Roop Polymers Limited

Transcription

1 Ratings Roop Polymers Limited Facilities Amount (Rs. crore) Ratings 1 Remarks Long-term Bank Facilities (enhanced from Rs crore) CARE BBB (Triple B) Reaffirmed Short-term Bank Facilities (enhanced from Rs crore) CARE A3+ (A Three Plus) Reaffirmed Short-term Bank Facilities- Fund-based-EPC/PCFC Withdrawn# Total Facilities RPL has surrendered the aforementioned EPC/PCFC facility. Rating Rationale The ratings continue to derive strength from the experienced promoters, long track record of operations, reputed client base and comfortable financial risk profile. The ratings, however, are constrained by the low bargaining power, customer concentration risk and sluggishness in the auto sector. Going forward, the ability of the company to profitably scale up the operations and effective management of working capital will be the key rating sensitivities. Background Roop Polymers Ltd (RPL) was established in 1973 as Roop Rubber Mills Pvt Ltd (RRMPL) and its name was changed to the present one in RPL is engaged in the manufacturing of moulded and extruded rubber, plastic components for automotive and industrial applications and other allied products. RPL is promoted by Mr Anil Jain and the company is Tier-I Original Equipment Manufacturer (OEM) for leading auto manufacturers and also supplies parts to other Tier-I OEMs, which in turn are sold to auto manufacturers. RPL has six operational manufacturing plants; three in Gurgaon (Haryana), one each in Pant Nagar (Uttarakhand), Chennai and Pune (Maharashtra). As on August 31, 2014, RPL had a total installed capacity of 12,671 MTPA for moulded rubber parts and 2,248 MTPA for moulded plastic parts. Credit Risk Assessment Long track record of operations, experienced promoters and management team RPL has more than 39 years of track record of operations. Over the period, RPL has established strong relationship with the reputed automobile companies in India and in the export market. RPL is headed by Mr Anil Jain having more than 39 years of experience in the automotive industry primarily in rubber and plastic product manufacturing. He is supported by his younger brother, Mr Hitesh Jain having more than 38 years of experience, and by Mr Mohit Oswal, having more than two decades of experience in the auto component industry. Mr Mohit Oswal also looks after the finance and human resource department. The management team at RPL comprises industry professionals having significant experience in the related domain of business operations. Established relationship with large auto manufacturers, albeit customer concentration risk RPL has an established relationship with large auto manufacturer across segments including passenger vehicles, commercial vehicle and two-wheelers. The sales of the company are largely concentrated in the two-wheeler segment as top three customers contributed approximately 62% of the total operating income in FY14 (refers to the period April 01 to March 31; PY: 66%). However, the risk is mitigated to a large extent, as the group has been dealing with its top clients for over 15 years. The sales mix of RPL is well diversified among several product lines, which include bellows and air/oil hoses, bushings, suspension bushes and silent blocks, engine mount & rubber housing and grips & footrests, etc. Financial risk profile The operating income of the company increased marginally to Rs crore in FY14 (PY: Rs crore). The PBILDT margins though moderated to 13.01% in FY14 (PY: 13.66%), remained comfortable. 1 Complete definitions of the ratings assigned are available at and other CARE publications 1

2 The operating cycle remained comfortable in FY14 in line with FY13 and the average working capital utilization stood moderate at approximately 75.8% for past 12 months ended September 30, The overall gearing increased marginally to 0.72x as on March 31, 2014 (PY: 0.68x); however, remained well below unity. For H1FY15 (provisional), RPL has reported a PBILDT of Rs crore on the total income of Rs crore. Low bargaining power RPL s business profile is constrained by limited bargaining power with the customers, since the major customers are large auto companies/oems. However, the company does have a mechanism wherein revision in the raw material prices is reset by the OEMs on a quarterly basis and the change in the raw material prices are accommodated subsequently. Project risk Successful commissioning of the Chennai project The company started partial operations of the Chennai project in August 2014 with the installed capacity of 600 MTPA for moulded rubber parts. The total cost of the project increased from Rs crore to Rs.19.2 crore on account of increase in the cost for building, in order to create infrastructure for future expansion. The incremental cost is expected to be funded through internal accruals. As on September 2014, the company has incurred total cost of Rs.18.7 crore funded through debt of Rs.11.5 crore and the balance through internal accruals. Sohna Project Additionally, the company envisages another project in Sohna, Haryana at a total cost of Rs crore to be funded through Rs crore of debt and balance through internal accruals. The project is expected to be completed by Q4FY16. Sohna project was planned in order to cater to additional demand from existing customers and also considering the limited scope of expansion in the Manesar plant. The project risk is mitigated to a large extent as the expansion is in the same line of business. Prospects The demand in the auto industry have been subdued during last three fiscal years ended FY14 due to continued economic slowdown, weak consumer sentiments, rising fuel prices and high interest rates. However, the consumer sentiments are likely to improve during FY15. Also, the prospects remain stable in the medium term on account of a well-established relationship with the leading auto players and innovative product lines which are in high demand among the customers. Financial Performance For the period ended / as at March 31, (12m, A) (12m, A) (12m, A) Working Results Total Operating income PBILDT Interest Depreciation PBT PAT (after deferred tax) Gross Cash Accruals Financial Position Equity Capital

3 Networth Total capital employed Key Ratios Growth Growth in Total income (%) Growth in PAT (after D.Tax) (%) Profitability PBILDT/Total Op. income (%) PAT (after deferred tax)/ Total income (%) ROCE (%) Solvency Long-term Debt Equity ratio (times) Overall gearing ratio(times) Interest coverage(times) Term debt/gross cash accruals(years) Liquidity Current ratio(times) Quick ratio(times) Turnover Average collection period (days) Average creditors (days) Average inventory (days) Operating cycle (days) Details of Rated Facilities 1.Long-term facilities 1.A. Rupee Term Loan Banker / lender Type of facility Tenure Amount (Rs. Crore) Kotak Mahindra bank Loan-1 Term Loan LT 1.98 Kotak Mahindra Bank Limited - Loan 2 Term Loan LT 2.15 Kotak Mahindra Bank Limited - Loan 3 Term Loan LT 0.95 Kotak Mahindra Bank Limited - Loan 4 Term Loan LT 7.58 Kotak Mahindra Bank Limited - Loan 5 Term Loan LT 5.83 Kotak Mahindra Bank Limited Loan-6 Term Loan LT 2.17 Kotak Mahindra Bank Proposed term loan LT 15 Citi Bank Tranche 1 Term Loan LT 2.75 Citi Bank - Tranche 2 Term Loan LT 2.44 Citi Bank - Tranche 3 Term Loan LT 2.82 ICICI Bank - ECB USD 2.2 Ml. Term Loan LT Bajaj Finance limited Term Loan LT 5.0 Total term facilities B. Fund-based limits Sr. No. Name of Bank Fund-based Limits CC Total Fund-based Limits 1 Citi Bank HDFC Bank

4 3 ICICI Bank Kotak Mahindra Bank Limited TOTAL *EPC=Export packing credit; PCFC=Packing credit in foreign currency; CC=Cash credit; LC=Letter of credit; BG=Bank guarantee Total Long-term facilities as at Rs crore. 2. Short-term facilities 2.A. Short-term Rupee term loans Sr. No. Name of Bank Rated Amount (Rs. Crore) 1. Bajaj Finance Limited 5 Total 5 2.B. Non-fund-Based Limits Sr. No. Name of Bank Non-fund-Based Limits LCs/ BGs* Others (please specify) Total Non-fund-Based Limit 1 Kotak Mahindra Bank Limited (forward contract) ICICI Bank (Forward contracts) HDFC Bank 0.7 (PSR Limit/ forward 0.7 contracts) TOTAL *LC=Letter of credit; BG=Bank guarantee Total Short-term facilities as at Rs.19.8 crore Analyst Contact Name: Mr Manek Narang Tel: manek.narang@careratings.com (This follows our brief rational for entity published on 23 December 2014) Disclaimer: CARE s ratings are opinions on credit quality and are not recommendations to sanction, renew, disburse or recall the concerned bank facilities or to buy, sell or hold any security. CARE has based its ratings on information obtained from sources believed by it to be accurate and reliable. CARE does not, however, guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. Most entities whose bank facilities/instruments are rated by CARE have paid a credit rating fee, based on the amount and type of bank facilities/instruments. In case of partnership/proprietary concerns, the rating assigned by CARE is based on the capital deployed by the partners/proprietor and the financial strength of the firm at present. The rating may undergo change in case of withdrawal of capital or the unsecured loans brought in by the partners/proprietor in addition to the financial performance and other relevant factors. 4

5 CONTACT Head Office Mumbai Mr. D.R. Dogra Mr. Rajesh Mokashi Managing Director Dy. Managing Director Mobile: Mobile: Ms. Meenal Sikchi Mr. Ankur Sachdeva Vice President - Bank Loan & Instrument Rating Vice President - Bank Loan & Financial Services Mobile: Mobile: meenal.sikchi@carerating.com ankur.sachdeva@careratings.com CREDIT ANALYSIS & RESEARCH LIMITED Corporate Office: 4th Floor, Godrej Coliseum, Somaiya Hospital Road, Off Eastern Express Highway, Sion (East), Mumbai Tel: Fax: care@careratings.com Other Office: 503, Kaledonia, Sahar Road, Near Andheri Railway Station, Andheri (E), Mumbai Tel: Fax: AHMEDABAD Mr. Mehul Pandya 32, Titanium, Prahaladnagar Corporate Road, Satellite, Ahmedabad Cell: Tel: mehul.pandya@careratings.com BENGALURU Mr. Dinesh Sharma Unit No , 11th Floor, Prestige Meridian II, No. 30, M.G. Road, Bangalore Cell: Tel: , dinesh.sharma@careratings.com CHANDIGARH Mr. Sajan Goyal 2nd Floor, S.C.O , Sector 34-A, Chandigarh Cell: Tel: / 09 sajan.goyal@careratings.com CHENNAI Mr. V Pradeep Kumar Unit No. O-509/C, Spencer Plaza, 5th Floor, No. 769, Anna Salai, Chennai Cell: Tel: / pradeep.kumar@careratings.com HYDERABAD Mr. Saikat Roy 401, Ashoka Scintilla, , Himayat Nagar, Hyderabad Tel: saikat.roy@careratings.com JAIPUR Mr. Harsh Raj Sankhla 304, Pashupati Akshat Heights, Plot No. D-91, Madho Singh Road, Near Collectorate Circle, Bani Park, Jaipur Cell: Tel: / 14 harshraj.sankhla@careratings.com KOLKATA Ms. Priti Agarwal 3rd Floor, Prasad Chambers, (Shagun Mall Bldg.) 10A, Shakespeare Sarani, Kolkata Cell: Tel: priti.agarwal@careratings.com NEW DELHI Ms. Swati Agrawal 13th Floor, E-1 Block, Videocon Tower, Jhandewalan Extension, New Delhi Cell: Tel: swati.agrawal@careratings.com PUNE Mr. Rahul Patni 9th Floor, Pride Kumar Senate, Plot No. 970, Bhamburda, Senapati Bapat Road, Shivaji Nagar, Pune Cell: Tel: rahul.patni@careratings.com CIN - L67190MH1993PLC