| Kasyap Sweetners Limited | ||||||
| Rated amount enhanced | ||||||
| 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 A/Stable/CRISIL A1' ratings on bank facilities of Kasyap Sweetners Limited (KSL).
The ratings continue to reflect KSL’s established market position in sorbitol manufacturing business in India, promoter’s extensive industry experience, moderate working capital requirements and robust financial risk profile. These strengths are partially offset by exposure to volatile raw material prices, and limited product diversification in the revenue profile. |
Key Rating Drivers & Detailed Description Strengths * Established market position in sorbitol manufacturing business KSL is one of the largest manufacturers of sorbitol in India. Its established market position is underpinned by its strong customer base, which includes Hindustan Unilever Ltd, and Colgate Palmolive Ltd. Strong customer relationships and repeat orders from most them have resulted in steady growth in revenue to Rs 450.0 crore in fiscal 2020 from Rs 335.9 crore in fiscal 2016. However, revenues are expected to slightly moderate in fiscal 2021 due to pandemic impacting the operations in beginning few months.
* Promoters' extensive industry experience KSL has been in the sorbitol manufacturing segment since 1986, and the promoters, Kasyap family, have over 3 decades of relevant industry experience leading to strong understanding of market dynamics. This has enabled the promoter to establish strong relationship with customers and suppliers which shall continue to support its business risk profile.
* Moderate working capital requirements KSL’s moderate working capital cycle requirements are marked by gross current assets of 115-130 days over the past 3 years ended March 31, 2020, backed by inventory of 55-60 days and receivables of around 70 days over the past 3 years aided by timely collection of receivables. With moderate credit from suppliers, KSL is able to fund its working capital requirements through internal accruals leading to low dependence on bank lines and hence its working capital requirements are expected to remain moderate over the medium term.
* Robust financial risk profile The networth was strong, estimated at Rs 257-258 crore as on March 31, 2021. Increasing networth and controlled external borrowing resulted in a comfortable capital structure, with total outside liabilities to adjusted networth (TOLANW) ratio estimated to remain less than 0.4 time as on March 31, 2021. Debt protection metrics are adequate, with interest coverage and net cash accrual to adjusted debt of 16 times and of 0.7 times, respectively, estimated for fiscal 2021. The financial risk profile should remain robust in the medium term due to strong cash accrual and controlled reliance on external debt.
Weaknesses * Exposure to volatility in raw material prices Maize is the principal raw material used in the manufacture of sorbitol, and comprises over 70% of KSL's raw material consumption. As the contracts with customers are fixed-price in nature, KSL's operating margin remained volatile in the range 8.9-12.1% over past 3 fiscals ended 2020, which highlights its susceptibility to sharp fluctuations in maize prices.
* Limited product diversification in revenue profile KSL has presence only in two products: sorbitol and liquid glucose which limits the growth in revenues and exposes it to product concentrations risks. It is not expected to diversify into other products over the medium term. Any changes in usage of sorbitol or availability of substitutes may impact revenue profile. |
Liquidity: Strong KSL has strong liquidity driven by expected cash accruals of around Rs 40-45 crore in fiscal 2022 and fiscal 2023, against term debt obligation of Rs 4 crore each fiscal. Cash and cash equivalents stood at Rs 1.0 crore as on March 31, 2020. The working capital limit of Rs 112 crore was utilised at an average of 13% over the 12 months through February 2021. Internal cash accrual, cash and cash equivalents, and unutilised bank lines should be sufficient to meet repayment obligation as well as incremental working capital requirement over the medium term. With a gearing of 0.2 time, KSL has sufficient gearing headroom, to raise additional debt to meet its capex or working capital requirement. |
Outlook : Stable CRISIL Ratings believes KSL will continue to benefit from its established market position and maintain its strong financial risk profile over the medium term. |
Rating Sensitivity factors Upward factors
Downward factors
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About the Company KSL, incorporated in 1988 in Mumbai, by Mr. Chetanya Kumar Kasyap and currently managed by his son, Mr. Siddharth Kasyap, manufactures sorbitol and liquid glucose at its facilities located in Badnawar (Madhya Pradesh) and Vapi (Gujarat). |
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 - 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 | 40 | HDFC Bank Limited | CRISIL A/Stable |
| Cash Credit | 72 | State Bank of India | CRISIL A/Stable |
| Letter of credit & Bank Guarantee | 8 | State Bank of India | CRISIL A1 |
| Term Loan | 8 | HDFC Bank Limited | CRISIL A/Stable |
| Term Loan | 9 | HDFC Bank Limited | CRISIL A/Stable |
This Annexure has been updated on 16-Dec-2021 in line with the lender-wise facility details as on 06-Dec-2021 received from the rated entity.
Criteria Details
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