2/Watch Developing  21-11-18  CRISIL A2/Watch Developing  10-05-17  CRISIL A2  21-01-16  CRISIL A2  CRISIL A2 
            30-08-18  CRISIL A2           
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
Cash Credit 125 Withdrawn Cash Credit 125 CRISIL BBB+/Watch Developing
Letter of Credit 20 Withdrawn Letter of Credit 20 CRISIL A2/Watch Developing
Proposed Long Term Bank Loan Facility 5 Withdrawn Proposed Long Term Bank Loan Facility 5 CRISIL BBB+/Watch Developing
Total 150 -- Total 150 --
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
Rating Criteria for Steel Industry
CRISILs Criteria for rating short term debt

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