Bedmutha Industries : Credit Rating

Date: 22/05/2022
To	To
Department of Corporate Services,	Listing Department,
BSE Limited	National Stock Exchange of India Limited
PhirojJeejibhoy Towers, Dalal Street,	C‐1, G‐Block, Bandra‐Kurla Complex
Mumbai - 400 001	Bandra, (E), Mumbai - 400 0051
Dear Sir/ Madam,

Sub: Credit Rating.

Ref: Announcement pursuant to Regulation 30 and other applicable provisions, if any, of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Scrip Code: 533270; Scrip Symbol: BEDMUTHA

With reference to the captioned subject, would like to inform you that INFOMERICS Valuation and Rating Private Limited, a Reserve Bank of India (RBI) accredited rating agency, released the credit ratings on its web portal for both long‐term and short term debts of the Company vide its press release on May 20, 2022.

We have enclosed the Press Release dated May 20, 2022 for your information.

Following are the details of ratings:

Instrument /	Amount (Rs. Crore)		Ratings	Rating Action	Complexity
	Facility								Indicator
Long	Term	Bank	185.78	IVR	BBB‐	/	Stable	Assigned	Simple
Facilities			Outlook [IVR Triple
				B	Minus	with
				Stable Outlook
Short	Term	Bank	73.51	IVR	A3	[IVR A	Assigned	Simple
Facilities			Three]
Total			259.29

Kindly take the same on your records.

The above information and press release will also be available in our web portal i.e. www.bedmutha.com.

Thanking You,

Encl.: Press Release dated May 20, 2022.

Bedmutha Industries Limited

May 20, 2022

Ratings

Instrument

/

Amount

Ratings

Rating

Complexity

Facility

(Rs. Crore)

Action

Indicator

IVR BBB- / Stable

Long Term

185.78

Outlook

Assigned

Simple

Bank Facilities

[IVR Triple B Minus with

Stable Outlook]

Short Term

73.51

IVR A3

Assigned

Simple

Bank Facilities

[IVR A Three]

259.29

(Rupees Two

Total

Hundred Fifty

Nine Crore and

Twenty Nine

Lakhs Only)

Details of Facilities are in Annexure 1

Detailed Rationale

The rating assigned to the bank facilities of Bedmutha Industries Limited (BIL) derived strength from experienced team of management with over four decades of experience and execution capabilities in the wire manufacturing industry, established market position supported by diversified product, end user industries and reputed customer portfolio and low customer concentration risk, healthy profitability supported by subsidy receipts from Government of Maharashtra, adequate capacity available to ramp up over the medium term leading to moderate capex requirement and moderate financial profile with above average debt protection metrics; financial flexibility arising from demonstrated support from promoter and strategic investors. The ratings however remained constrained by susceptibility to fluctuations in commodity prices to the extent of raw material inventory holding; overall low susceptibility of revenue and margins to fluctuations in steel and copper prices, working capital intensive nature of operations, competition from organized and unorganized segment though established brand provides comfort.

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Key Rating Sensitivities:

Upward Factors

• Significant growth in scale of business with improvement in profitability metrics thereby leading to overall improvement in cash accruals as envisaged
• Improvement in the capital structure along with improvement in debt service parameters

Downward Factors

• Larger-than-expecteddebt-funded capex, leading to deterioration in the financial profile, especially liquidity, gearing and debt coverage metrics
• Stretch in the working capital cycle leading to deterioration in liquidity

List of Key Rating Drivers with Detailed Description

Key Rating Strengths

• Experienced team of management with over four decades of experience and execution capabilities in the wire manufacturing industry
  Bedmutha Industries Limited (BIL) is a part of Bedmutha Group, spearheaded by Mr. K. R. Bedmutha and supported by Mr. Vijay and Ajay Bedmutha with diversified business interest in steel wire & copper sector, technical consultancy, chemical, agriculture, power and infrastructure sector. The promoters have over 4 decades of experience with strong technical and marketing expertise in wire drawing industry. The group is supported by team of professionals.
• Established market position supported by diversified product, end user industries and reputed customer portfolio and low customer concentration risk
  The company has two divisions steel and copper wire division. BIL has pan India presence with significant presence in western and southern Indian states and has a well- entrenched presence on the back of large manufacturing capacities, established brand and long-standing relationship with customers. It has a wide customer base including traders and manufacturers across different industries like engineering and infrastructure, auto components, agriculture, household segment and so on. Out of total sales of BIL,

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Top 5 customers contribute to ~20% of sales in 9MFY2022. Out of total raw material procured by BIL, Top 5 suppliers contribute to ~50% of raw material purchased in 9MFY2022.

• Healthy profitability supported by subsidy receipts from Government of Maharashtra
  The operating margin remained healthy in the range of 5.16% to 7.37% during the past 3 years ended as on FY21, however same has improved and stood at 10.32% during 9MFY2022. Net cash accruals in 9MFY22 remained positive at INR 37.19 crore. The company profitability remains supported by subsidy from Government of Maharashtra in the form of GST refund. The subsidy is expected to remain in force till FY2025, thereby leading to healthy operating margins. Healthy profitability backed by subsidy receivable is expected to generate enough cash accruals to repay debt obligations.
• Adequate capacity available to ramp up over the medium term leading to moderate capex requirement
  BIL has current installed capacity of 86,400 MTPA for its steel division and 16200 MTPA for its copper division. With sanctioning of working capital funds from banks and debt restructuring, BIL is able to ramp up its capacity utilizations. In 9MFY22 the company is operating ~47% capacity of its steel division and ~24% of its copper division. Going ahead with increase in sanctioned working capital bank financing and increase in its scale up operations the company is in comfortable position capacity to ramp up its production.
• Moderate financial profile with above average debt protection metrics; financial flexibility arising from demonstrated support from promoter and strategic investors
  The capital structure marked by adjusted overall gearing has improved and remained moderate at 1.13 times as on December 31, 2021 as against 1.48 times as on March 31, 2021, mainly on account of schedule repayment of debt obligation coupled with addition of profits to reserves. Further cumulative redeemable preference shares (CRPS) is

considered as part of networth as it is long term in nature. Total outside liabilities/ Net

3