| Andrew Yule and Co Limited | ||||||
| Ratings downgraded to 'CRISIL BB/Negative/CRISIL A4+' | ||||||
| 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 downgraded its ratings on the bank facilities of Andrew Yule and Co Ltd (AYCL) to ‘CRISIL BB/Negative/CRISIL A4+’ from ‘CRISIL BBB-/Negative/CRISIL A3’.
The downgrade reflects the deterioration in AYCL’s business risk profile resulting from a decline in revenue by ~18% on-year on account of low production of tea and muted export demand amid rising cost of production. Rise in employee wages and prices of key input of stores and consumables further exerted pressure on the operating margin, which is estimated to be negative 26% for fiscal 2024. However, improvement in revenue and profitability in electrical and engineering divisions coupled with non-operating dividend income supported the cash flow. Going forward, recovery in tea production, improving operating efficiency and lower external borrowings will be closely monitored.
The ratings continue to reflect the company’s established position in the tea industry along with continued support from the Government of India. These strengths are partially offset by modest debt protection metrics and susceptibility of profitability to fluctuations in tea prices. |
Analytical Approach To arrive at the ratings, CRISIL Ratings has combined the business and financial risk profiles of AYCL and its subsidiaries, i.e., Yule Engineering Ltd and Yule Electrical Ltd, collectively referred to as the AYCL group.
Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers & Detailed Description Strength:
Weaknesses:
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Liquidity: Stretched Bank limit utilisation averaged 93% in the 12 months through February 2024. Term debt obligation of Rs 1-2 crore, over the medium term, will be met by cash accrual, dividend income and surplus cash and bank balance. The current ratio was modest at 0.7 time as on March 31, 2024. Additionally, cash and bank balance was moderate at around Rs 10 crore as on March 31, 2024, along with dividend income of Rs 21-37 crore during the five fiscals through March 31, 2024, which provide the necessary financial cushion in case of any adverse conditions or downturn in the business. |
Outlook: Negative CRISIL Ratings believes AYCL will continue to benefit from the extensive experience of its promoters and improvement in profitability and debt protection metrics, which are monitorable. |
Rating Sensitivity factors Upward factors
Downward factors
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About the Group AYCL was incorporated in 1919 as a private sector company. Later, it lost its traditional business of managing agency and the government acquired the company in 1979 and currently holds 89.25% stake. The company primarily functions in three sectors - tea, engineering and electrical. It manufactures and sells tea, transformers, regulators or rectifiers, circuit breakers, switches, industrial fans, tea machinery and undertakes turnkey jobs. It has four operating units, out of which three are in West Bengal and one in Chennai, Tamil Nadu. AYCL also owns 12 tea gardens all of which are in West Bengal. AYCLs subsidiaries, Yule Engineering Ltd and Yule Electrical Ltd have no active business operations. |
Key Financial Indicators (Combined & CRISIL Ratings adjusted)
*Provisional |
Status of non cooperation with previous CRA: AYCL has not cooperated with India Ratings and Research Pvt Ltd and Acuite Ratings and Research Ltd which classified it as non-cooperative vide release dated October 09, 2017 and July 18, 2022 respectively The reason provided by them is non-furnishing of information for monitoring of ratings. |
Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
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Annexure – List of entities consolidated
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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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