Rating Rationale
June 30, 2022 | Mumbai
Lovely Offset Printers Private Limited
Ratings Reaffirmed
 
Rating Action
Total Bank Loan Facilities RatedRs.43.02 Crore
Long Term RatingCRISIL BBB/Stable (Reaffirmed)
Short Term RatingCRISIL A3+ (Reaffirmed)
1 crore = 10 million
Refer to Annexure for Details of Instruments & Bank Facilities

Detailed Rationale

CRISIL Ratings has reaffirmed its ratings on the bank facilities of Lovely Offset Printers Private Limited (LOPPL) at ‘CRISIL BBB/Stable/CRISIL A3+’.

 

The ratings continue to reflect the extensive experience of the promoters in the printing industry, and the company's above-average financial risk profile. These rating strengths are partially offset by modest scale of operations amidst intense competition and working capital intensive nature of operations.

Key Rating Drivers & Detailed Description

Strengths:

Extensive experience of the promoters in the printing industry: Promoter’s experience of around two decades in the printing industry has helped in building strong relationship with key suppliers and customers. The same has also helped in developing diverse product portfolio. The year on increment in the operating efficiency i.e., from around 11.8% in FY 2017 to around 16% in fiscal 2022 accounting to prudent procurement policy of raw material, by shifting back to domestic suppliers showcases domain expertise of the promoters.


Above-average financial risk profile: Financial risk profile is above average, marked by moderate networth of around Rs74 crore along with low gearing of less than 0.3 time as on March 31, 2022 and comfortable debt protection metrics with interest coverage and net cash accrual to total debt ratios of around 13.3 times and 1.14 times respectively, in fiscal 2022. Owing to healthy accretion to reserves, capital structure is expected to remain at similar levels over the medium term.

 

Weaknesses:

Modest scale of operations amidst intense competition: Intense competition in a highly fragmented industry with both established as well as small players has made business size expansion through acquisition of new customers tough. The same is reflected in the modest scale of operations of around Rs. 170 crore in fiscal 2022. However, with substantial capex done in the recent years towards technical modification of machineries and other operational necessities and healthy order book from export markets, scale of operation is expected to gradually improve.

 

Intense working capital management: Operations remains working capital intensive, marked by gross current assets of around 137 days as on March 31, 2022 due to high debtor days, owing to the nature of business where end user industries generally operates on higher credit periods. Inventory has also remained high at around 53 days in FY22 owing to bulk procurement during year end as the key raw material prices remain volatile.

Liquidity: Adequate

Average month end bank limit utilization for the last 12 months ended on May 2022 was low at around 50%. Net cash accruals is expected to be around Rs.24 crore in FY23 which is sufficient against repayment obligations of less than Rs.3 crore. Current ratio was moderate at around 2 times as on March 31, 2022.

Outlook: Stable

CRISIL Ratings believes LOPPL will continue to benefit from its established track record in the printing industry.

Rating Sensitivity Factors

Upward Factors:

  • Healthy revenue growth rate of more than 20% along with improved operating margin of more than 20%
  • Efficient working capital management and maintenance of moderate capital structure

 

Downward Factors:

  • Major decline in revenue growth rate or operating margin falling below 12%
  • Larger than expected working capital requirement or significant debt funded capex

About the Company

LOPPL was set up as a proprietary concern in 1962, and reconstituted as a partnership firm in 1999, and a private limited company in 2006. The company prints diaries, calendars, wedding cards, books, and stationery, and has ten showrooms in Tamil Nadu.

Key Financial Indicators

As on/for the period ended March 31

Unit

2021

2020

Operating income

Rs crore

129.85

168.06

Reported profit after tax

Rs crore

11.4

15.71

PAT margins

%

8.8

9.4

Adjusted Debt/Adjusted Networth

Times

0.33

0.45

Interest coverage

Times

18.51

12.94

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)

ISIN

Name of Instrument

Date of Allotment

Coupon Rate (%)

Maturity Date

Issue Size (Rs.Cr)

Complexity Level

Rating Assigned with Outlook

NA

Bank Guarantee

NA

NA

NA

8

NA

CRISIL A3+

NA

Cash Credit

NA

NA

NA

13

NA

CRISIL BBB/Stable

NA

Inland/Import Letter of Credit

NA

NA

NA

8

NA

CRISIL A3+

NA

Long Term Loan

NA

NA

Mar-2025

4.02

NA

CRISIL BBB/Stable

NA

Packing Credit

NA

NA

NA

10

NA

CRISIL A3+

Annexure - Rating History for last 3 Years
  Current 2022 (History) 2021  2020  2019  Start of 2019
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Fund Based Facilities LT/ST 27.02 CRISIL A3+ / CRISIL BBB/Stable   -- 12-04-21 CRISIL A3+ / CRISIL BBB/Stable 28-05-20 CRISIL BBB-/Stable / CRISIL A3 18-02-19 CRISIL BBB-/Stable / CRISIL A3 CRISIL BBB-/Stable / CRISIL A3
Non-Fund Based Facilities ST 16.0 CRISIL A3+   -- 12-04-21 CRISIL A3+ 28-05-20 CRISIL A3 18-02-19 CRISIL A3 CRISIL A3
All amounts are in Rs.Cr.
Annexure - Details of Bank Lenders & Facilities
Facility Amount (Rs.Crore) Name of Lender Rating
Bank Guarantee 8 Tamilnad Mercantile Bank Limited CRISIL A3+
Cash Credit 13 Tamilnad Mercantile Bank Limited CRISIL BBB/Stable
Inland/Import Letter of Credit 8 Tamilnad Mercantile Bank Limited CRISIL A3+
Long Term Loan 4.02 Tamilnad Mercantile Bank Limited CRISIL BBB/Stable
Packing Credit 10 Tamilnad Mercantile Bank Limited CRISIL A3+

This Annexure has been updated on 30-Jun-2022 in line with the lender-wise facility details as on 10-Aug-2021 received from the rated entity 

Criteria Details
Links to related criteria
CRISILs Approach to Financial Ratios
Rating criteria for manufaturing and service sector companies
CRISILs Bank Loan Ratings - process, scale and default recognition
CRISILs Criteria for rating short term debt

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