Rating Rationale

Brickwork Ratings upgrades rating to BWR A- & BWR A2+ for the Bank
loan facilities aggregating 222 Cr of Kutch chemical Industries Limited
(KCIL).
Brickwork Ratings upgrades the Ratings1 for the Bank Loan Facilities of Kutch Chemical
Industries Limited (KCIL or the Company) as under
Facility
Fund Based
Term Loan
Cash Credit
Standby limit
under exporter
gold card
Non Fund Based
Letter of Credit
Bank Guarantee
Total

Current
Limit
( Crs)

Previous
Limit
( Crs)

85.00

9.72
85.00

10.00

NA

125.00
2.00

95.00
2.00

222.00

191.72

Tenure

Current
Rating^

Previous
Rating^

Long
Term

BWR A(Pronounced BWR

A Minus)

BWR BBB+
(Pronounced BWR
Triple B Plus)

Outlook: Stable

Outlook: Stable

BWR A2+
(Pronounced BWR
A Two Plus)

BWR A2
(Pronounced BWR
A Two)

Short
Term

INR (Two Hundred Twenty Two Crores Only)

The ratings revision is on account of consistency in maintaining the financial profile marked by
revenue growth, satisfactory net worth and gearing levels.
The ratings continues to factor in established track record of the Company, experienced
management, strong product portfolio, established relationship with clientele and above average
financial profile marked by strong net worth.
The ratings continue to remain constrained on account of volatility in raw material prices and
competition from unorganized players.
Background:
KCIL was incorporated in 2002. It is promoted by Goyal Family. The Company is in the business
of manufacturing Benzene Derivatives, Dye Intermediates and Sulphuric acid. KCIL has a
manufacturing unit in Gandhidham, Gujarat with installed capacity of 428000pa. The
manufactured products are consumed by various entities operating in Pharmaceutical, Agro and
Dye manufacturing industries.
1

Please refer to www.brickworkratings.com for definition of the Ratings

www.brickworkratings.com

9 May 2016

The Company has established strong ties with its customers and is able to generate repeat orders
from them. KCIL markets its products domestically through its offices located in Mumbai, Delhi,
Ahmedabad and Vadodara. KCILs major raw materials are Nitric Acid, Benzene, 2EH, Sulphur,
EO, Accetic Acid, Aniline and chlorine. Most of the key raw materials are procured from
domestic sources. However, the company resorts to imports when the prices of these raw
materials are favorable in international market. To meet the power requirements of the
factories, the company has installed two wind mill of 1.5MW and 1.25MW. The power so
generated is being actively consumed and set off against GEB (Gujarat Electricity Board) units
consumed by KCIL.
Management:
The Companys Directors are Mr. Pirag Chand Goyal, Mr. Shivlal Goyal, Mr.Kailash Goyal, Mr
Jayprakash Goyal and Ms Kanta Goyal. All the directors have vast experience in the business of
manufacturing dye intermediate products. The Company is also managed by thorough
professionals who have good experience in their respective domains.
Financial Performance:
The Companys net sales stood at 725.90Cr in FY15 compared to 718.52Cr. Profit after Tax
stood at 20.97Cr in FY15 with net profit margin 2.89%. The tangible net worth of the Company
has seen an increase from 151.19Cr in FY14 to 172.20Cr in FY15, mainly due to retention of
profits. Company currently do not have any long term debt.Coverage ratio continues to remain
comfortable with Interest service coverage at 3.83x and debt service coverage ratio at 2.11x for
FY15. 9MFY16 (provisional): Net Sales stood at 557Cr with PAT at 17.54Cr.
Rating Outlook:
The outlook is expected to remain stable for the next one year. The ability of the Company to
increase profitability margins by entering into high value added products, maintain capital
structure and management of working capital cycle are the key rating sensitivities.
Analyst Contact

Relationship Contact

analyst@brickworkratings.com425-24

bd@brickworkratings.com

Phone

Media Contact

1-860-425-2742

media@brickworkratings.com

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.

www.brickworkratings.com

9 May 2016