Rating Rationale
February 01, 2022 | Mumbai
Wonder Fibromats Limited
Rated amount enhanced
 
Rating Action
Total Bank Loan Facilities RatedRs.17.26 Crore (Enhanced from Rs.15 Crore)
Long Term RatingCRISIL BBB-/Stable (Reaffirmed)
1 crore = 10 million
Refer to Annexure for Details of Instruments & Bank Facilities

Detailed rationale

CRISIL Ratings has reaffirmed its CRISIL BBB-/Stable rating on the long-term bank facilities of Wonder Fibromats Limited (WFL).

 

The rating continues to reflect the promoters’ extensive experience in the ceiling and exhaust fans industry, established relationships with prominent customers and the company’s healthy financial profile. These strengths are partially offset by intense competition in the consumer durables sector in India, large working capital requirement and limited product diversity, which constrains scale and sustainability.

Key rating drivers and detailed description

Strengths:

  • Established presence in the ceiling and exhaust fans segment, backed by extensive experience of the promoters: The company's promoters, Mr Harsh Anand, Mr Yogesh Anand and Mr Yogesh Sahni, have over four decades of industry experience and are actively engaged in the company’s operations. Due to the promoters’ extensive industry experience and longstanding business association with reputed clients, the company receives repeat orders and has become one of the largest players in this segment.

 

  • Healthy financial profile: The financial risk profile is moderately healthy, as indicated by networth of Rs 47 crore with gearing of 0.51 time and total outside liabilities to tangible networth (TOLTNW) ratio of 3.46 times as on March 31, 2021, mainly due to year-end creditors because of high velocity of sales in the fourth quarter. Interest coverage and net cash accrual to adjusted debt ratios are 6.85 times and 0.34 time, respectively. The company’s debt protection metrics are expected to remain at similar level over the medium term.

 

Weaknesses:

  • Intense competition in the consumer durables sector in India: With the entry of several large players over the past few years, there has been significant price competition, which has adversely affected the operating profitability of most players. Additionally, raw material price fluctuations accentuate the pressure on profitability because of the players. Therefore, profitability will remain a challenge for most players in the industry on account of intense competition and consolidation witnessed across large consumer players in the domestic market.

 

  • Working capital-intensive operations: Demand for ceiling fans is seasonal because of which profitability in the first half is lower. Also, WFL has high working capital requirement in the last quarter due to high velocity of sales.

 

     Gross current assets (GCAs) were 109-183 days over the three fiscals ended March 31, 2021. GCAs was 183 days as on March 31, 2021. Large working capital requirement arises from high debtor and inventory levels. It is required to extend long credit period. Furthermore, due to its business need, it holds large work-in-process and inventory.

Liquidity: Adequate

Cash accrual is expected to be Rs 8.2-10.5 crore, which is sufficient against term debt obligation of Rs 0.42 crore over the medium term. In addition, it will cushion the liquidity of the company. Bank limit utilisation was high at 94.16% on average for the 12 months through November 2021.

 

Current ratio was moderately low at 1.09 times as on March 31, 2021. Low gearing and moderate networth support the company’s financial flexibility and provides the financial cushion required in case of any adverse conditions or downturn in the business.

Outlook: Stable

CRISIL Ratings believes WFL will continue to benefit from the extensive experience of its promoters and established relationships with clients.

Rating sensitivity factors

Upward factors

  • Sustained improvement in revenue by 20% and sustenance of operating margin, leading to higher cash accrual
  • Prudent working capital management, leading to improvement in capital structure with TOLTNW ratio less than 2.6 times

 

Downward factors

  • Decline in revenue by 20% and weakened operating margin, leading to lower cash accrual
  • Large, debt-funded capital expenditure and stretch in the working capital cycle, leading to deterioration in capital structure with TOLTNW ratio more than 3.7 times

About the company

WFL manufactures ceiling fans, exhaust, pedestal and brushless DC (BLDC) expand abbreviation fans. The company was incorporated in 2009 as a private limited company and later in July 2018 was reconstituted as a limited company. It was listed on the National Stock Exchange’s SME platform in August 2019.

 

WFL has total installed capacity to manufacture 7.85 lakh fans per month. It has one manufacturing plant in Roorkee in Haridwar, Uttarakhand and recently set up a new manufacturing facility in Medak in Hyderabad, Telangana, which was operational from December 2020.

 

WFL is promoted by Mr Harsh Anand and Mr Yogesh Sahni and their family members.

Key financial indicators

As on / for the period ended March 31

 

2021

2020

Operating income

Rs crore

58.07

48.71

Reported profit after tax (PAT)

Rs crore

3.58

3.47

PAT margin

%

6.21

7.18

Adjusted debt/adjusted networth

Times

1.14

1.23

Interest coverage

Times

3.56

3.78

 

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 crore)

Complexity

Level

Rating assigned with outlook

NA

Cash Credit

NA

NA

NA

15.0

NA

CRISIL BBB-/Stable

NA

Term Loan

NA

NA

Mar-24

2.26

NA

CRISIL BBB-/Stable

 

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 17.26 CRISIL BBB-/Stable   -- 27-12-21 CRISIL BBB-/Stable   -- 09-04-19 Withdrawn CRISIL BB+/Stable
All amounts are in Rs.Cr.
Annexure - Details of Bank Lenders & Facilities
Facility Amount (Rs.Crore) Name of Lender Rating
Cash Credit 15 HDFC Bank Limited CRISIL BBB-/Stable
Term Loan 2.26 HDFC Bank Limited CRISIL BBB-/Stable

This Annexure has been updated on 01-Feb-22 in line with the lender-wise facility details as on 01-Feb-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 Consumer Durable Industry

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