| Standard Glass Lining Technology Limited | ||||||
| Rating outlook revised to 'Positive'; 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 outlook on the long-term bank facilities of Standard Glass Lining Technology Ltd (SGLTL; a part of the Standard Glass group) to ‘Positive’ from ‘Stable’ while reaffirming the rating at ‘CRISIL A-’. Further, CRISIL Ratings has reaffirmed its ‘CRISIL A2+’ rating on the short-term bank facilities of the company.
The revision in outlook factors the substantial improvement in the group’s financial and liquidity risk profiles along with steady growth in business performance. Operating income is expected to grow 15-20% in fiscal 2025 to around Rs 625-650 crore while the margin may remain stable at around 17-18%, supported by higher export revenue. Order book of Rs 260 crore provides revenue visibility for fiscal 2025; geographical expansion into new territories with tie-ups and strategic collaborations, addition of new customers and launch of new products should continue to support revenue growth going forward. The working capital requirement is also likely to be efficiently managed with minimal reliance on external debt.
The outlook revision also factors the strengthening of financial risk profile and liquidity due to equity infusion of over Rs167 Crores through Private placement in the third quarter of fiscal 2024. Gearing and total outside liabilities to tangible networth (TOL/TNW) ratio were comfortable at 0.28 time and 0.63 time, respectively, as on March 31, 2024 (improved from 0.39 time and 1.23 times a year ago). In the absence of any major capex and large ticket acquisitions, the group is likely to maintain a surplus liquidity of over Rs.120 crore over the medium term. SGLT also filed a draft red herring prospectus (DRHP) in July 2024 and is planning to come out with its Initial Public Offering (IPO) to raise about Rs 250 crore in fiscal 2025, this should further strengthen the financial risk profile as a sizeable part of the funds would be used for reduction of debt. Impact of the equity infusion on the financial risk profile of the company, sustenance of revenue growth and profitability would be monitorable.
The ratings also reflect the group's established market position, supported by the extensive experience of its promoters in the industry, improving financial risk profile and reputed clientele. These strengths are partially offset by large working capital requirement, exposure to intense competition and exposure to cyclicality in demand from the key end-user industries. |
Analytical Approach CRISIL Rating has combined the business and financial risk profiles of SGLTL, S2 Engineering Industry Pvt Ltd (SEIPL), Standard Flora Pvt Ltd (SFPL) and CPK Engineers Equipment Pvt Ltd (CEEPL).That is because all these entities, collectively referred to as the Standard Glass group, operate in the same line of business, with a common management team and significant operational and financial linkages.
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 Liquidity should remain supported by the ample surplus available in cash accrual and bank lines. Bank limit utilisation was around 54% for the 12 months through August 2024. Cash accrual are expected to be over Rs 82-95crore which are sufficient against minimal term debt obligation over the medium term. Current ratio stood healthy at 2.31 times and cash and bank balance at around Rs 128 crore as on March 31, 2024. Low gearing and moderate networth also aid financial flexibility |
Outlook: Positive The Standard group will continue to benefit from the strong operating performance and healthy cash generation from business |
Rating sensitivity factors Upward factors
Downward factors
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About the Group Incorporated in 2012, SGLTL manufactures glass-lined reactors, receivers and heat exchangers. The company has two facilities in Hyderabad with capacity to manufacture 150-160 vessels per month, ranging from 50 litre to 60,000 litre.
SEIPL was incorporated in September 2021. It is a wholly owned subsidiary of SGLTL. Company is set to manufacture stainless steel and nickel alloy process equipment such as dryers, filters, reactors, vessels, vacuum pumps, laboratory equipment, etc. It has manufacturing facility located in Hyderabad- Telangana.
SFPL is engaged in the manufacturing of PTFE coated lines and valves. SGLTL holds 51% stake in SFPL.
CEEPL was incorporated in January 2024 and focuses on manufacturing and selling of stainless steel and nickel/Alloy steel reactors, filters, dryers and vessels, storage tanks for pharmaceutical industries.
The group is promoted and managed by Mr K Nageswara Rao, Mr K Rama Krishna and Mrs. K Krishna Veni. |
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)
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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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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* - Issuer did not cooperate; based on best-available information
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| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||||||||||||||||||||||
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Criteria Details
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