| Rajshree Polypack Limited | ||||
| Rating Reaffirmed | ||||
| Rating Action | ||||
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| 1 crore = 10 million | ||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed rationale CRISIL Ratings has reaffirmed its 'CRISIL BBB+/Stable' rating on the bank facilities of Rajshree Polypack Limited (RPL).
The rating continues to reflect the extensive experience of the promoters in the plastic packaging industry, diversified product profile catering to reputed clientele across multiple industries and the strong financial risk profile of RPL. These strengths are partially offset by increasing yet average scale of operations amid intense competition and exposure to volatility in input cost. |
Key rating drivers and detailed description Strengths:
The two-decade-long experience of the promoters, their strong understanding of the local market dynamics and healthy relationships with suppliers and customers will continue to support the business. The clientele comprises reputed players, such as Nourishco Beverages Ltd, Huhtamaki PPL Ltd and Ferrero Inc. The company has a diversified clientele, with the top 10 customers contributing ~49% to the revenue in fiscal 2022.This has resulted in increase in revenue over the years to Rs 198 crore in fiscal 2022 compared with Rs 125 crore in fiscal 2019.
RPL has a diversified product profile that includes plastic rigid sheets, various types of packaging products and varied sizes of containers, cups and bottles made of 100% food grade materials. The products find application in various end-user industries, such as fast-moving consumer goods and food and beverages. Moreover, it has presence across India as well as the European market and exports contribute around 15% to the total sales A diversified product profile, reputed clientele and wide geographical presence de-risk the business to a large extent.
Net worth was strong at Rs 114 crore and gearing and total outside liabilities to adjusted net worth ratio low at 0.33 time and 0.67 time, respectively, as on March 31, 2022. Debt protection metrics were adequate, indicated by interest coverage and net cash accrual to adjusted debt ratios of 8.7 times and 0.54 time, respectively, in fiscal 2022. The financial risk profile is expected to remain stable despite debt-funded capital expenditure (capex) over the medium term.
Weaknesses:
Scale of operations is average, as indicated by revenue of Rs 198 crore in fiscal 2022. The plastic packaging industry is highly fragmented, and the consequent intense competition from various players may continue to constrain scalability, pricing power and profitability. Company is exposed to regulatory risks which can impact the company’s performance .
Major raw materials include high-density polyethylene, low-density polyethylene and polypropylene for manufacturing industrial plastics, which are crude oil derivatives, and hence their prices witness fluctuations. Since raw material prices account for bulk of the total production cost, even a slight variation in the prices may drastically impact profitability. Although raw material costs are revised periodically, operating margin will remain susceptible to sharp fluctuations in input cost. |
Liquidity: Adequate Cash accrual, expected at Rs 24-32 crore per annum, will sufficiently cover yearly debt obligation of Rs 4-4.5 crore over the medium term. Bank limit was utilised at 62% on average over the 12 months through March 2022. Cash and bank balance stood at Rs 1.39 crore as on March 31, 2022. |
Outlook: Stable RPL will continue to benefit from healthy revenue visibility backed by healthy relationship with regular customers and the promoters’ extensive experience. |
Rating sensitivity factors Upward factors
Downward factors
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About the company RPL, originally established as a partnership firm in 2003, was reconstituted as a limited company in 2011. It manufactures plastic packaging products, such as rigid plastic sheets and thermoformed packaging containers, cups, bowls punnets, lids and trays for food packaging. It has three manufacturing units at Daman in Daman and Diu. Mr Ramswaroop Radheshyam Thard and Mr Naresh Thard are the promoters of the company. It is listed on the National Stock Exchange. |
Key financial indicators
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Status of non-cooperation with previous CRA: RPL has not cooperated with Credit Analysis & Research Ltd, which has classified it as issuer not cooperative vide release dated March 20, 2020. The reason provided by Credit Analysis & Research Ltd.is non-furnishing of information for monitoring of ratings. |
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 - 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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