ICRA Assigns Ratings to Evershine Smelting Alloy Private Limited

Evershine Smelting Alloy Private Limited, a lead processing company, has been assigned ratings by ICRA, a credit rating agency. The ratings reflect the company's established track record in the industry, considerable experience of its promoters, and favourable demand outlook for lead and lead alloys. However, the ratings are constrained by the company's moderate scale of operations, low profitability, and intense competition in the lead processing industry.

Key Takeaways:

• ICRA has assigned a long-term rating of [ICRA]BB- (Stable) to the Rs. 3.50 crore long-term fund-based facilities of Evershine Smelting Alloy Private Limited.
• The rating factors in the established track record of the company in the lead processing business and the considerable experience of Evershine's promoters spanning over two decades.
• The ratings also factor in the favourable demand outlook for lead and lead alloys, backed by expected demand growth in the stationary lead-acid battery segment for industrial and UPS usage over the medium term.
• The ratings are constrained by the moderate scale of Evershine's operations; the low profitability due to the limited value added nature of business; and the intense competition in the highly fragmented lead processing industry which further exerts pricing pressures.
• ICRA takes into account the high customer concentration of Evershine's revenues with top three customers accounting for ~85% revenues in FY 2014-15.
• The ratings also factor in the exposure of Evershine's profitability to volatility in lead prices and foreign exchange rates; and the exposure to regulatory risk of any adverse policy change with respect to waste disposal and pollution control.
• Evershine operates an ISO 9001:2008 certified facility in Attibele Industrial area, Bangalore, and caters to battery manufacturers in the region as well as in the export markets.
• The company's day-to-day operations are managed by promoters Mr. Srinivasan Sekar and Mrs. Maheswari Sekar.

Statistics:

• Evershine Smelting Alloy Private Limited has reported a PAT of Rs. 0.46 crore on net sales of Rs. 70.63 crore in FY 2013-14, as against a PAT of Rs. 0.40 crore on net sales of Rs. 48.61 crore in FY 2012-13.
• The company operates in two shifts and employs a total of 50 employees.
• The top three customers account for ~85% of Evershine's revenues in FY 2014-15.

Sources:

• "Evershine Smelting Alloy Private Limited Instrument Amount Rating Action In Rs Crore May 2015" - ICRA Limited
• ICRA ratings should not be treated as recommendation to buy, sell or hold the rated debt instruments.