Press Release
Alufit India Private Limited
September 6, 2017 Ratings Amount Facilities Rating1 Rating Action (Rs. crore) CARE A-; Stable Long-term Bank 53 (Single A Minus; Assigned Facilities Outlook stable) Short-term Bank CARE A2+ 165 Assigned Facilities (A Two Plus) 218 Total Facilities (Rs. Two hundred and eighteen crore only) Details of instruments/facilities in Annexure-1
Detailed Rationale & Key Rating Drivers The ratings factor in the Alufit India Private Limited’s [AIPL] market position as one of the leading players in design, manufacturing and installation of Aluminium façade/curtain wall system, extensive experience of promoters and management with long standing relationship with its suppliers and reputed client base of developers and corporates, healthy order book position, strong financial risk profile with healthy capital structure, comfortable debt coverage indicators and liquidity position. The ratings are constrained by susceptibility to volatile raw material prices and cyclicality of the real estate sector, competition from other established players, working capital intensive nature of operation with exposure to project related delays and moderate scale of operations of the company. AIPL’s ability to handle multiple high value projects and maintain delivery timelines and ability to maintain stable margins amid increasing work orders, overhead cost and fluctuations in raw material price are the key rating sensitivities.
Detailed description of the key rating drivers Key Rating Strengths Experienced Promoters and Company’s strong standing in the industry : AIPL was established in 1984 and has more than three daces of standing in design , manufacturing and installation of metal cladding and curtain wall solutions. The company has two operational facilities (Peenya , Bangalore and Hosur, Tamil Nadu) and is set to open third facility at Vashi, Mumbai. The company has completed more than 500 projects and its customer base consists of reputed developers/corporates such as Embassy group, Salarpuria, Bagmane Group, RMZ group, Kalyani developers, Shapoorji developers, Prestige group, TCS, ITC, SAP Labs, Amazon, Yahoo, IGate etc. Long standing relation with Suppliers: The company’s long standing relationship with its suppliers enables it to procure raw materials at favourable terms. The company’s comfortable liquidity position has also reduced dependence on creditors. Consistent growth in Total operating income and PAT margins:
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The company’s total operating income has grown at CAGR of 23% in the period FY15-17. Besides income from operations, the company also has stable income from rent, interest on deposits and investments in shares/mutual funds. Similarly, the PAT margins have consistently improved over FY15-17. This improvement is attributed to increasing turnover, higher value orders and ability to control raw material cost, and other input expenses. Comfortable Capital structure and improving operating cycle : Long term bank debt has declined over the last two years period and debt coverage has improved. Interest coverage ratio has substantially improved from 5.47X to 15.37X. The working capital cycle in FY17 has improved to 53 days as against 64 days in FY16. With healthy cash generation and deployment of the same in working capital, company’s reliance on external debt has been limited. Improvement in Order Book position: AIPL’s outstanding order book position as on July 2017 has improved considerably over July 2016 and has healthy order book to sales ratio of 2.57X. Out of total orders on hand at present, 60% is from corporates thereby reducing the dependence on developers.
Key Rating Weaknesses Geographical risk: The company has executed orders in Bengaluru, Chennai, Pune, Mumbai, Delhi & Kolkata. However, the majority of projects executed since incorporation are in Bengaluru (85% of total revenue in FY17). In near term, the company envisages 50% of the business to be driven from outside Bangalore. The company is also looking at overseas business. Moderate scale of operations : In spite of long standing presence in façade engineering/curtain wall solutions industry, AIPL’s scale of operations continue to be at moderate levels (with total income of Rs. 264.64 crores in FY17). Cyclicality in demand from the real estate industry: The demand for the façade engineering depends on the vagaries of real estate industry. Government initiatives such as demonetization, GST and RERA Act also have direct impact on the uptake of real estate. However AIPL caters to commercial segment only where the demand for commercial space is expected to remain firm driven by technology, banking , financial services and insurance companies.
Analytical approach: Standalone
Applicable Criteria Criteria on assigning Outlook to Credit Ratings CARE’s Policy on Default Recognition Criteria for Long Term Instruments Rating Methodology-Manufacturing Companies Financial ratios – Non-Financial Sector
About the Company : AIPL was founded in 1984 and is primarily engaged in design, manufacture, supply, and installation of aluminum curtain walls (façade). The company’s major customers consists of Real Estate Developers and Corporates (IT, ITES, Retail, Hospitality ). The company has reputed clients like Bagmane, Brigade,
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Embassy, Godrej Properties, Prestige, RMZ Corp, General Electric, HCL, Infosys, ITC, TCS, SAP LABS, Novotel & IBIS, JW Marriot group of Hotels etc.
Brief Financials (Rs. crore) FY16 (A) FY17 (A) Total operating income 216.56 264.64 PBILDT 32.68 41.59 PAT 19.30 27.41 Overall gearing (times) 0.20 0.07 Interest coverage (times) 5.57 15.37 A: Audited
Status of non-cooperation with previous CRA: Not applicable
Any other information: Not Applicable
Rating History for last three years: Please refer Annexure-2
Note on complexity levels of the rated instrument: CARE has classified instruments rated by it on the basis of complexity. This classification is available at www.careratings.com. Investors/market intermediaries/regulators or others are welcome to write to [email protected] for any clarifications.
Analyst Contact: Name: Karthik Raj K M: 9980562244 Email: [email protected]
**For detailed Rationale Report and subscription information, please contact us at www.careratings.com
About CARE Ratings: CARE Ratings commenced operations in April 1993 and over two decades, it has established itself as one of the leading credit rating agencies in India. CARE is registered with the Securities and Exchange Board of India (SEBI) and also recognized as an External Credit Assessment Institution (ECAI) by the Reserve Bank of India (RBI). CARE Ratings is proud of its rightful place in the Indian capital market built around investor confidence. CARE Ratings provides the entire spectrum of credit rating that helps the corporates to raise capital for their various requirements and assists the investors to form an informed investment decision based on the credit risk and their own risk-return expectations. Our rating and grading service offerings leverage our domain and analytical expertise backed by the methodologies congruent with the international best practices. 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/outlooks 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 /outlook assigned by CARE is based on the capital deployed by the partners/proprietor and the financial strength of the firm at present. The rating/outlook 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.
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Annexure-1: Details of Instruments/Facilities Name of the Date of Issuance Coupon Maturity Size of the Issue Rating assigned Instrument Rate Date (Rs. crore) along with Rating Outlook Fund-based – LT- - - - 53 CARE A-; Stable Cash Credit Non-fund-based - - - 165 CARE A2+ – ST- LC/BG
Annexure-2: Rating History of last three years
Sr. Name of the Current Ratings Rating history No. Instrument/Bank Type Amount Rating Date(s) & Date(s) & Date(s) & Date(s) & Outstanding Rating(s) Rating(s) Rating(s) Rating(s) Facilities assigned in assigned in assigned in assigned in (Rs. crore) 2017-2018 2016-2017 2015-2016 2014-2015
1. Fund-based - LT-Cash LT 53.00 CARE A-; - - - - Credit Stable
2. Non-fund-based - ST- ST 165.00 CARE A2+ - - - - BG/LC
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