| Kanin India | ||||||
| Ratings reaffirmed at 'CRISIL AA-/Stable/CRISIL A1+' | ||||||
| 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 AA-/Stable/CRISIL A1+’ ratings on the bank facilities of Kanin India (KI; part of the Kangaro group).
The ratings continue to reflect the expectation that the Kangaro group's business and financial risk profiles will continue to improve over the medium term owing to revival in demand. The group has a leadership position in the domestic as well as export markets, with presence in more than 100 countries and has strong brand equity under the ‘Kangaro’ name.
Operating revenue of the group grew by a healthy ~32% in fiscal 2022. Operating income is estimated at Rs 592 crore in fiscal 2022 (increase from Rs 448 crore in fiscal 2021) despite loss of operations amid the Covid-19 pandemic. There has been steady revival in demand for commercial/ office stationery following easing of lockdown restrictions. The group mainly caters to the office/ commercial segment and does not have any major exposure to school stationary. It is expected to grow at a healthy pace of 10-12% per annum over the medium term on the back of revival in demand and continuous launch of products by the company. Revenue of the group is expected to remain at Rs 600-700 crore per fiscal over the medium term.
The ratings also factor in the group’s strong financial risk profile with healthy networth, backed by steady accretion to reserve and comfortable profitability, as reflected in estimated operating margin of over 27% in fiscal 2022. Unencumbered cash balance was healthy at approximately Rs 22 crore as on March 31, 2022.
These strengths are partially offset by large working capital requirement and product concentration in revenue. |
Analytical Approach CRISIL Ratings has combined the business and financial risk profiles of Kannin India and its associate concerns, Kangaro Industries Limited (KIL), Kangaro Industries (Regd), Munix India Pvt Ltd (Munix) and KGOC Global LLP. This is because all these entities, collectively referred to as the Kangaro group, have common promoters and management and marketing network and are in the same business. They also have the same finance team and banker
Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers & Detailed Description Strengths: Established position in the stationery business and strong operating efficiency The group has been in the stationery business since 1959 and has established its Kangaro brand. Products include staplers, staple removers, staples, paper punches and index file clips. Over the years, the group has integrated backwards by setting up wire-drawing machines in KIL and establishing the Kangaro tool for designing and manufacturing equipment, such as moulds and tools, required for the manufacturing of end products.
Strong geographical diversification in the domestic and overseas markets
Healthy financial risk profile The total outside liabilities to tangible networth ratio is estimated at a low 0.25 time as on March 31, 2022, while the interest coverage ratio is estimated at a robust 128 times in fiscal 2022. The group has planned capital expenditure (capex) of Rs 50-60 crore, to be funded through internal cash accrual. The financial risk profile should remain strong over the medium term, driven by steady accretion to reserve and absence of any debt-funded capex.
The group has been able to increase sales of value-added products, such as high-value variants of staplers—an example being the less effort stapler, which has higher value addition—large-size staplers that have higher price realisations, do-it-yourself products such as gun tackers, and pneumatic products. The group produces a wide variety of products to cater to the local needs of different markets and continuously assesses the need to introduce variants.
Weaknesses: Large working capital requirement
Product concentration in revenue |
Outlook: Stable The Kangaro group should continue to benefit from its established position in the stationery industry, which will support healthy revenue growth. |
Rating Sensitivity factors Upward factors
Downward factors
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About the Group KIL was incorporated in 1994 as Kangaro Wires Pvt Ltd to manufacture staple pins; the name was changed in fiscal 1996. The company manufactures staples for multiple wire machines.
Kangaro Industries (Regd) was set up in 1959 by the late Mr Jankidas Jain as a proprietorship concern to manufacture staplers and paper punches. It was reconstituted as a partnership firm with the inclusion of Mr Arihant Jain in 1963.
KI, set up in 1990, manufactures staplers, staple removers and gun tackers.
Based in Nalagarh, Himachal Pradesh, Munix manufactures staplers and was set up to avail of tax benefits. |
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)
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Annexure – List of entities consolidated
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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 | ||||||||||||||||||||||||
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This Annexure has been updated on 24-Jun-2022 in line with the lender-wise facility details as on 2-Aug-2021 received from the rated entity
Criteria Details
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