| B&B Triplewall Containers Limited | ||||
| Rating Reaffirmed | ||||
| Rating Action | ||||
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| 1 crore = 10 million | ||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has reaffirmed its rating on the long-term bank facilities of B&B Triplewall Containers Limited (BBTCL) at 'CRISIL BBB+/Stable'.
The rating reflects extensive industry experience of the promoters, established client relationships a comfortable financial risk profile. These strengths are partially offset by exposure to intense competition, customer concentration risk and exposure to cyclicality in the end-user industry. |
Analytical Approach Unsecured loans (Rs.13.23 crore as on March 31, 2021) have been treated as neither debt nor equity because these loans are expected to remain in the business over the medium term. |
Key Rating Drivers & Detailed Description Strengths: Extensive entrepreneurial experience of promoters and established client relationships: The promoters’ experience of two decades, their strong understanding of market dynamics and healthy relationships with suppliers and customers should continue to support the business. End user profile is diversified across industries and comprises fast-moving consumer goods (FMCG), processed food and beverages and online retail segments.
Comfortable financial risk profile: Gearing and total outside liabilities to tangible networth ratios are expected at a comfortable 0.52 time and 0.92 time, respectively, as on March 31, 2022. The company is setting up a new kraft paper plant in fiscal 2023 at a total investment of Rs 130 crore, of which, around Rs 80 crore will be funded by bank debt and balance through internal accruals. Funding support will be provided by promoters if required. Despite this, overall gearing is likely to be less than 1.5 times in the medium term, mainly on account of healthy accretion to reserve. Debt protection metrics are comfortable with interest coverage (IC) and net cash accrual to adjusted debt (NCAAD) ratios expected at 10.39 times and over 0.5 times, respectively, for fiscal 2022. Debt protection metrics are expected to deteriorate due to capex plans, but would remain comfortable over the medium term.
Weakness: Exposure to Intense competition and customer concentration risk: The industrial paper packaging industry in India is highly fragmented and the consequent intense competition may continue to constrain scalability, pricing power and profitability. Furthermore, the company’s top-5 customers contribute to about 47.94 percent to the overall revenues, with single customer being at 27.19 percent. Any loss of customers or change in terms may significantly weaken the business risk profile.
Exposure to cyclicality in the end-user industry: Cyclical downturns or adverse variability in the demand-supply balance may result in lower realisations. Any adverse impact in the end-user industry may have an impact on the overall revenues and profitability of the company.
Risks related to the upcoming capex plans: The firm is taking up a project to set up a Kraft paper unit in fiscal 2023 at an estimated cost of around Rs 130 crore, which will be partly funded via debt of Rs 80 crore. The balance requirement will be met through internal accruals. Completion of the capex within budgeted costs, timely commencement of commercial operations and offtake from the same will remain key monitorables. |
Liquidity: Adequate Bank limit utilisation is moderate at around 58 percent for the past 8 months ended Feb-22. Cash accruals are expected to be over Rs 30 to 40 crore which are adequate against term debt obligation of Rs 4.8 crore per annum over the medium term. The ongoing capex is being prudently funded and is not likely to impact liquidity in the medium term. The debt obligation for new bank loan facility is likely to commence from the second half of March 2024. |
Outlook: Stable BBTCL should continue to benefit from extensive entrepreneurial experience of its promoters and established relationship with customers. |
Rating Sensitivity Factors Upward Factors
Downward Factors
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About the Company BBTCL was incorporated in August 2011 and commenced commercial operations in June 2012. The company, based in Bengaluru, manufactures corrugated boxes used for packaging of products in FMCG and electronic-commerce industries. |
Key Financial Indicators
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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. The CRISIL Ratings' complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL Ratings' complexity levels for instruments that they consider for investment. Users may also call the Customer Service Helpdesk with queries on specific instruments. |
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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This Annexure has been updated on 07-Apr-2022 in line with the lender-wise facility details as on 17-Aug-2021 received from the rated entity.
Criteria Details
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