| Valiant Organics Limited | ||||||
| Long-term rating upgraded to ‘CRISIL A/Stable’; ‘CRISIL A1’ assigned to short-term bank debt; rated amount enhanced for Bank Debt | ||||||
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| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has upgraded its ratings on the long-term bank facilities of Valiant Organics Limited (VOL) to ‘CRISIL A/Stable’ from 'CRISIL A-/Positive'; ‘CRISIL A1’ was assigned to the short-term bank loan ratings.
The upgrade reflects the improved and strong business risk profile which remained resilient to Covid-19 pandemic. Company achieved an operating income of Rs 757 crore during fiscal 2021, a 12% y-o-y growth from Rs 675 crore in fiscal 2020, and the same has also been higher-than CRISIL Ratings’ previous expectations. The performance has been supported by diversity in products, customers and geography and increased sales from paracetamol. There has been a healthy demand in current fiscal which has resulted in higher volumetric sales and this coupled with improved realizations (on account of increasing crude oil prices) has resulted in a healthy revenue of Rs 806 crore during 9M FY22.
Operating margin too remained healthy at 27.5% during fiscal 2021. Although, operating margin has moderated to 18.3% during 9M FY22, the same is on account of the rise in crude oil prices. The integrated operations, order backed sales, and ability to pass on of increase in raw material prices to customers, will continue to support VOL's business risk parameters. The company continues to undertake capital expenditure for capacity enhancement for introduction of new products and for backward and forward integration which will enable VOL to improve its operating efficiencies.
The financial risk profile metrics continue to remain strong, with a robust networth expected to be around Rs 628 crore and low gearing expected at around 0.42 time, as on March 31, 2022. Debt protection metrics are strong, with interest cover and net cash accruals to adjusted debt ratios (NCAAD) expected to be around 23 times and 0.6 time, respectively in fiscal 2022.
The ratings reflect VOL's established market position, healthy financial risk profile and sound operating efficiencies. These rating strengths are partially offset by VOL's exposure to volatile commodity prices, cyclicality in domestic end-user industries and moderately high working capital requirements. |
Analytical Approach To arrive at the ratings on VOL, CRISIL Ratings has combined the business and financial risk profiles of VOL and its subsidiaries Dhanvallabh Ventures LLP (VOL has 73.15% ownership interest), Valiant Speciality Chemical Limited (VOL has 100% ownership interest) and Bharat Chemicals (VOL has 50.1% ownership interest).
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:
Weaknesses:
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Liquidity: Strong Liquidity is strong backed by moderate utilization in bank limits, averaging at 53% over the last 12 months ended January 2022, thus leaving adequate cushion in bank lines. Net cash accruals are expected to be Rs 160-260 crore per fiscal, which will be more than adequate to cover repayments of Rs 20-40 crore per fiscal, over the medium term. Cash and bank balance was Rs 13.4 crore, unencumbered FDs were Rs 47 cr and mutual fund investments were Rs 4 crore as on Dec 31, 2021. Current ratio was 1.12 times as on March 31, 2021 and expected to be around 1.2 times as on March 31, 2022. |
Outlook: Stable CRISIL believes VOL will continue to benefit from the extensive experience of its promoters, and established market position. VOL is expected to benefit from the on-going capex for capacity enhancement and backward integration. |
Rating Sensitivity factors Upward factors
Downward factors
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About the Company Established in 1984 as Valiant Chemical Corporation and then later changed to Valiant Organics Limited (VOL) in 2005, the company is engaged in the business of manufacturing specialty chemicals. The company is promoted by Gogri family and is based out of Mumbai, Maharashtra. The company acquired Amarjyot Chemical Limited in March 2019. |
Key Financial Indicators (Consolidated)
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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 04-Mar-22 in line with the lender-wise facility details as on 04-Mar-22 received from the rated entity.
Criteria Details
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