Press Release

Optus Laminates Private Limited

April 02, 2018
Ratings
Amount Rating Action
Facilities Ratings
(Rs. crore)
CARE BB; Stable
Long-term Bank Facilities 9.00 Assigned
(Double B; Outlook: Stable)
CARE BB; Stable/ CARE A4
Long-term/Short-term
11.50 (Double B; Outlook: Stable Assigned
Bank Facilities
/ A Four)
CARE A4
Short-term Bank Facilities 4.00 Assigned
(A Four)
24.50
Total (Rupees Twenty Four Crore and Fifty
lakh only)
Details of instruments/facilities in Annexure -1
Detailed Rationale & Key Rating Drivers
The ratings assigned to the bank facilities of Optus Laminates Private Limited (OLPL) are constrained on account of its
moderate scale of operations, moderate capital structure, moderate debt coverage indicators and working capital
intensive nature of operations leading to high operating cycle during FY17 (refers to the period April 1 to March 31).
Further, the ratings are also constrained due to its presence into highly fragmented and competitive industry, cyclical
nature of the industry and susceptibility of profit margins to volatility in raw material prices and foreign exchange
fluctuations.
The ratings, however, derives comfort from vast experience of promoters, location advantage of presence in Gujarat and
moderate profit margins.
OLPL’s ability to increase its scale of operations with improvement in profitability, capital structure and debt coverage
indicators along with better working capital management will be the key rating sensitivity.
Detailed description of the key rating drivers
Key Rating Weaknesses
Moderate scale of operations
The scale of operations stood moderate at Rs.45.25 crore as against Rs.44.46 crore during FY16. However, OLPL’s TOI has
reported CAGR of 8.43% for the past two years ended FY17 on the back of gradual increase in demand from its
customers.
Moderate capital structure and debt coverage indicators
As on March 31, 2017 overall gearing ratio stood at 1.30x (Including creditors on LC of Rs.3.13crore) as against 1.38x
(Including creditors on LC of Rs.3.55crore) as on March 31, 2016, the improvement was on account of increase in the
tangible net worth base.
As on March 31, 2017 total debt to GCA stood at 10.33 times which improved as compared to 16.21 times as on March
31, 2016 on account of increase in GCA level. Further, interest coverage ratio stood moderate at 2.28 times during FY17
as compared to 1.64 times during FY16.
Working capital intensive nature of operations leading to elongated operating cycle
Operating cycle of OLPL has remained elongated at 146 days during FY17 on account of higher level of inventory
maintained by the company in order to execute orders in timely manner thereby leading to higher utilization of its
working capital bank borrowing.
Presence into fragmented and competitive industry
OLPL operates in highly fragmented and competitive laminate industry marked by presence of large number of medium
sized players. The industry is characterized by low entry barrier due to negligible government policy restrictions, no
inherent resource requirement constraints and easy access to customers and suppliers. Also, the presence of big sized
players with established marketing & distribution network results into intense competition in the industry.
Susceptibility of profit margins to volatility in raw material price and foreign exchange fluctuations
Major raw material for the company are design paper, kraft paper, melamine, phenol, methanol etc. whose price are
volatile in nature. Hence, any adverse movement in their price can put pressure on the profit margins of the company.
The company imports design paper and melamine from China. Furthermore, OLPL keeps its payments un-hedged which
exposes it to foreign currency fluctuation risk.

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Cyclical nature of the industry

Again, the fortune of the industry is linked to the real estate industry which is inherently cyclical in nature. This factor
limits the pricing flexibility and bargaining power of OLPL and put pressure on profitability. However, the company has
geographically diversified presence in the domestic market which helps in maintaining the steady growth in revenue.

Key Rating Strengths

Vast Experience of Promoters
OLPL is promoted and managed by Mr. Bharat R. Choksi, Mr. Shalin B. Choksi, Mr. Saumil B. Choksi, Mr. Ramjibhai P. Patel
and Mr. Dharmendra R. Patel and all the promoters has vast experience in the same industry.
Location advantage of presence in Gujarat
The factory is situated in Sabarkantha District at North Gujarat, where raw materials are easily available along with
transportation and labour. Furthermore, location of the company is near to Ahmedabad which is the industrial hub of
Gujarat with very large number of industries with urban residential area.
Moderate profit margins
During FY17, PBILDT margin stood at 7.52% as compared to 5.78% during FY16 while PAT margin stood at 2.30%
duringFY17 as against 0.95% in FY16.

Analytical Approach: Standalone

Applicable Criteria
Criteria on assigning Outlook to Credit Ratings
CARE’s Policy on Default Recognition
Rating Methodology-Manufacturing Companies
Financial ratios – Non-Financial Sector
Criteria for Short Term Instruments

About the Company

Sabarkantha (Gujarat)-based, OLPL was incorporated in October 26, 2004 as private limited company by Mr. Bharat R.
Choksi, Mr. Shalin B. Choksi, Mr. Saumil B. Choksi, Mr. Ramjibhai P. Patel and Mr. Dharmendra R. Patel. OLPL is engaged
into manufacturing of decorative laminate sheets. OLPL has established its manufacturing unit at Sabarkantha with
installed capacity of 120000 sheets per month as on March 31, 2017.
Brief Financials (Rs. crore) FY16 (A) FY17 (A)
Total operating income 44.46 45.25
PBILDT 2.57 3.40
PAT 0.42 1.04
Overall gearing (times) 1.38 1.30
Interest coverage (times) 1.64 2.28
A: Audited
During 11MFY18 (Provisional),OLPL has achieved TOI of Rs.50.43crore.

Status of non-cooperation with previous CRA: Not Applicable

Any other information: Not Applicable

Rating History (Last three years): Please refer Annexure-2

Note on complexity levels of the rated instrument: CARE has classified instruments rated by it on the basis of complexity.
This classification is available at www.careratings.com. Investors/market intermediaries/regulators or others are welcome
to write to care@careratings.com for any clarifications.

Analyst Contact
Name: Mr Chintan Soni
Tel: (079) 40265634
Mobile: +91-8511190016
Email: chintan.soni@careratings.com

About CARE Ratings:

CARE Ratings commenced operations in April 1993 and over nearly two decades, it has established itself as one of the
leading credit rating agencies in India. CARE is registered with the Securities and Exchange Board of India (SEBI) and also

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recognized as an External Credit Assessment Institution (ECAI) by the Reserve Bank of India (RBI). CARE Ratings is proud of
its rightful place in the Indian capital market built around investor confidence. CARE Ratings provides the entire spectrum
of credit rating that helps the corporates to raise capital for their various requirements and assists the investors to form
an informed investment decision based on the credit risk and their own risk-return expectations. Our rating and grading
service offerings leverage our domain and analytical expertise backed by the methodologies congruent with the
international best practices.

Disclaimer
CARE’s ratings are opinions on credit quality and are not recommendations to sanction, renew, disburse or recall the
concerned bank facilities or to buy, sell or hold any security. CARE has based its ratings/outlooks on information obtained
from sources believed by it to be accurate and reliable. CARE does not, however, guarantee the accuracy, adequacy or
completeness of any information and is not responsible for any errors or omissions or for the results obtained from the
use of such information. Most entities whose bank facilities/instruments are rated by CARE have paid a credit rating fee,
based on the amount and type of bank facilities/instruments.
In case of partnership/proprietary concerns, the rating /outlook assigned by CARE is based on the capital deployed by the
partners/proprietor and the financial strength of the firm at present. The rating/outlook may undergo change in case of
withdrawal of capital or the unsecured loans brought in by the partners/proprietor in addition to the financial
performance and other relevant factors.
Annexure-1: Details of Instruments/Facilities

Name of the Date of Coupon Maturity Size of the Rating assigned

Instrument Issuance Rate Date Issue along with Rating
(Rs. crore) Outlook
Fund-based - LT-Term - - Dec., 2018 3.00 CARE BB; Stable
Loan
Fund-based - LT/ ST-Cash - - - 11.50 CARE BB; Stable /
Credit CARE A4

Non-fund-based - ST- - - - 4.00 CARE A4

Letter of credit
Fund-based - LT-Cash - - - 6.00 CARE BB; Stable
Credit

Annexure-2: Rating History of last three years

Sr. Name of the Current Ratings Rating history

No. Instrument/Bank Type Amount Rating Date(s) & Date(s) & Date(s) & Date(s) &
Facilities Outstanding Rating(s) Rating(s) Rating(s) Rating(s)
(Rs. crore) assigned in assigned in assigned in assigned in
2017-2018 2016-2017 2015-2016 2014-2015
1. Fund-based - LT-Term LT 3.00 CARE BB; - - - -
Loan Stable

2. Fund-based - LT/ ST-Cash LT/ST 11.50 CARE BB; - - - -

Credit Stable /
CARE A4

3. Non-fund-based - ST- ST 4.00 CARE A4 - - - -

Letter of credit
4. Fund-based - LT-Cash LT 6.00 CARE BB; - - - -
Credit Stable

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