Rating Rationale
March 22, 2019 | Mumbai
Laxmi Organic Industries Limited
Ratings reaffirmed and withdrawn
 
Rating Action
Total Bank Loan Facilities Rated Rs.381.14 Crore
Long Term Rating CRISIL A-/Positive (Rating reaffirmed and withdrawn)
Short Term Rating CRISIL A2+ (Rating reaffirmed and withdrawn)
1 crore = 10 million
Refer to annexure for Details of Instruments & Bank Facilities
Detailed Rationale

CRISIL has reaffirmed its ratings on the bank facilities of Laxmi Organic Industries Limited (LOIL) and subsequently withdrawn the ratings at the company's request and receipt of no objection certificates from all the bankers. The withdrawal is in line with CRISIL's policy on withdrawal of its ratings on bank facilities.

Analytical Approach

For arriving at its ratings, CRISIL has combined the business and financial risk profiles of LOIL and its fully owned subsidiaries, Laxmi Organic Industries (Europe) BV, Laxmi Petrochem Middle East FZE, Cellbion Life Science Pvt Ltd, Viva Lifesciences Pvt Ltd, Laxmi Lifesciences Pvt Ltd and Saideep Traders. That's because all these companies, together referred to herein as LOIL, have common promoters and management, and business and financial linkages. CRISIL has added letters of credit which is part of contingent liabilities to the creditors for calculating the total outside liabilities as this pertains to inventory contracted but not delivered.

Please refer Annexure - List of entities consolidated, which captures the list of entities considered and their analytical treatment of consolidation.

About the Company

LOIL, incorporated in 1989, commenced operations in 1991 with manufacturing of ethyl acetate. The company currently primarily manufactures ethyl acetate, which accounts for around 70% of its revenue; diketene derivatives account for the remaining 30%. Its manufacturing facility in Mahad, Maharashtra, has a capacity to produce 135,000 tonne per annum (tpa) of ethyl acetate, 14,400 tpa of acetic anhydride, and 22,280 tpa of diketene derivatives.

Key Financial Indicators
Particulars Unit 2018 2017
Revenue Rs crore 1389 1142
Profit After Tax Rs crore 76.3 71.7
PAT Margin %  5.5%  6.3%
Adjusted debt/adjusted networth Times 0.57 0.42
Interest coverage Times 14.98 9.13

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 Letter of Credit@ NA NA NA 35 Withdrawn
NA Letter of credit@@ NA NA NA 75 Withdrawn
NA Cash credit NA NA NA 50 Withdrawn
NA Term loan# NA NA 05-Jul-2020 7.04 Withdrawn
NA External commercial borrowings# NA NA 30-Sep-2017 3.62 Withdrawn
NA External commercial borrowings## NA NA 15-Jun-2020 38.48 Withdrawn
NA Bank guarantee NA NA NA 7 Withdrawn
NA Cash credit^^ NA NA NA 40 Withdrawn
NA Cash credit** NA NA NA 35 Withdrawn
NA Cash credit& NA NA NA 35 Withdrawn
NA Stand by line of credit NA NA NA 5 Withdrawn
NA Letter of credit! NA NA NA 50 Withdrawn
#Same has been fully repaid by the company; independent confirmation for the same has been received.
##The issue size of term loan is as per last provided by the company
^^Interchangeable with upto maximum of Rs. 20 crores for working capital demand loan, Rs. 15 crores for export packing credit/packing credit in foreign currency / export bill discounting/ export bill negotiation
&Fully interchangeability with fund based working capital and letter of credit, includes a sublimit for standby line of credit of Rs. 15 Crores for onward lending of working capital limits to the borrower's subsidiary 'Laxmi Petrochem Middle East FZE' in Dubai
@@Fully interchangeability with fund based working capital and letter of credit, includes sublimit of Rs. 65 crores for buyers credit, Rs.49 crores for export packing credit/packing credit in foreign currency / export bill discounting/ export bill negotiation, Rs. 10 Crores for cash credit, Rs.5 crores for working capital demand loan
!Fully interchangeability with buyers credit, cash credit, working capital demand loan, export packing credit/packing credit in foreign currency, post shipment credit/ post shipment in foreign currency, sale invoice discounting
**Fully interchangeability between Fund based and Non Fund Based working Capital
@Interchangeable with upto maximum of Rs.35 Crore for Buyers' Credit
 
Annexure - List of entities consolidated
Entities consolidated  
Laxmi Organic Industries (Europe) BV, Full consolidation
Laxmi Petrochem Middle East FZE Full consolidation
Cellbion Life Science Pvt Ltd Full consolidation
Viva Lifesciences Pvt Ltd Full consolidation
Laxmi Lifesciences Pvt Ltd Full consolidation
Saideep Traders Full consolidation
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  214.14  Withdrawn      31-12-18  CRISIL A-/Positive  14-09-17  CRISIL A-/Stable  30-03-16  CRISIL BBB+/Stable  CRISIL BBB+/Stable 
                23-03-17  CRISIL BBB+/Positive  18-02-16  CRISIL BBB+/Stable   
Non Fund-based Bank Facilities  LT/ST  167.00  Withdrawn/ Withdrawn     31-12-18  CRISIL A-/Positive/ CRISIL A2+  14-09-17  CRISIL A-/Stable/ CRISIL A2+  30-03-16  CRISIL BBB+/Stable/ CRISIL A2  CRISIL BBB+/Stable/ CRISIL A2 
                23-03-17  CRISIL BBB+/Positive/ CRISIL A2  18-02-16  CRISIL BBB+/Stable/ 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
Bank Guarantee 7 Withdrawn Bank Guarantee 7 CRISIL A2+
Cash Credit 50 Withdrawn Cash Credit 50 CRISIL A-/Positive
Cash Credit^^ 40 Withdrawn Cash Credit^^ 40 CRISIL A-/Positive
Cash Credit** 35 Withdrawn Cash Credit** 35 CRISIL A-/Positive
Cash Credit& 35 Withdrawn Cash Credit & 35 CRISIL A-/Positive
External Commercial Borrowings# 3.62 Withdrawn External Commercial Borrowings 42.1 CRISIL A-/Positive
External Commercial Borrowings## 38.48 Withdrawn Letter of Credit@@ 75 CRISIL A-/Positive
Letter of Credit@@ 75 Withdrawn Letter of Credit! 50 CRISIL A-/Positive
Letter of Credit! 50 Withdrawn Letter of Credit@ 35 CRISIL A2+
Standby Line of Credit 5 Withdrawn Standby Line of Credit 5 CRISIL A-/Positive
Term Loan# 7.04 Withdrawn Term Loan 7.04 CRISIL A-/Positive
Letter of Credit@ 35 Withdrawn -- 0 --
Total 381.14 -- Total 381.14 --
#Same has been fully repaid by the company; independent confirmation for the same has been received.
##The issue size of term loan is as per last provided by the company
^^Interchangeable with upto maximum of Rs. 20 crores for working capital demand loan, Rs. 15 crores for export packing credit/packing credit in foreign currency / export bill discounting/ export bill negotiation
&Fully interchangeability with fund based working capital and letter of credit, includes a sublimit for standby line of credit of Rs. 15 Crores for onward lending of working capital limits to the borrower's subsidiary 'Laxmi Petrochem Middle East FZE' in Dubai
@@Fully interchangeability with fund based working capital and letter of credit, includes sublimit of Rs. 65 crores for buyers credit, Rs.49 crores for export packing credit/packing credit in foreign currency / export bill discounting/ export bill negotiation, Rs. 10 Crores for cash credit, Rs. 5 crores for working capital demand loan
!Fully interchangeability with buyers credit, cash credit, working capital demand loan, export packing credit/packing credit in foreign currency, post shipment credit/ post shipment in foreign currency, sale invoice discounting
**Fully interchangeability between Fund based and Non Fund Based working Capital
@Interchangeable with upto maximum of Rs.35 Crore for Buyers' Credit
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 Chemical Industry
CRISILs Criteria for Consolidation
CRISILs Criteria for rating short term debt

For further information contact:
Media Relations
Analytical Contacts
Customer Service Helpdesk
Saman Khan
Media Relations
CRISIL Limited
D: +91 22 3342 3895
B: +91 22 3342 3000
saman.khan@crisil.com

Naireen Ahmed
Media Relations
CRISIL Limited
D: +91 22 3342 1818
B: +91 22 3342 3000
naireen.ahmed@crisil.com

Vinay Rajani
Media Relations
CRISIL Limited
D: +91 22 3342 1835
M: +91 91 676 42913
B: +91 22 3342 3000
vinay.rajani@ext-crisil.com

Anuj Sethi
Senior Director - CRISIL Ratings
CRISIL Limited
B:+91 44 6656 3100
anuj.sethi@crisil.com


Gautam Shahi
Director - CRISIL Ratings
CRISIL Limited
D:+91 124 672 2180
gautam.shahi@crisil.com


Omkar Bibikar
Rating Analyst - CRISIL Ratings
CRISIL Limited
D:+91 22 3342 3007
Omkar.Bibikar@crisil.com
Timings: 10.00 am to 7.00 pm
Toll free Number:1800 267 1301

For a copy of Rationales / Rating Reports:
CRISILratingdesk@crisil.com
 
For Analytical queries:
ratingsinvestordesk@crisil.com


 

Note for Media:
This rating rationale is transmitted to you for the sole purpose of dissemination through your newspaper / magazine / agency. The rating rationale may be used by you in full or in part without changing the meaning or context thereof but with due credit to CRISIL. However, CRISIL alone has the sole right of distribution (whether directly or indirectly) of its rationales for consideration or otherwise through any media including websites, portals etc.


About CRISIL Limited

CRISIL is a leading agile and innovative, global analytics company driven by its mission of making markets function better. We are India’s foremost provider of ratings, data, research, analytics and solutions. A strong track record of growth, culture of innovation and global footprint sets us apart. We have delivered independent opinions, actionable insights, and efficient solutions to over 1,00,000 customers.
 
We are majority owned by S&P Global Inc., a leading provider of transparent and independent ratings, benchmarks, analytics and data to the capital and commodity markets worldwide.
 
For more information, visit www.crisil.com 


Connect with us: TWITTER | LINKEDIN | YOUTUBE | FACEBOOK

About CRISIL Ratings
CRISIL Ratings is part of CRISIL Limited (“CRISIL”). We pioneered the concept of credit rating in India in 1987. CRISIL is registered in India as a credit rating agency with the Securities and Exchange Board of India (“SEBI”). With a tradition of independence, analytical rigour and innovation, CRISIL sets the standards in the credit rating business. We rate the entire range of debt instruments, such as, bank loans, certificates of deposit, commercial paper, non-convertible / convertible / partially convertible bonds and debentures, perpetual bonds, bank hybrid capital instruments, asset-backed and mortgage-backed securities, partial guarantees and other structured debt instruments. We have rated over 24,500 large and mid-scale corporates and financial institutions. CRISIL has also instituted several innovations in India in the rating business, including rating municipal bonds, partially guaranteed instruments and microfinance institutions. We also pioneered a globally unique rating service for Micro, Small and Medium Enterprises (MSMEs) and significantly extended the accessibility to rating services to a wider market. Over 1,10,000 MSMEs have been rated by us.


CRISIL PRIVACY
 
CRISIL respects your privacy. We may use your contact information, such as your name, address, and email id to fulfil your request and service your account and to provide you with additional information from CRISIL.For further information on CRISIL’s privacy policy please visit www.crisil.com.


DISCLAIMER

This disclaimer forms part of and applies to each credit rating report and/or credit rating rationale that we provide (each a “Report”). For the avoidance of doubt, the term “Report” includes the information, ratings and other content forming part of the Report. The Report is intended for the jurisdiction of India only. This Report does not constitute an offer of services. Without limiting the generality of the foregoing, nothing in the Report is to be construed as CRISIL providing or intending to provide any services in jurisdictions where CRISIL does not have the necessary licenses and/or registration to carry out its business activities referred to above. Access or use of this Report does not create a client relationship between CRISIL and the user.

We are not aware that any user intends to rely on the Report or of the manner in which a user intends to use the Report. In preparing our Report we have not taken into consideration the objectives or particular needs of any particular user. It is made abundantly clear that the Report is not intended to and does not constitute an investment advice. The Report is not an offer to sell or an offer to purchase or subscribe for any investment in any securities, instruments, facilities or solicitation of any kind or otherwise enter into any deal or transaction with the entity to which the Report pertains. The Report should not be the sole or primary basis for any investment decision within the meaning of any law or regulation (including the laws and regulations applicable in the US).

Ratings from CRISIL Rating are statements of opinion as of the date they are expressed and not statements of fact or recommendations to purchase, hold, or sell any securities / instruments or to make any investment decisions. Any opinions expressed here are in good faith, are subject to change without notice, and are only current as of the stated date of their issue. CRISIL assumes no obligation to update its opinions following publication in any form or format although CRISIL may disseminate its opinions and analysis. CRISIL rating contained in the Report is not a substitute for the skill, judgment and experience of the user, its management, employees, advisors and/or clients when making investment or other business decisions. The recipients of the Report should rely on their own judgment and take their own professional advice before acting on the Report in any way.CRISIL or its associates may have other commercial transactions with the company/entity.

Neither CRISIL nor its affiliates, third party providers, as well as their directors, officers, shareholders, employees or agents (collectively, “CRISIL Parties”) guarantee the accuracy, completeness or adequacy of the Report, and no CRISIL Party shall have any liability for any errors, omissions, or interruptions therein, regardless of the cause, or for the results obtained from the use of any part of the Report. EACH CRISIL PARTY DISCLAIMS ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE. In no event shall any CRISIL Party be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of any part of the Report even if advised of the possibility of such damages.

CRISIL Ratings may receive compensation for its ratings and certain credit-related analyses, normally from issuers or underwriters of the instruments, facilities, securities or from obligors. CRISIL’s public ratings and analysis as are required to be disclosed under the regulations of the Securities and Exchange Board of India (and other applicable regulations, if any) are made available on its web sites, www.crisil.com (free of charge). Reports with more detail and additional information may be available for subscription at a fee – more details about CRISIL ratings are available here: www.crisilratings.com.

CRISIL and its affiliates do not act as a fiduciary. While CRISIL has obtained information from sources it believes to be reliable, CRISIL does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives and / or relies in its Reports. CRISIL keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of the respective activity. As a result, certain business units of CRISIL may have information that is not available to other CRISIL business units. CRISIL has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with each analytical process. CRISIL has in place a ratings code of conduct and policies for analytical firewalls and for managing conflict of interest. For details please refer to: https://www.crisil.com/en/home/our-businesses/ratings/regulatory-disclosures/highlighted-policies.html

CRISIL’s rating criteria are generally available without charge to the public on the CRISIL public web site, www.crisil.com. For latest rating information on any instrument of any company rated by CRISIL you may contact CRISIL RATING DESK at CRISILratingdesk@crisil.com, or at (0091) 1800 267 1301.

This Report should not be reproduced or redistributed to any other person or in any form without a prior written consent of CRISIL.

All rights reserved @ CRISIL