| Sud-Chemie India Private Limited | ||||||
| Ratings reaffirmed at 'CRISIL AA/Stable/CRISIL A1+' | ||||||
| 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 reaffirmed its ‘CRISIL AA/Stable/CRISIL A1+’ ratings on the bank facilities of Sud-Chemie India Private Limited (SCIPL).
SCIPL recorded revenues of Rs. 1724 crore in fiscal 2022, a healthy year on year growth of 20% supported by healthy offtake in catalyst exports and domestic catalytic converters. Catalyst exports grew ~32% year on year albeit on a lower base, as the exports to group companies which had been impacted during the pandemic resumed normalcy, while the catalytic converter segment grew 12% year on year on the back of garnering market share from competitors in the domestic market. Revenue is expected to grow at 4-5% over the medium term driven by capacity expansions in key end-user industries like Fertiliser manufacturers, Refinery and Sponge Iron which would drive domestic catalyst sales. Operating margin for fiscal 2022 stood healthy at 23%. In-spite of raw material price inflation, it is expected to be maintained at 21-23 % with SCIPL increasing its focus on high margin catalyst sales over lower margin catalytic converter sales going forward.
Financial risk profile expected to remain strong with healthy networth of Rs. 1099 crore, nil debt and healthy liquid surplus estimated around Rs 379 crore as of March 31, 2022. Healthy internal accruals estimated at Rs 180-200 crore each fiscal, liquid surplus and unutilised bank lines are more than sufficient to support incremental working capital requirements and capex over the medium term.
The ratings continue to reflect the company’s established position in the catalyst segment, strong research and development (R&D) and new catalyst development in India. The ratings also factors in the company's diversified customer profile and comfortable financial risk profile. These rating strengths are partially offset by the company’s moderate working capital intensive operations and its susceptibility to decline in demand from end-user industries. |
Analytical Approach For arriving at its ratings, CRISIL Ratings has considered the standalone business and financial risk profile of SCIPL. |
Key Rating Drivers & Detailed Description Strengths:
Weaknesses:
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Liquidity: Strong Liquidity is strong supported inter-alia by steady profit accruals, nil debt and available drawing power. The capex plans for the medium term along with incremental working capital requirement are expected to be funded out of internal accrual. SCIPL has a cash surplus estimated at Rs 379 crore as of March 31, 2022. Additionally, cash accrual in the range of Rs 180-200 crore and unutilized fund based bank lines of Rs 57 crore support liquidity which is more than enough to fund incremental working capital requirements and moderate capex plans of Rs 80 crore for fiscal 2023. |
Outlook: Stable CRISIL Ratings believes SCIPL’s business risk profile will continue to benefit from its strong product offerings, R&D capabilities, and diversified market presence. The financial risk profile should remain strong because of steady cash accrual, nil debt, and healthy liquidity. |
Rating Sensitivity factors Upward factors
Downward factors
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About the Company SCIPL was incorporated in 1969 as Catalysts and Chemicals India (West Asia) Pvt Ltd, with its registered office in Kochi, Kerala. It was renamed Sud-Chemie India Ltd in 1999, when it became a 50:50 joint venture (JV) of Sud-Chemie AG, Germany (SCAG) and the Lalljee Group of India as its 50% JV partner. It was reconstituted as a private limited company and got its present name in 2001. In September 2012, Clariant Germany became a 50% JV partner of SCIPL, pursuant to SCAG’s merger with Clariant Germany in June 2012, while the Lalljee Group continues as 50% JV partner. SCIPL manufactures catalysts used in the fertiliser, petrochemical, refinery, and sponge iron industries. It also manufactures catalytic converters used by the automotive industry. |
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)
*Interchangeable with bank guarantee limit **Interchangeable with letter of credit limit up to Rs 25.0 crore #fully interchangeable with fund based limits |
| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | |||
| Facility | Amount (Rs.Crore) | Name of Lender | Rating |
| Bank Guarantee& | 75 | State Bank of India | CRISIL A1+ |
| Bank Guarantee | 38 | The Federal Bank Limited | CRISIL A1+ |
| Cash Credit^ | 20 | HDFC Bank Limited | CRISIL AA/Stable |
| Cash Credit | 28 | State Bank of India | CRISIL AA/Stable |
| Cash Credit^ | 9 | The Federal Bank Limited | CRISIL AA/Stable |
| Foreign Exchange Forward | 5.38 | State Bank of India | CRISIL A1+ |
| Foreign Exchange Forward | 20 | The Federal Bank Limited | CRISIL A1+ |
| Proposed Non Fund based limits$ | 24.62 | Not Applicable | CRISIL AA/Stable |
Criteria Details
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