Rating Rationale

Brickwork Ratings assigns BWR BB- for the Bank Loan Facilities
amounting to 6.25 Cr of Fine Non-Woven India Private Limited
Brickwork Ratings (BWR) has assigned the following Rating1 for Bank Loan Facilities
sanctioned by State Bank of Hyderabad to Fine Non-Woven India Private Limited:
Facilities
Fund Based
Term Loan
Foreign Letter of Credit
(Sublimit of Term Loan)
Cash Credit
Total

Limit
( Cr)
4.25
(3.00)

Tenure

Long
Term

2.00
6.25

Ratings
BWR BB(BWR Double B Minus)
(Outlook:Stable)

(INR Six Crores & Twenty Five Lakhs only)

BWR has principally relied upon the provisional financials of FY14 and the projected
financials for FY15 and FY16 of the Company, publicly available information and
information/clarification provided by the Companys management.
The rating factors inter-alia the Promoters acumen in recognizing the opportunity and foray
into Manufacturing of Non-woven Textile segment, scope for expansion in an increasing
demand for non-woven products. The promoters experience in establishing itself in the
Stone cutting Industry through its associates viz. Jain Udyog and Lotus Exports for more
than 15 years.
The rating is however constrained by the adversities of a start up in a bid to establish itself,
lower net-worth and revenues as per the projected financials, susceptible to monetize the
fluctuation in raw material pricing, mobilization of resources within the regulatory
framework, and exposure to changes in the Government policies and regulations. The
repayment due from October 2014 is dependent on the ability of the Company to generate
enough cash flows from the project in timely servicing of its debt obligations.
Background
Fine Non-Woven India Private Limited is incorporated in April 2013 with an objective to
enter Non-Woven Polypropylene business. The registered office of the Company is located at
Malakpet, Hyderabad and the plant is located at Nalgonda district Andhra Pradesh.
Non-woven fabric is an engineering fabric, manufactured by putting small fibers together in
the form of a sheet and then binding them either through thermal bonding. A non-woven is a
sheet of fibers, continuous filaments, or chopped yarns of any nature or origin, that have
been formed into a web by any means, and bonded together by any means, with the
1

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

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25 Mar 2014

exception of weaving or knitting. In Spun bonding, heat energy is being use to stimulate an
adhesive, which in turn flows to thermoplastic fibre juncture and interlocks the fibres upon
cooling. The bonding agent may be individual fibres portions of individual fibres, or
powders. Spun bonding is achieved as the result of a sequence of three events viz. Heating,
Flowing, and Cooling.
Project Brief
The Non-Woven Fabric plant with 1980 tons per annum (TPA) manufacturing capacity is set
up considering 40% production for hygienic industry products with 10 to 25 grams per
square meter (gsm) and 60% production for packaging industry products with 40 to 90 gsm.
The trial production of the Unit started from November 2013 and actual production from
December 2013. The Unit is gradually increasing its utilization capacity from 30% to 50%
since the last 4 months running in one shift. Subsequently it plans to increase its utilization
capacity and also plans to run in additional two shifts.
The unit is on the Companys acquired land of Acres 1.01 Guntas on long term lease at Survey
No: 87, Toopranpet Village, Choutuppal Mandal, Nalgonda District, Andhra Pradesh is at a
distance of 300 meters from NH-9. It has proximity to its raw material (Polypropylene)
sourcing from Reliance Industries Limiteds Warehouse which is at a distance of ~35 km.
from the factory site. This shall assist in reducing their transportation cost and timely supply
of raw material to maintain even flow of production. The main market area being Putli Bowli,
Goshamahal is in the neighboring area from the site. Initially, the Company is targeting
clients based in and around Hyderabad considering the increasing demand for hygiene
products manufactured and further to cater to the Packaging Industry, there is presence of
large number of rice and dal mills in and around Hyderabad which can be the clientele for
the Companys non-woven carry bags. The power requirement is sourced from Andhra
Pradesh Central Power Distribution Company Limited. The strategic objective of the
Company is to continue to improve on and consolidate the position by adopting latest
technologies
Management Profile
The Promoters and Directors - Mr Paras Doshi and Mr Vinesh Jain are both qualified and
experienced overlooking the entire business operations of the Company. Mr Paras Doshi, a
management graduate has an experience of more than 15 years in the Stone Cutting Industry
and is responsible for overall supervision and marketing of the Company. Mr Vinesh Jain,
also a management graduate, joined the family business of Stone cutting tools soon after his
education four years ago.
The promoters ventured into this business of manufacturing Non-Woven Products citing the
increasing demand for non-woven products and its ability in running industrial units in the
past i.e. its sister concerns viz. Lotus Exports and Jain Udyog. Mr Vinesh Jain holds 30%
share in Lotus Exports. Mr. Paras Doshi owns 40% share in Jain Udyog. Lotus Exports
started in 2006 deals in export of natural stones which are processed in their unit and they
also procure different colours of granite from different suppliers as per the requirement of

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25 Mar 2014

the customer. Jain Udyog formed in 1999 deals in engineering products required for the
Stone Cutting industry.
Financial Performance
The Non-Woven Fabric plant with 1980 tons per annum (TPA) manufacturing capacity is
set-up at total cost of Rs.7.02Cr funded by Term Loan of Rs.4.25Cr from State Bank of
Hyderabad and the balance Rs.2.77Cr brought in as capital and unsecured loan from
promoters. The Polypropylene Non-Woven Fabric Extrusion Line machinery which is
imported includes apart from fabric extrusion line, other equipment like transformer, D G
Set 125 KVA, EOT Crane, Forklifts, Lab equipment and electrical. The Machinery at Cost of
Rs.0.05 Cr includes taxes, duty, packing and freight, Design, Engineering and erection
expenses.
In 4 months of operations since December 2014 the Company has generated revenue of
Rs.0.54Cr. The promoters have share-capital of Rs.2.10Cr and Unsecured loans of Rs.0.70Cr.
The term loan of Rs.4.25Cr is due for repayment from October 2014 with an amount of
Rs.0.19 Cr payable per quarter. The Company has estimated net sales of Rs.5.50Cr and Profit
after tax of Rs.0.21Cr for FY14. The working capital limit of Rs.2.00Cr is available for
utilisation from the Commercial Operations date.
Rating Outlook
Going forward, the Companys ability to meet its projection with improving profitability
margins, to improve its net worth by strengthening the equity base and secure sufficient
orders to expand its clientele and to optimally utilize its capacity while timely repayment of
debt obligation will be 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.

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25 Mar 2014