Rating Rationale
November 29, 2023 | Mumbai
Replika Press Private Limited
Ratings migrated to 'CRISIL A+/Stable/CRISIL A1'
Rating Action
Total Bank Loan Facilities Rated Rs.87.2 Crore
CRISIL A+/Stable (Migrated from 'CRISIL BB+/Stable
Long Term Rating
ISSUER NOT COOPERATING*')
CRISIL A1 (Migrated from 'CRISIL A4+ ISSUER NOT
Short Term Rating
COOPERATING*')
Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating
committee and thus do not participate in discussion or assignment of any ratings. The Board of
Directors also does not discuss any ratings at its meetings.
1 crore = 10 million
Refer to Annexure for Details of Instruments & Bank Facilities
*Issuer did not cooperate; based on best-available information
Detailed Rationale
Due to inadequate information and in line with the Securities
and Exchange Board of India (SEBI) guidelines, CRISIL Ratings had
migrated its ratings on the bank facilities of Replika Press Pvt
Ltd (RPPL; part of the Replika group) to 'CRISIL BB+/Stable/CRISIL
A4+ Issuer Not Cooperating'. However, the company’s management
has subsequently started sharing the information necessary for carrying
out a comprehensive review of the ratings. Consequently, CRISIL
Ratings is migrating its ratings on the bank facilities of RPPL to 'CRISIL
A+/Stable/CRISIL A1'.
The rating upgrade reflects the improvement in the business risk profile
of the group supported by its established market position and diversified
clientele. In fiscal 2023, revenue improved by 29% from Rs.471 cr. in
FY22 to Rs. 608 crores in FY23 which is better than the CRISIL
expectations. The improvement in revenue is due to increase in the
volume sales and also due to the addition of new customers in the
packaging business. group has already achieved net sales of around
Rs. 360 crore by Sep, 2023 and is expecting to clock revenue of
approx. Rs.650-670 cr. for full year FY24. With the strong market
position of the company the revenue of the company is expected to
grow at a stable pace. The margins of the group has also improved from
19-20% in the past fiscals to more than 25% in FY23 which is due to
the better absorption of fixed cost (mainly employee cost) and decline in
material cost helped the group to generate better margins. Group has
bottom line focus approach and only deals with premium customers
with very minimum competition which will support the margins at ~24-
25% going forward also.
Group has strong financial risk profile as reflected in healthy networth of
Rs.313 crore as on March 31, 2023 which is expected to be more than
Rs. 390 crores in FY24 and low gearing of 0.27 time. Financial risk
profile of the group is further supported by healthy debt protection
matrices as reflected in interest coverage of 21 times and NCATD of
1.42 times for fiscal 2023 which is expected to improve in FY24 in
absence of any debt funded capex.
The ratings reflect the extensive experience
of the promoters in the printing industry, the comfortable financial risk
profile of the group and the healthy growth prospects for the
packaging industry. These strengths are partially offset
by moderate working capital requirement and susceptibility to volatility
in raw material prices and intense competition.
Analytical Approach
For arriving at the ratings, CRISIL Ratings has combined the
business and financial risk profiles of RPPL and its 100% subsidiary,
Replika Packaging Pvt Ltd (RPL). The companies, together referred to
as the Replika group, are in similar businesses, under the same
management and have strong operational and financial linkages.
Please refer Annexure - List of Entities Consolidated, which captures the list of entities
considered and their analytical treatment of consolidation.
Key Rating Drivers & Detailed Description
Strengths:
Extensive experience of the promoters
and diverse clientele: Over the past six decades, the Replika group
has established its position in the printing industry and built a strong
international clientele, which includes reputed book publishers.
Moreover, the group has diversified into the packaging business and
added clients in the mobile handsets segment, leading
to increase in revenue. Revenue grew at compound annual rate of
21% in the past three years to ~Rs. 607.90 crore in fiscal 2023 from
Rs. 340 crores in fiscal 2020.
Group has already achieved net sales of around Rs. 360 crore by
Sep, 2023 and is expecting to clock revenue of approx. Rs.650-670
cr. for full year FY24. With the strong market position of the company
the revenue of the company is expected to grow at a stable pace.
Comfortable financial risk profile: Networth of the group has
remained healthy at Rs. 313 crores with continuous accretion of
reserve net worth is expected to improve to more than
Rs 390 crore as on March 31, 2024. Despite debt funded capex
undertaken in past the gearing and total outside liabilities to tangible
networth (TOLTNW) ratio remained at 0.6 time
and ~1 time, respectively last 3 fiscals ending FY23. Going forward
the financials risk profile of the group is expected to improve further
with continuous improvement in networth and debt protection
matrices over the medium term. Additionally gearing of the group is
expected to come down over the medium on the back of controlled
reliance on external debt to meet working capital requirements and
no major debt funded capex plans.
Healthy growth prospects for the packaging business: RPL’s tie-
up with reputed clients in packaging to make
mobile handset boxes underpins the group’s capabilities. The
packaging segment contributes around 42% of overall sales. Addition
of marque clients should help the group post healthy revenue growth
in the packaging segment over the medium term.
Weakness:
Susceptibility to volatility in raw material prices and intense
competition: The domestic printing industry has a large number of
unorganised players. Hence, organised players such as the Replika
group face competitive pressure during economic
downturns as clients opt for cheaper solutions. However, continuous
investment in automation and technology have
helped improve productivity and quality and curb wastage. Paper
prices, constituting around 75% of raw material cost,
are volatile. To compete with smaller players, the group procures
paper in bulk at lower cost. Hence, the operating margin
remains susceptible to intense competition and fluctuations in paper
prices.
Moderate working capital requirement: Group has moderate
working capital intensive operations as reflected in GCA of 145 days
as on March 31, 2023 GCA days is driven by debtors and inventory
of 70-80 days, as in printing segment, the customers are publishers
whose revenue is linked to sale of books; hence substantial credit
needs to be extended to them. Furthermore, group maintain sufficient
inventory of raw material—paper and printing plates—to meet the
customer orders in a timely manner. The company partly funds its
working capital requirement through high creditor days of around 60-
90 days and the rest through working capital debt. Driven by healthy
margins and accruals the working capital debt of the company has
remained negligible in last 12 months ending Sep-23
Liquidity: Strong
Expected cash accrual of Rs.110-130 crore will comfortably cover term
debt obligation of Rs 20-30crore over the medium term. Utilization of
the fund-based limit was moderate at 5% on average during the 12
months through Sep-23 Internal accrual, cash and equivalent and
cushion in bank lines will comfortably cover incremental working capital
expenses over the medium term.
Outlook: Stable
CRISIL Ratings believes the Replika group will maintain its healthy
financial risk profile over the medium term, backed by comfortable cash
accrual and diverse clientele.
Rating Sensitivity factors
Upward factors
Further geographical diversification and customer addition resulting
in revenue growth of around 30% along with sustenance of operating
margin at around 25% leading to higher cash accrual.
Efficient working capital management and sustenance of the capital
structure and debt-protection metrics, with no significant
capital withdrawal.
Downward factors
Decline in revenue and profitability leading to fall in cash accrual by
15%.
Substantial, debt-funded capex weakening the return on capital
employed and the financial risk profile.
About the Company
RPPL was set up in 1995 by Mr Bhuvnesh Seth and his family
members. The Seth family members have been in the printing industry
for the past six decades through Rajkamal Press. Based in Sonipat,
Haryana, RPPL provides typesetting, prepress, printing and post-press
services to national and international book publishers as well as
manufactures packaging boxes. The group owns three plants in Kundli
Industrial Park.
RPL was incorporated in June 2016 as a 100% subsidiary of RPPL.
The company is the marketing arm of RPPL and sells packing boxes
(rigid boxes) for mobile handsets.
Key Financial Indicators: Consolidated:
Particulars Unit 2023 2022
Revenue Rs crore 607 471
Profit after tax (PAT) Rs crore 84.82 47.65
PAT margin % 13.95 10.10
Adjusted debt / adjusted networth Times 0.27 0.55
Interest coverage Times 21 18
Status of non cooperation with previous CRA:
RPPL has not cooperated with Brickwork Ratings India Private Limited
(BWR) which has classified it as issuer not cooperative through release
dated Dec-14, 2022. The reason provided by BWR is non-furnishing of
information for rating.
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 and are included (where applicable) in the
'Annexure - Details of Instrument' in this Rating Rationale.
CRISIL Ratings will disclose complexity level for all securities
- including those that are yet to be placed - based on available
information. The complexity level for instruments may be updated,
where required, in the rating rationale published subsequent to the
issuance of the instrument when details on such features are available.
For more details on the CRISIL Ratings` complexity levels please visit
[Link]. Users may also call the Customer Service
Helpdesk with queries on specific instruments.
Annexure - Details of Instrument(s)
ISIN Name of instrument Date of Coupon Maturity Issue size Complexity Rating assigned
allotment rate (%) date ([Link]) Level with outlook
NA Cash credit NA NA NA 28 NA CRISIL A+/Stable
NA Export Packing Credit & NA NA NA 27 NA CRISIL A1
Export Bills
Negotiation/Foreign Bill
discounting
NA Letter of credit and bank NA NA NA 4 NA CRISIL A1
guarantee
NA External Commercial NA NA Mar-2025 26.32 NA CRISIL A+/Stable
Borrowings
NA Proposed long-term bank NA NA NA 1.88 NA CRISIL A+/Stable
loan facility
Annexure – List of entities consolidated
Names of Entities Consolidated Extent of Consolidation Rationale for Consolidation
Replika Packaging Private Limited Full 100% Subsidiary
Replika Press Private Limited Full Parent Company
Annexure - Rating History for last 3 Years
Start of
Current 2023 (History) 2022 2021 2020
2020
Outstanding
Instrument Type Rating Date Rating Date Rating Date Rating Date Rating Rating
Amount
CRISIL BB+ CRISIL CRISIL
CRISIL
/Stable / CRISIL A1 / A2+ / A2+ /
Fund Based A+/Stable/
LT/ST 83.2 22-06-23 CRISIL A4+ 08-04-22 CRISIL -- 28-10-20 CRISIL CRISIL
Facilities CRISIL
(Issuer Not A/Stable A- A-
A1
Cooperating)* /Stable /Stable
CRISIL BB+
CRISIL A1 / /Stable /
-- 06-02-23 CRISIL 31-01-22 CRISIL A4+ -- -- --
A/Stable (Issuer Not
Cooperating)*
Non-Fund CRISIL A4+
CRISIL CRISIL CRISIL
Based ST 4.0 22-06-23 (Issuer Not 08-04-22 CRISIL A1 -- 28-10-20
A1 A2+ A2+
Facilities Cooperating)*
CRISIL A4+
-- 06-02-23 CRISIL A1 31-01-22 (Issuer Not -- -- --
Cooperating)*
All amounts are in [Link].
* - Issuer did not cooperate; based on best-available information
Annexure - Details of Bank Lenders & Facilities
Facility Amount ([Link]) Name of Lender Rating
Cash Credit 28 State Bank of India CRISIL A+/Stable
Export Packing Credit &
Export Bills Standard Chartered Bank
27 CRISIL A1
Negotiation/Foreign Bill Limited
discounting
External Commercial
26.32 State Bank of India CRISIL A+/Stable
Borrowings
Letter of credit & Bank
4 State Bank of India CRISIL A1
Guarantee
Proposed Long Term Bank
1.88 Not Applicable CRISIL A+/Stable
Loan Facility
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 Fast Moving Consumer Goods Industry
CRISILs Criteria for rating short term debt
CRISILs Criteria for Consolidation
Media Relations Analytical Contacts Customer Service Helpdesk
Aveek Datta Himank Sharma Timings: 10.00 am to 7.00 pm
Media Relations Director Toll free Number:1800 267 1301
CRISIL Limited CRISIL Ratings Limited
M: +91 99204 93912 D:+91 124 672 2152 For a copy of Rationales / Rating Reports:
B: +91 22 3342 3000 [Link]@[Link] CRISILratingdesk@[Link]
[Link]@[Link]
Smriti Singh For Analytical queries:
Prakruti Jani ratingsinvestordesk@[Link]
Manager
Media Relations
CRISIL Ratings Limited
CRISIL Limited
B:+91 124 672 2000
M: +91 98678 68976
[Link]@[Link]
B: +91 22 3342 3000
[Link]@[Link]
Naman Jain
Rutuja Gaikwad Manager
Media Relations CRISIL Ratings Limited
CRISIL Limited B:+91 124 672 2000
B: +91 22 3342 3000 [Link]@[Link]
[Link]@[Link]
Note for Media:
This rating rationale is transmitted to you for the sole purpose of dissemination through
your newspaper/magazine/agency. The rating rationale may be used by you in full or in
part without changing the meaning or context thereof but with due credit to CRISIL
Ratings. However, CRISIL Ratings alone has the sole right of distribution (whether directly
or indirectly) of its rationales for consideration or otherwise through any media including
websites and portals.
About CRISIL Ratings Limited (A subsidiary of CRISIL Limited, an S&P
Global Company)
CRISIL Ratings pioneered the concept of credit rating in India in 1987. With a
tradition of independence, analytical rigour and innovation, we set the
standards in the credit rating business. We rate the entire range of debt
instruments, such as bank loans, certificates of deposit, commercial paper,
non-convertible/convertible/partially convertible bonds and debentures,
perpetual bonds, bank hybrid capital instruments, asset-backed and
mortgage-backed securities, partial guarantees and other structured debt
instruments. We have rated over 33,000 large and mid-scale corporates and
financial institutions. We have also instituted several innovations in India in
the rating business, including ratings for municipal bonds, partially
guaranteed instruments and infrastructure investment trusts (InvITs).
CRISIL Ratings Limited ('CRISIL Ratings') is a wholly-owned subsidiary of
CRISIL Limited ('CRISIL'). CRISIL Ratings Limited is registered in India as a
credit rating agency with the Securities and Exchange Board of India
("SEBI").
For more information, visit [Link]
About CRISIL Limited
CRISIL is a leading, agile and innovative global analytics company driven by
its mission of making markets function better.
It is India’s foremost provider of ratings, data, research, analytics and
solutions with a strong track record of growth, culture of innovation, and
global footprint.
It has delivered independent opinions, actionable insights, and efficient
solutions to over 100,000 customers through businesses that operate from
India, the US, the UK, Argentina, Poland, China, Hong Kong and Singapore.
It is majority owned by S&P Global Inc, a leading provider of transparent and
independent ratings, benchmarks, analytics and data to the capital and
commodity markets worldwide.
For more information, visit [Link]
Connect with us: TWITTER | LINKEDIN | YOUTUBE | FACEBOOK
CRISIL PRIVACY NOTICE
CRISIL respects your privacy. We may use your contact information, such as your name,
address and email id to fulfil your request and service your account and to provide you
with additional information from CRISIL. For further information on CRISIL's privacy
policy please visit [Link].
DISCLAIMER
This disclaimer is part of and applies to each credit rating report
and/or credit rating rationale ('report') that is provided by CRISIL
Ratings Limited ('CRISIL Ratings'). To avoid doubt, the term
'report' includes the information, ratings and other content forming
part of the report. The report is intended for the jurisdiction of India
only. This report does not constitute an offer of services. Without
limiting the generality of the foregoing, nothing in the report is to be
construed as CRISIL Ratings providing or intending to provide any
services in jurisdictions where CRISIL Ratings does not have the
necessary licenses and/or registration to carry out its business
activities referred to above. Access or use of this report does not
create a client relationship between CRISIL Ratings and the user.
We are not aware that any user intends to rely on the report or of
the manner in which a user intends to use the report. In preparing
our report we have not taken into consideration the objectives or
particular needs of any particular user. It is made abundantly clear
that the report is not intended to and does not constitute an
investment advice. The report is not an offer to sell or an offer to
purchase or subscribe for any investment in any securities,
instruments, facilities or solicitation of any kind to enter into any
deal or transaction with the entity to which the report pertains. The
report should not be the sole or primary basis for any investment
decision within the meaning of any law or regulation (including the
laws and regulations applicable in the US).
Ratings from CRISIL Ratings are statements of opinion as of the
date they are expressed and not statements of fact or
recommendations to purchase, hold or sell any
securities/instruments or to make any investment decisions. Any
opinions expressed here are in good faith, are subject to change
without notice, and are only current as of the stated date of their
issue. CRISIL Ratings assumes no obligation to update its opinions
following publication in any form or format although CRISIL Ratings
may disseminate its opinions and analysis. The rating contained in
the report is not a substitute for the skill, judgment and experience
of the user, its management, employees, advisors and/or clients
when making investment or other business decisions. The
recipients of the report should rely on their own judgment and take
their own professional advice before acting on the report in any
way. CRISIL Ratings or its associates may have other commercial
transactions with the entity to which the report pertains.
Neither CRISIL Ratings nor its affiliates, third-party providers, as
well as their directors, officers, shareholders, employees or agents
(collectively, 'CRISIL Ratings Parties') guarantee the accuracy,
completeness or adequacy of the report, and no CRISIL Ratings
Party shall have any liability for any errors, omissions or
interruptions therein, regardless of the cause, or for the results
obtained from the use of any part of the report. EACH CRISIL
RATINGS PARTY DISCLAIMS ANY AND ALL EXPRESS OR
IMPLIED WARRANTIES, INCLUDING BUT NOT LIMITED TO
ANY WARRANTIES OF MERCHANTABILITY, SUITABILITY OR
FITNESS FOR A PARTICULAR PURPOSE OR USE. In no event
shall any CRISIL Ratings Party be liable to any party for any direct,
indirect, incidental, exemplary, compensatory, punitive, special or
consequential damages, costs, expenses, legal fees or losses
(including, without limitation, lost income or lost profits and
opportunity costs) in connection with any use of any part of the
report even if advised of the possibility of such damages.
CRISIL Ratings may receive compensation for its ratings and
certain credit-related analyses, normally from issuers or
underwriters of the instruments, facilities, securities or from
obligors. Public ratings and analysis by CRISIL Ratings, as are
required to be disclosed under the regulations of the Securities and
Exchange Board of India (and other applicable regulations, if any),
are made available on its website, [Link] (free of
charge). Reports with more detail and additional information may
be available for subscription at a fee - more details about ratings by
CRISIL Ratings are available here: [Link].
CRISIL Ratings and its affiliates do not act as a fiduciary. While
CRISIL Ratings has obtained information from sources it believes
to be reliable, CRISIL Ratings does not perform an audit and
undertakes no duty of due diligence or independent verification of
any information it receives and/or relies on in its reports. CRISIL
Ratings has established policies and procedures to maintain the
confidentiality of certain non-public information received in
connection with each analytical process. CRISIL Ratings has in
place a ratings code of conduct and policies for managing conflict
of interest. For details please refer to:
[Link]
disclosures/[Link].
Rating criteria by CRISIL Ratings are generally available without
charge to the public on the CRISIL Ratings public website,
[Link]. For latest rating information on any
instrument of any company rated by CRISIL Ratings, you may
contact the CRISIL Ratings desk at crisilratingdesk@[Link], or
at (0091) 1800 267 1301.
This report should not be reproduced or redistributed to any other
person or in any form without prior written consent from CRISIL
Ratings.
All rights reserved @ CRISIL Ratings Limited. CRISIL Ratings is a
wholly owned subsidiary of CRISIL Limited.
CRISIL Ratings uses the prefix 'PP-MLD' for the ratings of principal-protected
market-linked debentures (PPMLD) with effect from November 1, 2011, to
comply with the SEBI circular, "Guidelines for Issue and Listing of Structured
Products/Market Linked Debentures". The revision in rating symbols for
PPMLDs should not be construed as a change in the rating of the subject
instrument. For details on CRISIL Ratings' use of 'PP-MLD' please refer to
the notes to Rating scale for Debt Instruments and Structured Finance
Instruments at the following link: [Link]
[Link]