Rating Rationale
December 27, 2021 | Mumbai
Wonder Fibromats Limited
'CRISIL BBB- / Stable' assigned to Bank Debt
 
Rating Action
Total Bank Loan Facilities RatedRs.15 Crore
Long Term RatingCRISIL BBB-/Stable (Assigned)
1 crore = 10 million
Refer to Annexure for Details of Instruments & Bank Facilities

Detailed Rationale

CRISIL Ratings has assigned its CRISIL BBB-/Stable ratings to the bank facilities of Wonder Fibromats Limited (WFL).

 

The rating reflects WFL's promoters’ extensive experience in the industry, established relationships with prominent customers and healthy financial profile. These strengths are partially offset by its intense competition in the consumer durables sector in India, working capital intensive operations and limited product diversity constrain the scale and sustainability.

Key Rating Drivers & Detailed Description

Strengths:

  • Established presence in the ceiling and exhaust fans segment, backed by extensive experience of promoters: The company's promoter, Mr. Harsh Anand and Mr. Yogesh Sahni has over four decades of industry experience and is actively engaged in the company’s operations. Due to the promoters’ extensive industry experience, and long-standing business association with reputed clients, the company receives repeat orders and has become one of the largest players in this segment.

 

  • Healthy financial profile: Fin risk profile is moderately healthy marked by networth of 47 Cr with gearing of 0.51 times and TOL/TNW of 3.46 times as on March 31, 2021 mainly due to year end creditors as high velocity of sales in Q4. Debt protection metrics are marked by interest coverage of net cash accrual/adjusted debt of 6.85 times and 0.34 time, respectively. WFL debt protection measures are expected to remain at similar level over medium term.

 

Weaknesses:

  • Intense competition in the consumer durables sector in India: The Indian consumer durable market is intensely competitive. With the entry of several large players over the past few years, there has been significant price competition, which has adversely affected the operating profitability of most players. Additionally, raw material price fluctuations accentuate the pressure on profitability because of the players. Therefore, profitability will remain a challenge for most players in the industry on account of intense competition and consolidation witnessed across large consumer players in the domestic market.

 

  • Working capital intensive operations: Demand for ceiling fans are seasonal because of which the first half profitability is lower, also it has high working capital requirement in last quarter due to high velocity of salesGross current assets were at 109-183 days over the three fiscals ended March 31, 2021. Its intensive working capital management is reflected in its gross current assets (GCA) of 183 days as on March 31, 2021. Its's large working capital requirements arise from its high debtor and inventory levels. It is required to extend long credit period. Furthermore, due to its business need, it holds large work in process & inventory.

Liquidity: Adequate

Cash accrual are expected to be over Rs 8.2-10.5 Cr which are sufficient against term debt obligation of Rs 0.42 Cr over the medium term. In addition, it will be act as cushion to the liquidity of the company. Bank limit utilisation is high at around 94.16 percent for the past twelve months ended November 2021.

 

Current ratio is moderately low at 1.09 times on March 31, 2021. Low gearing and moderate net worth support its financial flexibility and provides the financial cushion available in case of any adverse conditions or downturn in the business.

Outlook: Stable

CRISIL Ratings believes WFL will continue to benefit from the extensive experience of its promoter, and established relationships with clients.

Rating Sensitivity factors

Upward factors:

  • Sustained improvement in scale of operation by 20% and sustenance of operating margin, leading to higher cash accruals
  • Improvement in working capital cycle leading to improvement in capital structure with TOL/TNW less than 2.6 times

 

Downward factors:

  • Decline in its  in scale of operation by 20% and operating margin, leading to lower cash accruals
  • Large debt-funded capital expenditure and stretch in working capital cycle leading to deterioration in capital structure with TOL/TNW more than 3.7 times

About the Company

WFL is engaged in the manufacturing of ceiling fans, exhaust, pedestal and brushless DC (BLDC) fans. WFL was incorporated in 2014 as private limited and later in June 2018 was incorporated as limited company. It was listed in NSE SME platform in August 2019.

 

WFL has total installed capacity to manufacture 7.85 Lakh fans per month. It has one manufacturing plant in Roorkee, Haridwar, Uttarakhand and recently set up a new manufacturing facility in Medak, Hyderabad, Telangana, operational from December 2020.

 

WFL if promoted by Mr. Harsh Anand's family and Mr. Yogesh Sahni's family.

Key Financial Indicators

As on / for the period ended March 31

 

2021

2020

Operating income

Rs crore

58.07

48.71

Reported profit after tax

Rs crore

3.58

3.47

PAT margins

%

6.21

7.18

Adjusted Debt/Adjusted Net worth

Times

1.14

1.23

Interest coverage

Times

3.56

3.78

 

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)

ISIN Name of Instrument Date of Allotment Coupon Rate (%) Maturity Date Issue Size (Rs crore) Complexity level Rating Assigned with Outlook
NA Cash Credit NA NA NA 15 NA CRISIL BBB-/Stable

 

Annexure - Rating History for last 3 Years
  Current 2021 (History) 2020  2019  2018  Start of 2018
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Fund Based Facilities LT 15.0 CRISIL BBB-/Stable   --   -- 09-04-19 Withdrawn 17-04-18 CRISIL BB+/Stable CRISIL BB/Stable
      --   --   --   -- 31-03-18 CRISIL BB+/Stable --
All amounts are in Rs.Cr.
Annexure - Details of Bank Lenders & Facilities
Facility Amount (Rs.Crore) Name of Lender Rating
Cash Credit 15 HDFC Bank Limited CRISIL BBB-/Stable

This Annexure has been updated on 27-Dec-2021 in line with the lender-wise facility details as on 24-Dec-2021 received from the rated entity.

 

 

Criteria Details
Links to related criteria
CRISILs Approach to Financial Ratios
Rating criteria for manufaturing and service sector companies
CRISILs Bank Loan Ratings - process, scale and default recognition
Rating Criteria for Consumer Durable Industry

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