| Banco Gaskets India Limited | ||||
| 'CRISIL AA / Stable' assigned to Bank Debt | ||||
| Rating Action | ||||
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| 1 crore = 10 million | ||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale
The rating reflects extensive experience of the promoters, strong parentage support of Banco Products India Limited (BPIL) and its established market position, and comfortable financial risk profile. These strengths are partially offset by moderate scale of operations, working capital intensive operations, and exposure to cyclicality in demand in domestic automobile industry. |
Analytical Approach
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 Strengths: BGIL was hived off from BPIL in FY12 for better operational efficiencies and is wholly owned subsidiaries of BPIL. The promoters, Mr Mehul Patel and family have over six decades of experience in industry. Their technical expertise, management skills while successfully navigating through several business cycles over the past years have enabled them to understand market dynamics and establish healthy relationships with suppliers and customers.
Being a wholly owned subsidiary of BPIL, BGIL is enjoying technical and managerial expertise of parent company. BPIL is largest manufacturer of engine cooling systems and manufactures over 1,000 types of products. Aside this, revenue profile of BPIL finds application in various industries such as automobiles, agricultural equipment including farm equipment, industrial and earth moving equipment and remaining from rail locomotives, etc. BPIL has well established marketing network as is largest manufacturer of radiators in India and have been dealing directly with various OEM’s (55-60% of revenue), aftermarkets (~15%), and export (~30%).
Benefits from the six-decade-long experience of the promoter, BPIL, will continue to support the business risk profile. The promoters have maintained healthy relationships with customers, while successfully navigating through several business cycles over the past years. Apart from funding support, BGIL should also receive technical support from BPIL.
The financial risk profile of BGIL is comfortable with networth of over Rs 71 crore and nil gearing as on March 31, 2021 which indicates healthy financial flexibility. Its total outside liabilities to adjusted networth ratio (TOL/ANW) ratio was also comfortable at 0.34 times as on March 31, 2021. The debt protection metrics were comfortable too, with interest coverage and net cash accrual to adjusted debt ratios of 123 times and 164 time, respectively, in fiscal 2021. In absence of large debt funded capex, financial risk profile is expected to remain comfortable over the medium term.
Weaknesses: Revenue was moderate in range of 130-160 crore during past three years ended FY21. BGIL achieved revenue of Rs 135 crore during FY21 (against Rs 121 crore during FY20). Till September 2021, BGIL achieved revenue of Rs 77 crore and is expected to remain at similar range over the medium term. The moderate scale restricts bargaining power with customers and suppliers and restrict pricing flexibility.
Operations of BGIL is working capital intensive with gross current assets of 206 days in FY21, because of inventory of 112 days and receivables of 83 days. Over the medium term, GCA days expected to remain over 200 days.
The product profile of group finds application in various industries such as automobiles, industrial and earth moving equipment, agricultural equipment including farm equipment, rail locomotives, marine, etc. Although key end user industries are diversified by are correlated to economic cycles. In the past, because of subdue performance of automobiles, the industry faced a slowdown which in turn restrained the performance of the radiator industry. As a result, the revenue is expected to remain exposed to any sustained downturn in demand in the domestic automobile industry. |
Liquidity: Strong Liquidity of BGIL expected to remain strong with expected generation of accruals of over Rs 18-25 crore against meagre term debt repayment over the medium term. In absence of large incremental working capital requirement and no planned capex, BGIL is paying dividend to BPIL. The bank lines are largely unutilised for past 12 months ended December 2021. BGIL had unencumbered cash and bank balance of Rs 11.64 crore as on March 31, 2021. The current ratio is comfortable at 3.51 times as on March 31, 2021 and BGIL would derive support from its parent, BPIL in case of requirements |
Rating Sensitivity factors Upward factors:
Downward factors:
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About the Group
Incorporated in 1961 and promoted by Mr Mehul K Patel and family members, BPIL manufactures engine cooling systems including Radiators, change air coolers, oil coolers – transmission & hydraulic, fuel coolers with large backward integration in Aluminium and coper/brass configurations. BPIL is listed on BSE and NSE.
Nederlandsw Radiateuren Fabriek B. V. (NRF) was 100% acquired by Banco group in FY10 and is a leading European manufacturer and trader of automotive, industrial, railway and marine heat transfer and AC products. Operations and distribution of NRF are located in western and eastern European countries. |
Key Financial Indicators (Standalone)
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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 – 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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This Annexure has been updated on 10-Mar-2022 in line with the lender-wise facility details as on 10-Mar-2022 received from the rated entity.
Criteria Details
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