By Prakash P

India Ratings and Research (Ind-Ra) has assigned Ram Ratna Wires Limited’s (RRWL) working capital facilities final rating as follows:

Instrument Type

Date of Issuance

Coupon Rate (%)

Maturity Date

Size of Issue (million)

Rating/Outlook

Rating Action

Fund-based limits* #

-

-

-

INR110

IND BBB+/Stable/IND A2

Assigned

* The final rating has been assigned following the receipt of the sanction letter by Ind-Ra
# Part of the INR323.5 million fund-/non-fund based working capital limits which were assigned provisional rating on 14 March 2019


For RRWL’s detailed rating rationale, please click here.

KEY RATING DRIVERS

Positive: Timely completion and commercialisation of its ongoing capex, resulting in an improvement in revenue and operating profitability, leading to net adjusted leverage reducing below 3.5x on a sustained basis, would be positive for the rating.

Negative: Any cost/time overruns to complete the ongoing capex and/or a further decline in its EBITDA margins and/or an elongation of its working capital cycle, resulting in net adjusted leverage rising above 4.5x on a sustained basis would be negative for the rating.  


COMPANY PROFILE

Incorporated in 1995, RRWL primarily manufactures copper winding wires. The company has three manufacturing units in Silvassa, Dadar & Nagar Haveli.

FINANCIAL SUMMARY

Particulars

FY18

FY17

Revenue (INR million)

10,273

8,008

EBITDA (INR million)

628

510

EBITDA margin (%)

6.1

6.4

Profit after tax

265

219

Gross interest coverage (x)

4.5

4.7

Net adjusted leverage (x)

3.4

2.7

Source: RRWL, Ind-Ra

 


RATING HISTORY

Instrument Type

Current Rating/Outlook

Historical Rating/Outlook

Rating Type

Rated Limits (million)

Rating/Outlook

14 March 2019

Issuer rating

Long-term

-

IND BBB+/Stable

IND BBB+/Stable

Term loan

Long-term

INR946.5

IND BBB+/Stable

IND BBB+/Stable

Fund-based limits

Long-term/Short-term

INR1,760

IND BBB+/Stable/IND A2

IND BBB+/Stable/IND A2

Non-fund-based limits

Short-term

INR60

IND A2

IND A2

Proposed working capital limits

Long-term/Short-term

INR213.5 (reduced from INR323.5)

Provisional IND BBB+/Stable/Provisional IND A2

Provisional IND BBB+/Stable/Provisional IND A2


COMPLEXITY LEVEL OF INSTRUMENTS

For details on the complexity level of the instruments, please visit https://www.indiaratings.co.in/complexity-indicators.

SOLICITATION DISCLOSURES

Additional information is available at www.indiaratings.co.in. The ratings above were solicited by, or on behalf of, the issuer, and therefore, India Ratings has been compensated for the provision of the ratings. 

Ratings are not a recommendation or suggestion, directly or indirectly, to you or any other person, to buy, sell, make or hold any investment, loan or security or to undertake any investment strategy with respect to any investment, loan or security or any issuer.

ABOUT INDIA RATINGS AND RESEARCH

About India Ratings and Research: India Ratings and Research (Ind-Ra) is India's most respected credit rating agency committed to providing India's credit markets accurate, timely and prospective credit opinions. Built on a foundation of independent thinking, rigorous analytics, and an open and balanced approach towards credit research, Ind-Ra has grown rapidly during the past decade, gaining significant market presence in India's fixed income market. 

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Applicable Criteria

Analyst Names

  • Primary Analyst

    Prakash P

    Analyst
    India Ratings and Research Pvt Ltd Harmony Square 3rd Floor, Door No. 48 & 50 Prakasam Street T Nagar Chennai 600 017
    044 43401700

    Media Relation

    Namita Sharma

    Manager – Corporate Communication
    +91 22 40356121