| TPL Plastech Limited | ||||||
| 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 reaffirmed its ‘CRISIL A+/Stable/CRISIL A1’ ratings on the bank facilities of TPL Plastech Limited (TPL).
Operating income grew by nearly 16% to Rs 313 crore, while operating margin was stable at 11.5% in fiscal 2024, aided by healthy demand from end-user industries and ramp up of the Dahej plant. Revenue is likely to grow at a moderate pace over the medium term, led by healthy demand and timely stabilisation of the Dahej plant.
The ratings continue to reflect the strong managerial and financial support that TPL receives from its parent, Time Technoplast Ltd (TTL), which holds 75% stake in the company; and has an established market position in the rigid industrial packaging segment. These strengths are partially offset by the average financial risk profile marked by modest networth and cash accrual, large working capital requirement, and susceptibility to fluctuations in polymer prices and foreign exchange (forex) rates. |
Analytical Approach CRISIL Ratings has applied its parent notch-up framework to factor in the support from TTL to TPL. |
Key Rating Drivers & Detailed Description Strengths: Strategic importance to TTL, and strong operational and management support from the parent Strong market position of TTL in the rigid industrial packaging segment enables TPL to purchase raw material in bulk, and benefit from favourable purchasing terms with suppliers. TPL shares a common treasury function with its parent and also receives managerial support from the latter. Being in the same business, TPL is of strategic interest to the parent and will thus, continue to receive strong support from TTL.
Established market position in the rigid industrial packaging segment The plastic-based industrial packaging industry has few organised players (including TPL, TTL, Balmer Lawrie) and some unorganised players. TPL has units at Silvassa (Dadra and Nagar Haveli),), Ratlam (Madhya Pradesh), Visakhapatnam (Andhra Pradesh), Bhuj (Gujarat) and Dahej (Gujarat); and has a combined installed capacity of 31,400 tonne per annum (tpa). TPL has completed its capex at Dahej and the unit has started contributing to revenue from fiscal 2024. It has also increased the capacity for packaging products, including intermediate bulk containers (IBC) under composite category which is value added product
Weaknesses: Susceptibility to volatility in polymer prices and forex rates TPL follows sound procurement and hedging strategies under the guidance of its parent. Key raw materials, such as high density polyethylene (HDPE) and polypropylene that are commonly known as polymers, form 75-80% of the operating income. The company does not enter into long-term, index-linked contracts with customers and hence, remains exposed to sharp fluctuations in polymer prices. However, TPL is able to pass on variations in polymer prices to its regular customers, through monthly price revisions, though with a lag of up to 30 days. Furthermore, as the company imports a part of its raw material requirement, it also faces fluctuation in forex rates.
Average financial risk profile Networth and gearing stood at Rs 130 crore and around 0.2 time, respectively, as on March 31, 2024. Gearing should remain at similar levels over the medium term, as capex is being prudently funded via internal accrual. Interest coverage ratio was moderate at 6.7 times for fiscal 2024, and is likely to improve with limited debt addition going forward. |
Liquidity: Adequate Expected cash accrual of Rs 20-25 crore per fiscal should comfortably meet yearly debt obligation of Rs 6-7 crore. Capex of Rs 10-12 crore in fiscal 2025 would be funded internally. Additional working capital requirements are likely to be met via internal accrual and bank debt. Cash and equivalent stood at Rs 4.5 crore as on March 31, 2024. Utilisation of fund-based bank limit of Rs 51 crore averaged 33% for the 12 months ended June 30, 2024. |
Outlook: Stable CRISIL Ratings believes TPL will continue to benefit from its established market position in the industrial packaging segment and synergies of operating in the same business as the parent. |
Rating Sensitivity Factors Upward Factors
Downward Factors
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About the Company TPL was incorporated in 1992, as Tainwala Polycontainers Ltd. In July 2006, the original promoters exited the business and TTL acquired 75% stake and renamed the company.
TPL manufactures HDPE drum containers with capacity of 20-250 litre, primarily used for bulk packaging of speciality chemicals, paints and inks, pharmaceutical products, and fast-moving consumer goods. It has facilities in Silvassa, Ratlam, Visakhapatnam, Bhuj and Dahej, with total capacity of 31,400 tpa. |
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 from Cash Credit to Letter of Credit/SBLC fully (up to Rs 5 Crore each for SBLC & LC ) ^Interchangeability from Fund Based to Non Fund based to the extent of 75% of Fund based limit i.e. Rs 21.375 crore $Includes sub-limit of Bank Guarantee amounting to Rs 5 crore and SBLC of Rs 20 crore @Includes sub-limit of SBLC amounting to Rs 5 crore #Emergency credit line guarantee scheme; long-term loan - guaranteed by National Credit Guarantee Trustee Company Ltd |
| 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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&Interchangeable from Cash Credit to Letter of Credit/SBLC fully (up to Rs 5 Crore each for SBLC & LC )
^Interchangeability from Fund Based to Non Fund based to the extent of 75% of Fund based limit i.e. Rs 21.375 crore
$Includes sub-limit of Bank Guarantee amounting to Rs 5 crore and SBLC of Rs 20 crore
@Includes sub-limit of SBLC amounting to Rs 5 crore
#Emergency credit line guarantee scheme; long-term loan - guaranteed by National Credit Guarantee Trustee Company Ltd
Criteria Details
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