| Black Rose Industries Limited | ||||||
| Ratings Reaffirmed | ||||||
| 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 Black Rose Industries Limited (BRIL) to 'CRISIL BBB+/Stable/CRISIL A2'.
The ratings continue to reflect the extensive experience of the promoters in the specialty chemicals industry and the company's above-average financial risk profile. These strengths are partially offset by low contribution from the manufacturing segment, exposure to foreign exchange (forex) fluctuations and product concentration. |
Analytical Approach CRISIL Ratings has consolidated the business and financial risk profiles of BRIL and BR Chemicals Co Ltd (BRCC). This is because BRCC is BRIL's 100% subsidiary and is in the same line of business.
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:
Mr. Anup Jatia, the key promoter, has experience of close to two decades in the specialty chemicals industry. He is a chemical engineer from the California Institute of Technology, USA, and possesses technical expertise in the chemicals industry. The extensive experience of the promoters has helped the company establish strong relations with its principals, such as Mitsui Chemicals, Sumitomo Chemical and Taoka Chemical in Japan and Lanxess in Germany - all of whom have been associated with BRIL for more than decade.
Capital structure is healthy, as reflected in networth and total outside liabilities to adjusted networth (TOLTNW) ratio of Rs 125 crore and 0.27 times, respectively, as on March 31, 2023 (Rs 121 crore and 0.44 times, respectively, as on March 31, 2022). Debt protection metrics are also healthy, reflected by interest coverage and net cash accrual to adjusted debt ratios of 7 times and 1.43 time, respectively, in fiscal 2023, likely to further improve. The financial risk profile should remain healthy over the medium term.
Weaknesses:
BRIL currently generates about 70% of its revenue from the distribution business, largely imported from Japan, South Korea and Germany. The business is dependent on relationships with the principals and is exposed to entry of new players, direct sales by principals and regulatory changes with respect to international trade. Profitability is also susceptible to fluctuations in forex rate because of large imports. However, longstanding relationships with the principals and partial hedging of forex exposure partially mitigate these risks. Group’s operating margin was impacted in fiscal 2023 on account of sharp volatility in raw material prices and lower demand from end user segment. Improvement in operating margin will be key monitorable.
Currently, BRIL manufactures three products; acrylamide polyacrylamide liquid and polyacrylamide . While acrylamide contributed to majority of its manufacturing revenue; polyacrylamide is expected to scale up over the medium term. Product concentration in these products exposes company to any adverse price movements, demand-supply dynamics and competition from foreign and potential domestic players. However, acrylamide is used in multiple industries such as paints, emulsions, adhesive, textile, water & sewage treatment industries etc. which should partially mitigate this risk. Further the company is in the process of introducing new products to the market, this, once scaled up, should bring diversification to its manufacturing product profile over the medium term |
Liquidity: Adequate Net cash accrual, expected at Rs 30-32 crore per fiscal, will sufficiently cover yearly debt obligation of Rs 0.5-0.6 crore per fiscal over the medium term. Bank limit utilization averaged at 17% over the twelve months ended on March 2023.Current ratio was comfortable at over 4 times as on March 31, 2023 and is expected to remain comfortable over the medium term. |
Outlook: Stable CRISIL Ratings believes BRIL's business risk profile will continue to benefit from the promoters' extensive experience |
Rating Sensitivity factors Upward Factors
Downward Factors
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About the Company Incorporated in 1990, BRIL, formerly known as Asia Fab Ltd, distributes specialty chemicals in India. It has also set up a unit in Jhagadia, Gujarat, wherein it manufactures acrylamide and polyacrylamide, which finds application in paints, emulsions and adhesives, water treatment etc., with installed capacity of 20000 and 40000 ton per annum respectively.
BRIL derives a minor portion of its revenue from sale of wind power. The company has two wind power plants in Rajasthan and Gujarat.
Mr. Anup Jatia, the promoter of the company, handles the day-to-day operations. |
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 – 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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