| Pearl Drinks Limited | ||||
| Rated amount enhanced | ||||
| Rating Action | ||||
| ||||
| 1 crore = 10 million | ||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings on the bank facilities of Pearl Drinks Limited (PDL; a part of the Pearl group) continues to reflect established presence of the Pearl group in the non-alcoholic beverages industry, exclusive franchise rights for PepsiCo India’s products and moderate profitability. These strengths are partially offset by average financial risk profile. |
Analytical Approach CRISIL Ratings has combined the business and financial risk profiles of PDL with its wholly owned subsidiary, Pearl Beverages Ltd (PBL). This is because both the entities, together referred to as the Pearl group, have synergistic businesses and are operated by the same promoter and management.
Unsecured loan (Rs 28 crore as on March 31, 2022) extended by the promoter has been treated as neither debt nor equity as the loan is subordinated to bank debt and will remain in the business over the medium term.
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:
The promoter, Mr C K Jaipuria, has experience of around four decades in the non-alcoholic beverages industry; this helped him to develop strong relation with the principal supplier, PepsiCo India, and its distributors. Over the years, the promoter and the management team have gained a strong understanding of local market dynamics. The group owns two bottling plants in Andhra Pradesh: Guntur and Visakhapatnam. It has exclusive franchise rights (10-year contract renewed in 2016) for selling PepsiCo India’s products in 13 districts across Andhra Pradesh, which along with higher penetration prospects in rural areas will provide steady revenue flow over the medium term. Thus, revenue increased over 20% to around Rs 295 crore in fiscal 2022.
The company has moderate operating profitability, as reflected by earnings before interest, taxes, depreciation, and amortisation margin, estimated at around 15% in fiscal 2022. Though the margin slightly declined from 17% in fiscal 2021 owing to higher revenue share from the water segment where the company earns comparatively lower margin, the operating profitability continues to be moderate. With improvement in scale, operating profitability may rise over the medium term. Weakness:
Financial risk profile continues to be constrained by high reliance on external debt. Total outside liabilities to tangible networth (TOL/TNW) ratio is estimated at around 2.5 times as on March 31, 2022. Debt protection metrics were subdued, with interest coverage ratio at around 2.7 times as on March 31, 2022. Financial risk profile may improve, with gradual repayment of existing debt and the absence of any large, debt-funded capital expenditure (capex). |
Liquidity: AdequateBank limit utilisation was around 90% for the 12 months through February 2022. Cash accrual is projected at over Rs 30 crore per annum, sufficient to meet the yearly debt obligation of around Rs 20 crore; the surplus cash will boost liquidity. Current ratio was 0.7 time on March 31, 2022. The promoter is likely to continue extending timely, need-based funds to aid financial flexibility. Unsecured loans from the promoter stood at around Rs 31 Cr as on 31st Mar, 2022. |
Outlook: Stable The Pearl group will continue to benefit from its established presence in the non-alcoholic beverages industry. |
Rating Sensitivity factors Upward factors
Downward factors
|
About the Group PDL, incorporated in 1982 by Mr C K Jaipuria, manufactures pre-forms for poly ethylene terephthalate (PET) bottles used in various industries such as beverages and bottled water. The pre-forms manufacturing unit is at Jammu and Kashmir, and has capacity of 9,538 metric tonne per annum.
|
Key Financial Indicators
|
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)
|
Annexure – List of entities consolidated
|
| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||
|
|||||||||||||||||||||||||||||||||||||||
| All amounts are in Rs.Cr. | |||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||
|
This Annexure has been updated on 06-May-22 in line with the lender-wise facility details as on 06-May-22 received from the rated entity.
Criteria Details
|