| Rishi Techtex Limited | ||||||
| Ratings 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/CRISIL A3’ ratings on the bank facilities of Rishi Techtex Limited (RTL).
The ratings continue to reflect the company’s longstanding presence and the promoter’s extensive experience in the technical textile industry, and above-average financial risk profile driven by comfortable debt protection metrics and healthy capital structure. These strengths are partially offset by modest scale of operations amid intense competition and large working capital requirement. |
Key Rating Drivers & Detailed Description Strengths: Longstanding presence and promoter’s extensive experience in the technical textile industry: RTL has been manufacturing woven sacks and technical textile products such as shade nets for over two decades. This, along with the promoter’s experience of over three decades has helped to develop strong relationships with customers and suppliers.
Above-average financial risk profile: Gearing and total outside liabilities to adjusted networth ratios were healthy at 0.80 time and 1.3 times, respectively, as on March 31, 2021, on account of limited capital expenditure (capex) and modest incremental working capital requirement. The company is carrying out capital expenditure of around Rs 5 crore funded by term debt of Rs 3.6 crore; it has also availed Rs 1.5 cror eemergency covid loan during current fiscal. Despite the incremental debt, leverage levels and debt protection metrics are likely to be sustained over the medium term backed by moderate accruals and scheduled repayments. Debt protection metrics were comfortable, as reflected in interest coverage ratio of 2 times and net cash accrual to total debt ratio of 0.2 time in fiscal 2021. Revenue and profitability is expected improve over medium term, strengthening debt protection metrics. Overall financial risk profile is expected to be sustained over medium term.
Weaknesses: Modest scale of operations: Revenue is expected to remain modest over the medium term (turnover was Rs 81.1 crore in fiscal 2021) because of intense competition in the woven sacks segment, which accounts for 50% of revenue. Although the technical textile industry is less competitive, demand growth and scalability is gradual, which constrains revenue growth.
Large working capital requirement: Gross current assets were high at 155-177 days during the three fiscals through 2021 (177 days as on March 31, 2021) driven by large inventory of over 125 days and moderate receivables of 47 days. Though inventory is sizeable, price escalation clauses mitigate the price risk. Inventory levels are also expected to moderate to around 90-100 days over the medium term. The working capital requirement is likely to remain large over the medium term. |
Liquidity: Adequate Expected cash accrual of Rs 3.8-7.2 crore per fiscal over the medium term should comfortably cover yearly debt obligation of Rs 2.6-3.1 crore per fiscal. Expected capex of around Rs 5 crore over the medium term will be adequately funded through Rs 3.6 crore of term debt. Fund-based limit of Rs 17 crore was utilized moderately 78.5% on average over the 12 months through January 2021. The company has availed emergency Covid line of Rs 4.9 crore, which also supports liquidity. Current ratio was comfortable at 1.5 times as on March 31, 2021. Support from promoters are available in case of any exigencies |
Outlook: Stable CRISIL Ratings believes RTL will continue to benefit from the extensive experience of the promoter and healthy relationships with clients. |
Rating Sensitivity Factors Upward factor:
Downward factors:
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About the Company RTL, formerly known as Rishi Packers Ltd, was incorporated in 1984 by Mr Harshad Patel. The company manufactures woven sacks and technical textile products such as shade nets. The facility is located in Daman. The company is listed on the Bombay Stock Exchange. |
Key Financial Indicators
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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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This Annexure has been updated on 28-Feb-2022 in line with the lender-wise facility details as on 02-Aug-2021 received from the rated entity
Criteria Details
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