Rating Rationale
July 20, 2022 | Mumbai
Vivid Global Industries Limited
Rated amount enhanced
 
Rating Action
Total Bank Loan Facilities RatedRs.18 Crore (Enhanced from Rs.10.5 Crore)
Long Term RatingCRISIL BB+/Stable (Reaffirmed)
Short Term RatingCRISIL A4+ (Reaffirmed)
1 crore = 10 million
Refer to Annexure for Details of Instruments & Bank Facilities

Detailed Rationale

CRISIL Ratings has reaffirmed its 'CRISIL BB+/Stable/CRISIL A4+' ratings on the bank facilities of Vivid Global Industries Limited (VGIL).

 

The ratings continue to reflect the established relationship of the company with its customers, extensive experience of the promoters in chemical industry, and comfortable debt protection metrics. These strengths are partially offset by modest scale of operations and working capital intensive nature of operations

Key Rating Drivers & Detailed Description

Strengths:

Extensive experience of the promoters and their established relationships with customers: Benefits from the three-decade-long presence of the promoters in the dye intermediaries’ segment, their strong understanding of market dynamics and healthy relationships with suppliers and customers should continue.

 

Comfortable financial risk profile: Company has moderate capital structure indicated by total outside liabilities to adjusted networth (TOLANW) estimated at 1.11 time on a networth base of Rs 13.91 crore as on March 31 2022.The company also has comfortable debt protection metrics instanced by interest coverage ratio and net cash accruals to adjusted debt to be estimated around 7.4 times and 0.5 times for fiscal 2022.

 

Weakness:

Modest scale of operations amidst intense competition: Company has modest scale of operations and is estimated to report flattish revenue of Rs 46.13 crore in fiscal 2022. Impact of change in raw material prices on demand and operating margin to remain rating sensitivity factor.

 

Large working capital requirement: Gross current assets (GCA) has remained in range of 160-172 days over past 2 years through March 31, 2022 with inventory of 90 days and debtors of 70 days as on March 31, 2022.Overall GCA days are expected to remain in the same range over medium term.

Liquidity: Adequate

Bank limit utilization averaged 49.64% for fund-based facilities and 73.38% for non-fund-based facilities during the 12 months ended March 2022. Expected net cash accrual of over Rs 1.5 crore should suffice to cover the marginal repayment obligation of around Rs 0.12 crore over the medium term. In addition, it will act as cushion to the liquidity of the company. Current ratio is estimated at 1.59 times as on March 31, 2022 with a moderate cash and bank balance of around 3.5 crores as on March 31,2022. Low gearing and moderate net worth support its financial flexibility and provides financial cushion in case of any adverse conditions or downturn in the business

Outlook: Stable

CRISIL Ratings believes VGIL will continue to benefit from the extensive experience of its promoters and their established relationships with customers.

Rating Sensitivity Factors

Upward factors

  • Significant increase in revenue while maintaining operating margin leading to accruals of over Rs 5 crore on sustained basis
  • Improvement in working capital cycle
  • Sustenance of financial risk profile

 

Downward factors

  • Decline in revenue and dip in operating margin below 4% on sustained basis leading to lower-than-expected cash accrual
  • Further stretch in working capital cycle resulting in weakening of financial risk profile and liquidity.  

About the Company

Incorporated in 1989 and promoted by Mr Sudhir Mody and Mr Sumish Mody, VGIL (formerly, Vivid Chemicals Ltd) manufactures dye intermediaries at its facilities in Vapi, Gujarat; and Tarapur, Boisar, Maharashtra. The company is listed on the Bombay Stock Exchange.

Key Financial Indicators

Particulars

Unit

2022

2021

Revenue

Rs.Crore

46.11

47.95

Profit After Tax (PAT)

Rs.Crore

1.42

1.48

PAT Margin 

%

3.08

3.08

Adjusted Debt/Adjusted Networth

Times

0.29

0.15

Interest coverage

Times

6.57

5.42

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 Levels

Rating assigned with outlook

NA

Export Packing Credit & Export Bills Negotiation/Foreign Bill discounting

NA

NA

NA

6.00

NA

CRISIL BB+/Stable

NA

Letter of Credit

NA

NA

NA

12.00

NA

CRISIL A4+

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 6.0 CRISIL BB+/Stable 25-02-22 CRISIL BB+/Stable   -- 11-11-20 CRISIL BB+/Stable 11-09-19 CRISIL BB+/Stable CRISIL BB+/Positive
Non-Fund Based Facilities ST 12.0 CRISIL A4+ 25-02-22 CRISIL A4+   -- 11-11-20 CRISIL A4+ 11-09-19 CRISIL A4+ CRISIL A4+
All amounts are in Rs.Cr.
Annexure - Details of Bank Lenders & Facilities
Facility Amount (Rs.Crore) Name of Lender Rating
Export Packing Credit & Export Bills Negotiation/Foreign Bill discounting 4 Kotak Mahindra Bank Limited CRISIL BB+/Stable
Export Packing Credit & Export Bills Negotiation/Foreign Bill discounting 2 Kotak Mahindra Bank Limited CRISIL BB+/Stable
Letter of Credit 5.5 Kotak Mahindra Bank Limited CRISIL A4+
Letter of Credit 6.5 Kotak Mahindra Bank Limited CRISIL A4+

This Annexure has been updated on 20-Jul-22 in line with the lender-wise facility details as on 20-Jul-22 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
Rating Criteria for Chemical Industry
CRISILs Criteria for rating short term debt
Understanding CRISILs Ratings and Rating Scales

Media Relations
Analytical Contacts
Customer Service Helpdesk

Aveek Datta
Media Relations
CRISIL Limited
M: +91 99204 93912
B: +91 22 3342 3000
AVEEK.DATTA@crisil.com

Prakruti Jani
Media Relations
CRISIL Limited
M: +91 98678 68976
B: +91 22 3342 3000
PRAKRUTI.JANI@crisil.com

Rutuja Gaikwad 
Media Relations
CRISIL Limited
B: +91 22 3342 3000
Rutuja.Gaikwad@ext-crisil.com


Rahul Subrato Kumar Guha
Director
CRISIL Ratings Limited
D:+91 22 4097 8320
rahul.guha@crisil.com


Jumana Badshah
Associate Director
CRISIL Ratings Limited
D:+91 22 3342 8324
Jumana.Badshah@crisil.com


Hetvi Shailesh Darji
Management Trainee
CRISIL Ratings Limited
B:+91 22 3342 3000
Hetvi.Darji@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 Ratings. However, CRISIL Ratings alone has the sole right of distribution (whether directly or indirectly) of its rationales for consideration or otherwise through any media including websites and portals.


About CRISIL Ratings Limited (A subsidiary of CRISIL Limited)

CRISIL Ratings pioneered the concept of credit rating in India in 1987. With a tradition of independence, analytical rigour and innovation, we set 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 33,000 large and mid-scale corporates and financial institutions. We have also instituted several innovations in India in the rating business, including ratings for municipal bonds, partially guaranteed instruments and infrastructure investment trusts (InvITs).
 
CRISIL Ratings Limited ('CRISIL Ratings') is a wholly-owned subsidiary of CRISIL Limited ('CRISIL'). CRISIL Ratings Limited is registered in India as a credit rating agency with the Securities and Exchange Board of India ("SEBI").
 
For more information, visit www.crisilratings.com 

 



About CRISIL Limited

CRISIL is a global analytical company providing ratings, research, and risk and policy advisory services. We are India's leading ratings agency. We are also the foremost provider of high-end research to the world's largest banks and leading corporations.

CRISIL is 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


CRISIL PRIVACY NOTICE
 
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 is part of and applies to each credit rating report and/or credit rating rationale (‘report’) that is provided by CRISIL Ratings Limited (‘CRISIL Ratings’). To avoid 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 Ratings providing or intending to provide any services in jurisdictions where CRISIL Ratings 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 Ratings 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 to 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 Ratings 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 Ratings assumes no obligation to update its opinions following publication in any form or format although CRISIL Ratings may disseminate its opinions and analysis. The 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 Ratings or its associates may have other commercial transactions with the entity to which the report pertains.

Neither CRISIL Ratings nor its affiliates, third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively, ‘CRISIL Ratings Parties’) guarantee the accuracy, completeness or adequacy of the report, and no CRISIL Ratings 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 RATINGS 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 Ratings 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. Public ratings and analysis by CRISIL Ratings, 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 website, www.crisilratings.com (free of charge). Reports with more detail and additional information may be available for subscription at a fee – more details about ratings by CRISIL Ratings are available here: www.crisilratings.com.

CRISIL Ratings and its affiliates do not act as a fiduciary. While CRISIL Ratings has obtained information from sources it believes to be reliable, CRISIL Ratings does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives and/or relies on in its reports. CRISIL Ratings has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with each analytical process. CRISIL Ratings has in place a ratings code of conduct and policies for managing conflict of interest. For details please refer to:
https://www.crisil.com/en/home/our-businesses/ratings/regulatory-disclosures/highlighted-policies.html.

Rating criteria by CRISIL Ratings are generally available without charge to the public on the CRISIL Ratings public website, www.crisilratings.com. For latest rating information on any instrument of any company rated by CRISIL Ratings, you may contact the CRISIL Ratings 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 prior written consent from CRISIL Ratings.

All rights reserved @ CRISIL Ratings Limited. CRISIL Ratings is a wholly owned subsidiary of CRISIL Limited.

 

 

CRISIL Ratings uses the prefix ‘PP-MLD’ for the ratings of principal-protected market-linked debentures (PPMLD) with effect from November 1, 2011, to comply with the SEBI circular, "Guidelines for Issue and Listing of Structured Products/Market Linked Debentures". The revision in rating symbols for PPMLDs should not be construed as a change in the rating of the subject instrument. For details on CRISIL Ratings' use of 'PP-MLD' please refer to the notes to Rating scale for Debt Instruments and Structured Finance Instruments at the following link: https://www.crisil.com/en/home/our-businesses/ratings/credit-ratings-scale.html