Rating Rationale
September 30, 2024 | Mumbai
Alkyl Amines Chemicals Limited
Ratings reaffirmed at 'CRISIL AA-/Stable/CRISIL A1+'
 
Rating Action
Total Bank Loan Facilities RatedRs.219.38 Crore (Reduced from Rs.288.35 Crore)
Long Term RatingCRISIL AA-/Stable (Reaffirmed)
Short Term RatingCRISIL A1+ (Reaffirmed)
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 loan facilities of Alkyl Amines Chemicals Ltd (AACL) at ‘CRISIL AA-/Stable/CRISIL A1+’.

 

CRISIL Ratings has also withdrawn its rating on the proposed long term bank loan facility of Rs.68.97 crore based on entity’s request. This is in line with CRISIL Ratings’ withdrawal policy.

 

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

 

Analytical Approach

CRISIL Ratings has evaluated the standalone business and financial risk profiles of AACL.

Key Rating Drivers & Detailed Description

Strengths:

  • Strong financial risk profile and ample liquidity: Networth was healthy at Rs. 1263 crores as on March 31, 2024  (Rs 1165 crore as on March 31, 2023), with nil gearing  as on March 31, 2024.The total outside liabilities to adjusted networth (TOL/ANW) ratio though had decreased to 0.25 time as on March 31, 2024 from 0.36 times as on March 31, 2023, and it is expected to improve over the medium term driven by steady accretion to reserves, absence of long term loans and moderate reliance on external debt for working capital and capex. Cash and cash equivalents of Rs 17  crore as on March 31, 2024, provide cushion to overall liquidity. Interest coverage ratio has improved to 60.4 times March 31, 2024. It is expected to remain healthy over the medium term.

 

  • Leadership market position in the aliphatic amines: Company is engaged in the manufacturing of aliphatic amines; Indian amines industry is oligopolistic and AACL is one of the leading players with significant market share.

 

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:

  • Exposure to volatile commodity prices: The cost of raw material inputs (alcohols, ammonia, and acetic acid) and the company’s products (amines) has been volatile, thus impacting profitability. Domestic ethanol prices are dependent on the cyclicality in the sugar industry and methanol prices are driven by crude price movements and demand-supply dynamics in the international markets. Market prices of amines and other speciality chemicals are also volatile depending on the demand-supply dynamics in the market. Thus, profitability may remain susceptible to any unfavorable price movement.

 

  • Working capital-intensive operations: Operations are likely to remain working capital intensive over the medium term. Gross current assets were moderately high at 114 days as on March 31, 2024, driven by inventory and debtors of 53 days and 56 days, respectively. Credit of 60-90 days are provided to customers with good track record and inventory of around 45-60 days is maintained owing to the large product portfolio and bulk purchase of ethanol and methanol to take advantage of better prices. Operations are expected to remain working capital intensive over the medium term

Liquidity: Strong

Bank limit utilization is low at around 17.4% percent for the past twelve months ended June 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

  • AACL’s scope 1 and 2 emissions and energy consumption intensity has reduced by ~4% and ~8% on-year on year  in fiscal 2023.
  • All Of its manufacturing units, equipped with the zero liquid discharge facilities
  • Company’s disclosures on social parameters are evolving, and it is in the process of further strengthening the disclosures going forward.
  • AACL governance structure is characterized by 50% of its board comprising of independent directors, 10% woman board directors, lack of split in positions of chairperson and managing director, a dedicated investor grievance redressal system, and extensive financial disclosures

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:

  • Sustained growth in revenue and operating margin of over 22%.
  • Efficient working capital management and sustained financial risk profile backed by healthy capital structure and strong debt protection metrics.

 

Downward Factors:

  • Significantly lower-than-expected revenue, with operating margin remaining below 17% on sustained basis.
  • Weakening of capital structure, with gearing increasing, because of large, debt-funded capex or acquisition or any large dividend payout or share buy-back

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

As on / for the period ended March 31

Unit

2024

2023

Operating income

Rs crore

1456

1,696

Reported profit after tax

Rs crore

149

229

PAT margins

%

10.23

13.48

Adjusted Debt/Adjusted Net worth

Times

0.00

0.07

Interest coverage

Times

60.41

108.16

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 and are included (where applicable) in the 'Annexure - Details of Instrument' in this Rating Rationale.

CRISIL Ratings will disclose complexity level for all securities - including those that are yet to be placed - based on available information. The complexity level for instruments may be updated, where required, in the rating rationale published subsequent to the issuance of the instrument when details on such features are available.

For more details on the CRISIL Ratings` complexity levels please visit www.crisilratings.com. Users may also call the Customer Service Helpdesk with queries on specific instruments.

Annexure - Details of Instrument(s)

ISIN Name of the
instrument		 Date of
Allotment		 Coupon
Rate (%)		 Maturity
Date		 Issue size
(Rs. Crore)		 Complexity
Level		 Rating assigned
with outlook
NA  Bank Guarantee  NA  NA  NA  6.8 NA  CRISIL A1+ 
NA  Cash Credit  NA  NA  NA  45 NA  CRISIL AA-/Stable 
NA  Cash Credit / Overdraft facility  NA  NA  NA  50 NA  CRISIL AA-/Stable 
NA  Export Packing Credit  NA  NA  NA  25 NA  CRISIL AA-/Stable 
NA  Foreign Exchange Forward  NA  NA  NA  7.6 NA  CRISIL A1+ 
NA  Letter of Credit  NA  NA  NA  49.98 NA  CRISIL A1+ 
NA  Letter of credit & Bank Guarantee  NA  NA  NA  30 NA  CRISIL A1+ 
NA  Line of Credit  NA  NA  NA  5 NA  CRISIL AA-/Stable 
NA  Proposed Long Term Bank Loan Facility  NA  NA  NA  68.97 NA  Withdrawn 
Annexure - Rating History for last 3 Years
  Current 2024 (History) 2023  2022  2021  Start of 2021
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Fund Based Facilities LT/ST 201.57 CRISIL A1+ / CRISIL AA-/Stable 05-07-24 CRISIL A1+ / CRISIL AA-/Stable 29-05-23 CRISIL A1+ / CRISIL AA-/Stable 28-02-22 CRISIL A+/Positive / CRISIL A1   -- CRISIL A+/Positive / CRISIL A1
Non-Fund Based Facilities ST 86.78 CRISIL A1+ 05-07-24 CRISIL A1+ 29-05-23 CRISIL A1+ 28-02-22 CRISIL A1   -- CRISIL A1
All amounts are in Rs.Cr.
Annexure - Details of Bank Lenders & Facilities
Facility Amount (Rs.Crore) Name of Lender Rating
Bank Guarantee 6 State Bank of India CRISIL A1+
Bank Guarantee 0.8 Axis Bank Limited CRISIL A1+
Cash Credit 20 Axis Bank Limited CRISIL AA-/Stable
Cash Credit 10 Citi Bank CRISIL AA-/Stable
Cash Credit 15 State Bank of India CRISIL AA-/Stable
Cash Credit / Overdraft facility 50 Standard Chartered Bank Limited CRISIL AA-/Stable
Export Packing Credit 25 Standard Chartered Bank Limited CRISIL AA-/Stable
Foreign Exchange Forward 5.6 Standard Chartered Bank Limited CRISIL A1+
Foreign Exchange Forward 2 Axis Bank Limited CRISIL A1+
Letter of Credit 26.38 State Bank of India CRISIL A1+
Letter of Credit 3.6 Axis Bank Limited CRISIL A1+
Letter of Credit 20 Citi Bank CRISIL A1+
Letter of credit & Bank Guarantee 30 Standard Chartered Bank Limited CRISIL A1+
Line of Credit 2 Axis Bank Limited CRISIL AA-/Stable
Line of Credit 3 State Bank of India CRISIL AA-/Stable
Proposed Long Term Bank Loan Facility 68.97 Not Applicable Withdrawn
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 Chemical Industry
CRISILs Criteria for rating short term debt

Media Relations
Analytical Contacts
Customer Service Helpdesk

Prakruti Jani
Media Relations
CRISIL Limited
M: +91 98678 68976
B: +91 22 3342 3000
PRAKRUTI.JANI@crisil.com

Rutuja Gaikwad 
Media Relations
CRISIL Limited
B: +91 22 3342 3000
Rutuja.Gaikwad@ext-crisil.com


Himank Sharma
Director
CRISIL Ratings Limited
D:+91 124 672 2152
himank.sharma@crisil.com

Rushabh Pramod Borkar
Associate Director
CRISIL Ratings Limited
D:+91 22 3342 3390
rushabh.borkar@crisil.com

Sachin Bhikaji Bandagale
Manager
CRISIL Ratings Limited
B:+91 22 3342 3000
Sachin.Bandagale@crisil.com		Timings: 10.00 am to 7.00 pm
Toll free Number:1800 267 1301

For a copy of Rationales / Rating Reports:
CRISILratingdesk@crisil.com
 
For Analytical queries:
ratingsinvestordesk@crisil.com

 

Note for Media:
This rating rationale is transmitted to you for the sole purpose of dissemination through your newspaper/magazine/agency. The rating rationale may be used by you in full or in part without changing the meaning or context thereof but with due credit to CRISIL Ratings. However, CRISIL Ratings alone has the sole right of distribution (whether directly or indirectly) of its rationales for consideration or otherwise through any media including websites and portals.


About CRISIL Ratings Limited (A subsidiary of CRISIL Limited, an S&P Global Company)

CRISIL Ratings pioneered the concept of credit rating in India in 1987. With a tradition of independence, analytical rigour and innovation, we set the standards in the credit rating business. We rate the entire range of debt instruments, such as bank loans, certificates of deposit, commercial paper, non-convertible/convertible/partially convertible bonds and debentures, perpetual bonds, bank hybrid capital instruments, asset-backed and mortgage-backed securities, partial guarantees and other structured debt instruments. We have rated over 33,000 large and mid-scale corporates and financial institutions. We have also instituted several innovations in India in the rating business, including ratings for municipal bonds, partially guaranteed instruments and infrastructure investment trusts (InvITs).

CRISIL Ratings Limited ('CRISIL Ratings') is a wholly-owned subsidiary of CRISIL Limited ('CRISIL'). CRISIL Ratings Limited is registered in India as a credit rating agency with the Securities and Exchange Board of India ("SEBI").

For more information, visit www.crisilratings.com 

 



About CRISIL Limited

CRISIL is a leading, agile and innovative global analytics company driven by its mission of making markets function better. 

It is India’s foremost provider of ratings, data, research, analytics and solutions with a strong track record of growth, culture of innovation, and global footprint.

It has delivered independent opinions, actionable insights, and efficient solutions to over 100,000 customers through businesses that operate from India, the US, the UK, Argentina, Poland, China, Hong Kong and Singapore.

It is majority owned by S&P Global Inc, a leading provider of transparent and independent ratings, benchmarks, analytics and data to the capital and commodity markets worldwide.

For more information, visit www.crisil.com

Connect with us: TWITTER | LINKEDIN | YOUTUBE | FACEBOOK

CRISIL PRIVACY NOTICE
 
CRISIL respects your privacy. We may use your contact information, such as your name, address and email id to fulfil your request and service your account and to provide you with additional information from CRISIL. For further information on CRISIL's privacy policy please visit www.crisil.com.



DISCLAIMER

This disclaimer is part of and applies to each credit rating report and/or credit rating rationale ('report') provided by CRISIL Ratings Limited ('CRISIL Ratings'). For the avoidance of doubt, the term 'report' includes the information, ratings and other content forming part of the report. The report is intended for use only within the jurisdiction of India. This report does not constitute an offer of services. Without limiting the generality of the foregoing, nothing in the report is to be construed as CRISIL Ratings provision or intention to provide any services in jurisdictions where CRISIL Ratings does not have the necessary licenses and/or registration to carry out its business activities. Access or use of this report does not create a client relationship between CRISIL Ratings and the user.

The report is a statement of opinion as on the date it is expressed, and it is not intended to and does not constitute investment advice within meaning of any laws or regulations (including US laws and regulations). The report is not an offer to sell or an offer to purchase or subscribe to any investment in any securities, instruments, facilities or solicitation of any kind to enter into any deal or transaction with the entity to which the report pertains. The recipients of the report should rely on their own judgment and take their own professional advice before acting on the report in any way.

CRISIL Ratings and its associates do not act as a fiduciary. The report is based on the information believed to be reliable as of the date it is published, CRISIL Ratings does not perform an audit or undertake due diligence or independent verification of any information it receives and/or relies on for preparation of the report. THE REPORT IS PROVIDED ON “AS IS” BASIS. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAWS, CRISIL RATINGS DISCLAIMS WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR OTHER WARRANTIES OR CONDITIONS, INCLUDING WARRANTIES OF MERCHANTABILITY, ACCURACY, COMPLETENESS, ERROR-FREE, NON-INFRINGEMENT, NON-INTERRUPTION, SATISFACTORY QUALITY, FITNESS FOR A PARTICULAR PURPOSE OR INTENDED USAGE. In no event shall CRISIL Ratings, its associates, third-party providers, as well as their directors, officers, shareholders, employees or agents be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of any part of the report even if advised of the possibility of such damages.

The report is confidential information of CRISIL Ratings and CRISIL Ratings reserves all rights, titles and interest in the rating report. The report shall not be altered, disseminated, distributed, redistributed, licensed, sub-licensed, sold, assigned or published any content thereof or offer access to any third party without prior written consent of CRISIL Ratings.

CRISIL Ratings or its associates may have other commercial transactions with the entity to which the report pertains or its associates. Ratings are subject to revision or withdrawal at any time by CRISIL Ratings. CRISIL Ratings may receive compensation for its ratings and certain credit-related analyses, normally from issuers or underwriters of the instruments, facilities, securities or from obligors.

CRISIL Ratings has in place a ratings code of conduct and policies for managing conflict of interest. For more detail, please refer to: https://www.crisil.com/en/home/our-businesses/ratings/regulatory-disclosures/highlighted-policies.html. Public ratings and analysis by CRISIL Ratings, as are required to be disclosed under the Securities and Exchange Board of India regulations (and other applicable regulations, if any), are made available on its websites, www.crisilratings.com and https://www.ratingsanalytica.com (free of charge). CRISIL Ratings shall not have the obligation to update the information in the CRISIL Ratings report following its publication although CRISIL Ratings may disseminate its opinion and/or analysis. Reports with more detail and additional information may be available for subscription at a fee.  Rating criteria by CRISIL Ratings are available on the CRISIL Ratings website, www.crisilratings.com. For the latest rating information on any company rated by CRISIL Ratings, you may contact the CRISIL Ratings desk at crisilratingdesk@crisil.com, or at (0091) 1800 267 1301.

CRISIL Ratings uses the prefix 'PP-MLD' for the ratings of principal-protected market-linked debentures (PPMLD) with effect from November 1, 2011, to comply with the SEBI circular, "Guidelines for Issue and Listing of Structured Products/Market Linked Debentures". The revision in rating symbols for PPMLDs should not be construed as a change in the rating of the subject instrument. For details on CRISIL Ratings' use of 'PP-MLD' please refer to the notes to Rating scale for Debt Instruments and Structured Finance Instruments at the following link: https://www.crisilratings.com/en/home/our-business/ratings/credit-ratings-scale.html