Rating Rationale
December 18, 2024 | Mumbai
Indian Toners and Developers Limited
Ratings reaffirmed at 'CRISIL A-/Stable/CRISIL A2+'
 
Rating Action
Total Bank Loan Facilities RatedRs.2.1 Crore (Reduced from Rs.40 Crore)
Long Term RatingCRISIL A-/Stable (Reaffirmed)
Short Term RatingCRISIL A2+ (Reaffirmed)
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 Indian Toners and Developers Ltd (ITDL). CRISIL Ratings has also withdrawn its rating on the bank facilities of Rs 37.9 crore at the request of the company and on receipt on no objection certificate received from the banker. This is in line with the CRISIL Ratings policy on withdrawal of ratings.

 

The ratings continue to reflect the sustained operating performance of ITDL, with revenue of Rs 162 crore and operating margin of 21% in fiscal 2024. The revenue is expected to remain modest with 2-5% on-year growth over the medium term. The anti-dumping duty levied on black toner imports in powder form, originating from China, Malaysia and Taiwan, for five years starting August 10, 2020, has supported the revenue and realisation over the past few fiscals. With anti-dumping duty in place for the near term, the demand for domestic toner is likely to grow at a modest pace.

 

The company’s liquidity remains strong with nil debt and cash and equivalent of Rs 74 crore as on September 30, 2024. ITDL is exploring opportunities to invest in new projects and other activities as part of its diversification plan. While these have not been finalised yet, the capex, funding pattern, and the revenue growth and operating margin from such activities, will remain monitorable.

 

The ratings continue to reflect the established market position of ITDL, its strong business risk profile and healthy financial risk profile supported by adequate liquidity and debt-free balance sheet. These strengths are partially offset by the modest scale of operations and exposure to intense competition from low-priced imported toners.

Analytical Approach

For arriving at the ratings, CRISIL Ratings has considered the standalone business and financial risk profiles of ITDL.

Key Rating Drivers & Detailed Description

Strengths:

  • Established position in the domestic toner replacement market: ITDL is one of the largest players in the organised domestic toner manufacturing segment and exports to over 20 countries. However, the segment has a limited market. The company has over 165 distributors and 600 dealers across India and is the sole distributor in Singapore. Apart from selling bulk toners, it also markets its toners under the Supremo brand, which becomes a differentiator in a competitive market.

 

  • Strong financial risk profile: The financial risk profile is supported by healthy networth and nil debt, and comfortable debt protection metrics. The networth stood at Rs 210 crore as on March 31, 2024, despite buyback of Rs 20.62 crore in August 2024. It is expected to increase to Rs 215-220 crore over the medium term, aided by steady profitability. The debt protection metrics are expected to remain comfortable supported by healthy accrual of Rs 25-27 crore over the medium term against nil long-term debt. Capital structure is expected to remain healthy with total outside liabilities to tangible networth (TOLTNW) ratio of 0.11-0.12 time and nil gearing. The company does not have any capex plan over the medium term. Liquidity is supported by cash, bank balance, investments and cash equivalent of Rs 88 crore as on March 31, 2024.

 

Weaknesses:

  • Modest scale of operations: Despite the established market position of ITDL and its track record of over three decades, the scale of operations remains modest, as indicated by revenue of Rs 162 crore for fiscal 2024. The topline is expected to grow 2-5% over the medium term. Intense competition limits room for scaling up of operations globally. Moreover, as the company deals in a single product, it remains vulnerable to change in technology.

 

  • Exposure to intense competition from the unorganised market and low-priced imported toners: Low product differentiation and intense competition from the unorganised segment and cheaper imports from China and Malaysia, restrict the pricing power of players such as ITDL. Product saleability is also sensitive to import price parity and movement in foreign exchange rates. However, the levy of anti-dumping duty on black toner imports for five years, till August 2025, has benefited the domestic players.

Liquidity: Strong

The liquidity is supported by cash, bank balance, investments and cash equivalent of Rs 88 crore as on March 31, 2024. Expected net cash accrual of Rs 25-27 crore should suffice to cover incremental working capital requirement in absence of any debt obligation and capex. Cash credit limit of Rs 0.50 crore was not utilised during the 12 months through March 2024.

Outlook: Stable

ITDL should benefit from the strong financial risk profile supported by healthy accretion to reserve, nil debt, strong liquidity and limited capex requirements over the medium term

Rating sensitivity factors

Upward factors:

  • Healthy revenue growth resulting from higher-than-expected demand and diversification, while maintaining the operating margin
  • Steady net cash accrual above Rs 50 crore

 

Downward factors:

  • Muted revenue growth and operating margin sustaining below 15%, adversely affecting the cash accrual
  • Significant, debt-funded capex or any large dividend payout, straining the capital structure

About the Company

Established in 1990 by Chairman, Mr Sushil Jain, ITDL manufactures toners for photocopiers, laser printers, digital machines and multi-function printers, and caters to the replacement market under the Supremo brand. The company’s manufacturing unit in Rampur (Uttar Pradesh) had installed production capacity of 1,200 TPA. In 2008, ITDL formed a 51% subsidiary, ITDL Imagetec Ltd (Imagetec), with toner production capacity of 2,400 TPA in Sitarganj (Uttarakhand). Imagetec started commercial operations in April 2009.

 

In fiscal 2011, ITDL started catering to the international markets through its Rampur plant, while Imagetec catered to the domestic market through its Sitarganj plant. In 2017, ITDL amalgamated Imagetec and four other investment companies with itself, under the order (dated May 9, 2017) of the National Company Law Tribunal (NCLT), Allahabad, and under the order (dated July 26, 2017) of NCLT, New Delhi.

 

The plant capacity was increased by the addition of two more lines at Rampur to 2,400 TPA in fiscal 2023 and further to 3,000 TPA in August 2023, taking the total capacity to 5,400 TPA.

Key Financial Indicators

Particulars

Unit

2024

2023

Revenue

Rs crore

162

159

Profit after tax (PAT)

Rs crore

26

26

PAT margin

%

16.06

16.5

Adjusted gearing

Times

NA

NA

Interest coverage

Times

73.52

66.19

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 and are included (where applicable) in the 'Annexure - Details of Instrument' in this Rating Rationale.

CRISIL Ratings will disclose complexity level for all securities - including those that are yet to be placed - based on available information. The complexity level for instruments may be updated, where required, in the rating rationale published subsequent to the issuance of the instrument when details on such features are available.

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Annexure - Details of Instrument(s)

ISIN Name Of Instrument Date Of Allotment Coupon Rate (%) Maturity Date Issue Size (Rs. Crore) Complexity Levels Rating Outstanding with Outlook
NA Cash Credit NA NA NA 0.10 NA CRISIL A-/Stable
NA Letter of Credit NA NA NA 2.00 NA CRISIL A2+
NA Proposed Long Term Bank Loan Facility NA NA NA 37.90 NA Withdrawn
Annexure - Rating History for last 3 Years
  Current 2024 (History) 2023  2022  2021  Start of 2021
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Fund Based Facilities LT 38.0 CRISIL A-/Stable   -- 29-09-23 CRISIL A-/Stable 26-07-22 CRISIL BBB+/Positive 28-05-21 CRISIL BBB+/Stable CRISIL BBB+/Negative
Non-Fund Based Facilities ST 2.0 CRISIL A2+   -- 29-09-23 CRISIL A2+ 26-07-22 CRISIL A2+ 28-05-21 CRISIL A2+ CRISIL A2+
All amounts are in Rs.Cr.
Annexure - Details of Bank Lenders & Facilities
Facility Amount (Rs.Crore) Name of Lender Rating
Cash Credit 0.1 State Bank of India CRISIL A-/Stable
Letter of Credit 2 State Bank of India CRISIL A2+
Proposed Long Term Bank Loan Facility 37.9 Not Applicable Withdrawn
Criteria Details
Links to related criteria
CRISILs Approach to Financial Ratios
Rating criteria for manufaturing and service sector companies
CRISILs Bank Loan Ratings - process, scale and default recognition
CRISILs Criteria for rating short term debt

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