Rating Rationale
Brickwork Ratings revises ratings of Forace Polymers Pvt. Ltd. for long term bank
loan facilities of ₹ 44.17 Cr to ‘BWR BBB-’ and for short term bank loan facilities of
₹ 30.00 Cr to ‘BWR A3’
Brickwork Ratings revises Ratings1 of Forace Polymers Pvt. Ltd for long term bank loan
facilities to ‘BWR BBB-’ and for short term bank loan facilities to ‘BWR A3’ as follows:
Facility
(Fund Based)
CC
(Fund Based)
Term Loan
(Fund Based)
FOBNLC/FOUBN
LC/FOBP/FOUBP
(Non -Fund Based)
BG
(Non -Fund
Based)
ILC/FLC
Total
Previous
(₹ Cr)
Present
(₹ Cr)
32.50
32.50
11.85
4.17
7.50
7.50
1.00
1.00
Tenure
Rating
BWR BBB(Pronounced BWR Triple
B Minus)
(Outlook-Stable)
Long Term
Short Term
29.00
81.85
29.00
74.17
Rating
History
BWR BB+
(Pronounced BWR
Double B Plus)
(Outlook-Stable)
(Nov 2013)
BWR A4
BWR A3
(Pronounced BWR A
(Pronounced BWR A Three)
Four)
(Nov 2013)
(INR Seventy Four Crores and Seventeen Lakhs only)
Banker: Punjab National Bank
BWR has principally relied upon the audited financial results up to FY14, provisional unaudited
key financial figures for 9MFY15, publicly available information and information/clarification
provided by the Company management.
The rating revision factors sustained growth in scale of operations, better capacity utilization
and stable operating performance. The rating also takes note of the operating and industry
scenario. The rating continues to factor experience of promoter and diversified customer base.
However, the rating is constrained by, thin profitability margin, high level of receivables, the
moderate leverage position of the company, proposed capex activities related to backward
integration alongwith associated increase in debt levels and interest cost, raw material price
volatility, and intense competition from domestic and foreign players.
Background:
Forace Polymers Pvt. Ltd. (FPPL) was established in 1980 by the late Mr. S. K. Garg. The
company is engaged in the production of phenolic resins, catalysts and hardeners having
applications in Foundry, Refractory, Abrasives, Friction and Rubber Industry. FPPL is now
being managed by Mr. Vikas Garg, son of the late Mr. S. K. Garg. Mr. Vikas Garg is the
Managing Director of the Company. Mr. S. C Gupta, Mrs. Sonia Garg, Mrs. Rashmi Gupta and
Mr. Dipak Kumar Ghosh are the other Directors of the Company.
1
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1
27 Jan 2015
Operations:
FPPL manufactures foundry binders, coatings & foundry chemicals. Besides, FPPL also
produces resins having applications in refractory, abrasives, friction and rubber industry. The
Company has manufacturing plant on Haridwar-Delhi highway, Haridwar (Uttarakhand) India,
with its Sales Offices-Cum-Service Centers spread all over India, positioned in most of the major
cities, to offer effective services. Currently the company has overall installed capacity of 35000
MT with capacity utilization of around 76% in the 9MFY15 compared to around 69% for FY14.
In FY14, the company had done the backward integration of Paratoluene Sulfonic Acid (PTSA).
The company is now going for in-house manufacturing of Formaldehyde.
The company’s clientele include reputed Public and Private sector companies. It also exports to
UAE and South Africa, and in FY14, about 12.21% of their sales was by way of exports.
Financial Performance:
Net sales of the Company increased from ₹ 191.88 Crores in FY13 to ₹ 224.13 Crores in FY14.
The PAT for FY14 stood at ₹ 3.56 Crores compared to ₹ 3.18 Crores in FY13. The Company had a
tangible net worth of ₹ 32.01 Crores as on 31.3.14. The total borrowings increased from ₹ 45.21
Crores in FY13 to ₹ 56.81 Crores in FY14, a substantial portion of which related to working
capital borrowings. As on March 31st 2014, trade receivables were substantially high at ₹ 83.54
Crores.
As per provisional 9MFY15 unaudited key financial figures the net sales of the Company was
around ₹ 189.50 Crores with a PAT of around ₹ 3.04 Crores.
Rating Outlook:
The outlook of the company is expected to be stable over the current year. The successful
implementation of the capex and company’s ability to benefit from the same via continued
turnover growth, reduction of costs as well as improving margins will be important for the
company’s credit profile. Going forward, maintaining a favorable capital structure, reduction of
receivables, significant improvement in the profitability margins and revenue levels especially
exports and continued efficient utilization of working capital will be the key rating sensitivities.
Analyst Contact
Relationship Contact
[email protected]
[email protected]
Phone
Media Contact
1-860-425-2742
[email protected]
Disclaimer: Brickwork Ratings (BWR) has assigned the rating based on the information obtained from the issuer and other reliable sources,
which are deemed to be accurate. BWR has taken considerable steps to avoid any data distortion; however, it does not examine the precision or
completeness of the information obtained. And hence, the information in this report is presented “as is” without any express or implied warranty
of any kind. BWR does not make any representation in respect to the truth or accuracy of any such information. The rating assigned by BWR
should be treated as an opinion rather than a recommendation to buy, sell or hold the rated instrument and BWR shall not be liable for any losses
incurred by users from any use of this report or its contents. BWR has the right to change, suspend or withdraw the ratings at any time for any
reasons.
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2
27 Jan 2015