| Linc Limited | ||||||
| Rating outlook revised to 'Stable'; 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 revised its rating outlook on the long-term bank facilities of Linc Limited (Linc) to ‘Stable’ from ‘Positive’ and has reaffirmed the rating at ‘CRISIL A’; the short-term rating has been reaffirmed at ‘CRISIL A1’.
The outlook revision reflects the lower-than-expected growth in revenue driven by low sales of ‘Deli’ products, lower-than-expected exports, and delay in launch of premium products in the Pentonic range. Revenue grew just 5% on-year to Rs 508 crore in fiscal 2024 due to stiff competition in the writing instruments industry, and foreign exchange crisis and geopolitical unrest in Myanmar and Sudan constraining sales from ‘Deli’ and export sales, respectively. While exports improved in the second half of fiscal 2024, changes in marketing strategies for ‘Deli’, leading to a healthy and sustained growth in scale of operations, will be closely monitored. Furthermore, to counter intense competition, Linc has, over the years, launched mid-premium products under its Pentonic brand, driving up revenue from higher average selling price. Thus, overall scale strengthening the company’s market position over the medium term will remain a rating sensitivity factor.
The ratings continue to reflect the company’s established market position in the domestic pen industry, and healthy financial risk profile. These strengths are partially offset by Susceptibility of operating margin to fluctuations in raw material prices and exposure to intense competition. |
Analytical Approach CRISIL Ratings has combined the business and financial risk profiles of Linc, its joint venture, Morris Linc Pvt Ltd, and its subsidiary, Gelx Industries Ltd.
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:
Weaknesses:
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Liquidity: Strong Bank limit utilisation was nil for the 12 months through July 2024. In the absence of debt obligation, heathy net cash accrual aids working capital requirement. The current ratio was strong at 2.28 times as on March 31, 2024. Large networth and comfortable gearing boost financial flexibility. |
Outlook: Stable Linc will continue to benefit from its established market position, supported by strong brand equity. |
Rating sensitivity factors Upward factors:
Downward factors:
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About the Group Linc, established in 1994 by Mr S M Jalan, manufactures and trades in writing instruments and stationery items. Its units are in Falta and Serakole in West Bengal. The company got listed on the Bombay Stock Exchange in 1995. Mr Deepak Jalan manages the operations.
Morris Linc Private Limited, is a 50% joint venture with Morris Co Limited and was incorporated in June 2023 to manufacture anti-ink dry marker.
Gelx Industries Limited, is a 60% subsidiary of Linc, incorporated in October 2023 to manufacture pens for the market in Africa. |
Key Financial Indicators (combined and CRISIL Ratings-adjusted)
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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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