Rating Rationale
July 03, 2018 | Mumbai
Vivid Global Industries Limited
Rating outlook revised to 'Positive'; ratings reaffirmed
Rating Action
Total Bank Loan Facilities Rated Rs.10.5 Crore
Long Term Rating CRISIL BB+/Positive (Outlook revised from 'Stable' and rating reaffirmed)
Short Term Rating CRISIL A4+ (Reaffirmed)
1 crore = 10 million
Refer to annexure for Details of Instruments & Bank Facilities
Detailed Rationale

CRISIL has revised its outlook on the long term bank facilities of Vivid Global Industries Limited (VGIL) to 'Positive' from 'Stable' while reaffirming its ratings at CRISIL BB+/CRISIL A4+

Revision in outlook reflects expected improvement in business risk profile of the company supported by an above average revenue growth and improvement in profitability. Financial risk profile of the company is also expected to improve supported by expected improvement in accruals and modest debt funded capital expenditure (capex) plans.

The ratings continue to reflect the extensive experience of VGIL's promoters in the chemicals industry and above-average financial risk profile marked by moderate TOL/ANW ratio and comfortable debt protection metrics. The rating also reflect improvement in business risk profile as reflected in growth in revenues and improvement in profitability. These strengths are partially offset by large working capital requirement and modest scale of operations.

Key Rating Drivers & Detailed Description
* Extensive experience of promoters: Longstanding presence in the dye intermediaries segment has enabled the promoters to establish strong relationship with customers and suppliers.

* Above-average financial risk profile: Despite working capital-intensive nature operations, TOL/ANW ratio remains moderate at 2.23 times as on March 31, 2018. Debt protection metrics were comfortable, with interest coverage and NCATD ratios of 9 times and 1.58 times, respectively, for fiscal 2018. Financial risk profile is expected to further improve, supported by expected improvement in accruals and modest debt funded capex plans

* Working capital-intensive operations: Gross current assets were 164 days as on March 31, 2018, due to moderate level of receivables and inventory. Inventory holding as on 31st march 2018 is high at around 60 days compared with 40 days at the end of fiscal 2017. The company is holding higher raw material inventory to protect itself from the price hikes and any shortage in supply in future. Operations are expected to continue to be working capital intensive with GCA of around 150-160 days

* Modest scale of operations: With sales of around Rs 48 crore in fiscal 2018, scale remains small. Scale of operations are expected to grow in double digits over the medium term, however will remain modest.
Outlook: Positive

CRISIL believes VGIL's business risk profile is expected to improve backed by growth in revenues and improvement in profitability. The favourable market condition are expected to continue over medium term, supporting growth in revenue and profitability. The rating may be upgraded in case of significant increase in revenue and profitability and if working capital cycle improves leading to improvement in financial risk profile. The outlook may be revised to 'Stable' if growth in revenue and profitability remain average or deterioration in working capital management or debt funded capex puts pressure on liquidity and financial risk profile.

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, Maharashtra. Managed by Mr. Sumish Mody, the company is listed on the Bombay Stock Exchange.

Key Financial Indicators
Particulars Unit 2018 2017
Revenue Rs crore 55 48
Profit after tax Rs crore 1.4 2.7
PAT Margins % 6.1 5.6
Adjusted debt/adjusted networth Times 0.20 0.24
Interest coverage Times 8.83 9.01

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
(Rs Cr)
Rating Assigned with Outlook
NA Proposed Long Term Bank Loan Facility NA NA NA 0.78 CRISIL BB+/Positive
NA Long Term Loan NA NA Mar-2021 0.72 CRISIL BB+/Positive
NA Foreign Bill Purchase NA NA NA 2.6 CRISIL BB+/Positive
NA Import Letter of Credit Limit NA NA NA 6.4 CRISIL A4+
Annexure - Rating History for last 3 Years
  Current 2018 (History) 2017  2016  2015  Start of 2015
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Fund-based Bank Facilities  LT/ST  4.10  CRISIL BB+/Positive      01-12-17  CRISIL BB+/Stable  17-08-16  CRISIL BB/Stable    --  -- 
Non Fund-based Bank Facilities  LT/ST  6.40  CRISIL A4+      01-12-17  CRISIL A4+  17-08-16  CRISIL A4+    --  -- 
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
Foreign Bill Purchase 2.6 CRISIL BB+/Positive Foreign Bill Purchase 2.6 CRISIL BB+/Stable
Import Letter of Credit Limit 6.4 CRISIL A4+ Import Letter of Credit Limit 6.4 CRISIL A4+
Long Term Loan .72 CRISIL BB+/Positive Long Term Loan .72 CRISIL BB+/Stable
Proposed Long Term Bank Loan Facility .78 CRISIL BB+/Positive Proposed Long Term Bank Loan Facility .78 CRISIL BB+/Stable
Total 10.5 -- Total 10.5 --
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 Bank Loan Ratings
CRISILs Criteria for rating short term debt
The Rating Process
Understanding CRISILs Ratings and Rating Scales

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