| Alkyl Amines Chemicals Limited | ||||||
| Ratings reaffirmed at 'CRISIL AA-/Stable/CRISIL A1+' | ||||||
| Rating Action | ||||||
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| Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||||
| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has reaffirmed its ratings on the bank facilities of Alkyl Amines Chemicals Ltd (AACL) at ‘CRISIL AA-/Stable/CRISIL A1+’.
During FY 24, company’s business risk profile moderated. AACL reported a revenue of Rs. 1441 crores in fiscal 2024, a year-on-year degrowth of 14%. The overall business profile was impacted mainly due to fall in prices impacting the realization coupled with demand below expectation from end user industry. Consequently, net cash accruals were lower than expected. However, the company’s financial risk profile continues to remain strong supporting the credit profile.
The financial risk profile of the AACL is driven by strong net worth, improving capital structure and adequate debt protection metrics. Strong net worth of Rs.1263 crore as on March 31, 2024 coupled with reduced reliance on external debt for working capital requirement and nil debt funded capex over the medium term will lead to improvement of the capital structure. Debt levels have been reduced to Rs. 65 lacs as on March 31, 2024, as compared to Rs. 85 crores as on March 31, 2023 where in it was at Rs.24 Crores as on March 31, 2022. This has led to nil gearing as on March 31, 2024, and is expected to remain in the similar range over medium term. Further the AACL has healthy unencumbered cash and cash equivalents and investments of Rs 17 crore as on March 31, 2024. Liquidity is expected to remain strong, backed by strong cash flows, low utilization of fund-based working capital limits and healthy cash and cash equivalents which are expected to remain in the business over the medium term.
The ratings continue to reflect the company’s established market position, diversified revenue profile, and healthy financial risk profile. These strengths are partially offset by the vulnerability of operating margin to sharp volatility in foreign exchange (forex) rates and commodity prices, working capital-intensive operations and exposure to intense competition |
Key Rating Drivers & Detailed Description Strengths:
AACL enjoys a dominant position in the domestic aliphatic amines which is supported by multiple products catering to pharmaceutical and agrochemical industry. The company's efforts are driven by higher available capacities to achieve leadership and competitiveness which have supported its volume growth. The company continues to be the one of the foremost manufacturers of ethylamine and methylamine segments and leading player in acetonitrile, diethyl hydroxylamine, and dimethylamine hydrochloride (DMA HCL). It had commissioned a methylamine plant at Dahej in March 2018. Market share in the methylamines market improved since fiscal 2019 as the capacity utilization at the new plant augmented to optimum levels. The company further enhanced its DMA HCL and has enhanced its acetonitrile capacity during fiscal 2021-2022 among other smaller capacity enhancements. Ramp up in utilization levels in these new capacities and healthy demand should continue to drive growth over the medium term.
Weaknesses:
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Liquidity: Strong Bank limit utilization is low at around 25% percent for the past twelve months ended March 2024.In addition, it will act as cushion to the liquidity of the company. The company is expected to generate accruals of above Rs 150 crore over the medium term. The current ratio is healthy at 1.90 times on March 31, 2024. Low gearing and moderate net worth support its financial flexibility and provides the financial cushion available in case of any adverse conditions or downturn in the business.
ESG Profile CRISIL Ratings believes that AACL’s Environment, Social, and Governance (ESG) profile supports its already strong credit risk profile.
The Chemical sector has a high impact on the environment because of the high greenhouse gas (GHG) emissions, high hazardous waste generation by its core operations. The sector has a social impact because of its large workforce, impact on health and wellbeing of its workers and local community on account of its nature of operations. AACL has continuously focused on mitigating its environmental and social impact.
AACL’s Key ESG highlights
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Outlook: Stable AACL should significantly benefit from its leadership position in the amines market, ramp up in enhanced capacities, sustained operating efficiency backed by volume growth and strong financial risk profile |
Rating Sensitivity factors Upward Factors
Downward Factors
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About the Company AACL, incorporated in 1979, is promoted by Mr. Yogesh Kothari and his family members and DSP Financial Consultants Ltd. The company, based in Mumbai, manufactures aliphatic amines such as ethylamine and methylamine, amine derivatives, and specialty chemicals at its facilities in Patalganga and Kurkumbh in Maharashtra, and Dahej in Gujrat. The company also has an R&D facility in Hadapsar, Maharashtra |
Key Financial Indicators
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Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
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| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Criteria Details
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