| Goa Carbon Limited | ||||||
| Rated amount enhanced for Bank Debt | ||||||
| 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 ‘CRISIL A-/Stable/CRISIL A2+’ ratings on the bank facilities of Goa Carbon Limited (GCL).
CRISIL Ratings had on July 31, 2023, assigned its ‘CRISIL A-/Stable/CRISIL A2+’ ratings to the bank facilities of GCL.
The ratings continues to reflect the company’s established position in the manufacture of calcined petroleum coke (CPC), and its healthy financial risk profile and comfortable operating efficiencies that are supported by integrated operations and proximity to strategic location. These rating strengths are partially offset by susceptibility to volatility in demand and realisation due to inherent cyclicality in the end-user industries and volatile operating margins. |
Key Rating Drivers & Detailed Description Strengths: Established market position: GCL is an established player in the manufacture of CPC has a long track record of more than four decades in this business. Furthermore, the company benefits from the extensive experience of the promoter, his strong understanding of market dynamics and healthy relationships with customers and suppliers. This has resulted in healthy growth in revenues to Rs 1,364 crores in fiscal 2023 as compared to Rs 416 crores in fiscal 2020.
Moderate financial profile: Financial risk profile is at moderate level and expected to improve significantly over the medium term. Networth and gearing are comfortable at Rs 186 crores and 2.27 times, respectively, as on March 31, 2023. With no major debt funded capex plans and healthy accretion to reserves, capital structure will continue to remain strong in the medium term. Debt protection metrics are robust, with interest coverage and net cash accrual to total debt ratios estimated over 3.39 times and 0.17 time, respectively, in fiscal 2023.
Locational advantage, leading to easy transportation of raw materials: The current manufacturing facilities are in Goa, Bilaspur – Chhattisgarh and Paradeep - Orissa. All of these facilities are strategically located close to the port or near to the customer. This helps in timely supply of the CPC to end customer and saves transportation cost.
Weakness: Volatility in demand and realisations due to inherent cyclicality in end-user industries: The key raw material required for the production of CPC is RPC, which is a by-product for the oil refineries. Further the main products CPC and CEP are consumed in steel, graphite electrode, aluminium and ferroalloy industries which are all inherently cyclical in nature. Hence the realisations and profits are linked to the demand and fortunes of these industries. However, with strong support from the Dempo Group, the Company has successfully completed more than 50 years of operations.
Volatile operating margins Operating margin had been volatile in the past because of variation in the spread between raw material prices and finished products. Further changing revenue mix of manufacturing and trading sales also impacts the overall operating margin. Operating margin would continue to be volatile due to nature of the industry. However, the management takes cautious steps while negotiating its final prices of its finished product and raw materials. |
Liquidity: Strong Liquidity is supported by healthy net cash accrual of Rs 50-65 crores, which should be more than adequate to meet its low term debt obligation of Rs 3 Crores in fiscal 2024 and 2025. Healthy cash and cash equivalent balance of Rs 201.69 crores as on March 31, 2023 out of which around Rs 2.55 Crores was unencumbered and moderate bank limit utilisation of 80% for the past twelve months ending June 2023 also support liquidity. Current ratio was healthy at 1.26 times as on March 31, 2023. CRISIL Rating believes that internal accruals and unutilized bank lines to be sufficient to meet its repayment obligations, as well as incremental capex and working capital requirements. |
Outlook: Stable CRISIL Ratings believes GCL will continue to benefit from the promoter’s extensive experience and healthy relationships with clients. |
Rating Sensitivity Factors Upward factors
Downward factors
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About the Company Goa Carbon Limited (GCL, part of Dempo Group of Companies), was incorporated in 1967. The company is into manufacturing of calcinated petroleum coke (CPC). Its manufacturing facilities are located in Goa, Bilaspur (Chattisgarh) and Paradeep (Orissa). It is headed by Mr. Shrinivas V Dempo (Promoter & Chairman).
GCL is listed in National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). |
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)
**100% fungible with the Letter of Credit, Trade Credit Bank Guarantee (TCBG) and Buyers Credit Facility. ^^100% fungible with the Letter of Credit, Standby Letter of Credit Facility and partially with Credit Exposure Limits (CEL). ##100% fungible with TCBG, Buyers Credit and partially fungible with CEL and Packing Credit in Foreign Currency (PCFC) Limits. |
| 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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**100% fungible with the Letter of Credit, Trade Credit Bank Guarantee (TCBG) and Buyers Credit Facility.
^^100% fungible with the Letter of Credit, Standby Letter of Credit Facility and partially with Credit Exposure Limits (CEL).
##100% fungible with TCBG, Buyers Credit and partially fungible with CEL and Packing Credit in Foreign Currency (PCFC) Limits
Criteria Details
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