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DCM Ltd. Capital/Financing Update 2019
61500_rns_2019-08-16_19c980ab-6537-4ee3-a005-0a5c5384f561.pdf
Capital/Financing Update
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August 16,2019
USEL' ,.{.'d Flor , Phiroze JeejeebhoyTowers, D al Street, umbai-400001
~tiOnal Stock Exchangeof India Limited ExchangePlaza, Plot no.Cl1, G-Block, Bandra-Kurla Complex,Bandra (E), Mumbai-400051
Scrip Code:S02820jDCM
Sub: Intimation of Revised Credit Rating
Re : Disclosure under Regulation 30 of the SEBI (Listing Obligations & Disclosure Requirements), Regulations, 2015, as amended from time to time
Dear Sir,
We hereby inform you that credit rating assigned to the Company has been downgraded by Credit Rating Agency i.e. CRISILw.e.f. August 14, 2019. The copy of same is enclosed herewith for your reference.
This is to clarify that a term loan installment payment aggregating to Rs. 7.49 crores has been deferred due to temporary cash flow mismatch on account of the ongoing auto downturn which has resulted in substantial reduction in order flow. It is not a material amount in context of the company and Company is working with banks to address the fallout of the auto meltdown which Company hope is temporary.
This is for your information and records.
Yourstruly,
Encl.- Asstated above
Registered Office : . Vikrant Tower, 4, Rajendra Place, New Delhi-ll0008 . e-mail id:[email protected] Phone: (011) 25719967 Fax: (011) 25765214 CIN: L74899DL1889PLC000004 Website: www.dcm.in E-mail: [email protected]
Rating Rationale
August 14, 2019 | Mumbai
DCM Limited
Ratings downgraded to 'CRISIL D/CRISIL D'
Rating Action
| TotalBankLoanFacilitiesRated | Rs.375.88Crore | ||
|---|---|---|---|
| LongTermRating | CRISILD(Downgradedfrom'CRISILBB+/WatchNegative') | ||
| ShortTermRating | CRISILD(Downgradedfrom'CRISILA4+/WatchNegative') |
1 crore = 10 million Refer to annexure for Details of Instruments & Bank Facilities
Detailed Rationale
CRISIL has downgraded its ratings on the bank facilities of DCM Limited (DCM) to 'CRISIL D/CRISIL D' from 'CRISIL BB+/CRISIL A4+/Watch Negative'. The downgrade reflects delays by DCM in repaying the interest and principal obligation on the term loan.
The ratings continue to reflect the moderate debt protection metrics, stretched working capital cycle, and susceptibility to volatile cotton yarn prices and continues off take from the automobile sector. These weaknesses are partially offset by extensive experience of the promoters and DCM's moderate financial risk profile.
Key Rating Drivers & Detailed Description
* Delays in debt repayment
Stretch in receivables have constrained cash flow, resulting in delays by DCM in servicing the interest and principal payment on the term loan.
Weaknesses
* Moderate debt protection metrics: Debt protection metrics are moderate, with interest coverage and net cash accrual to total debt ratios at 2.4 and 0.17 times, respectively, for fiscal 2019.
* Working capital-intensive operations: Gross current assets stood at 123 days as on March 31, 2019, due to large inventory of 74 days and receivables of 33 days. Working capital management was however, aided by payables of 48 days extended by suppliers.
* Vulnerability to fluctuations in cotton yarn prices, and continuity in sales to the automobile sector: Susceptibility to fluctuations in raw material prices and to continuity in sales to the automobile sector continue to constrain operations margin. The margin has fluctuated between 2.3 and 7.2% in the five fiscals through March 2019 (combining the business and financial risk profiles of DCM and DCM Engineering Ltd [DCME] for fiscals before 2016).
Strengths
* Extensive experience of the promoters: The present management comprises the fourth generation of the promoter family. Over the years, the group has diversified into real estate, engineering, and information technology segments, and forged healthy relationships with customers and suppliers.
* Moderate financial risk profile: The financial risk profile is marked by a healthy adjusted networth of Rs 194.2 crore and total outside liabilities to adjusted networth ratio of 2 times as on March 31, 2019. Financial risk profile is expected to remain moderate in FY 20.
Liquidity
Liquidity is stretched, marked by delay in debt repayment.
About the Company
Set up by the late Mr Lala Shriram in 1889, DCM (formerly, Delhi Cloth and General Mills Company Ltd) is currently headed by Dr Vinay Bharat Ram. It is listed on the Bombay Stock Exchange and the National Stock Exchange. It provides services such as system administration, storage management, backup recovery, disaster management, and databases in the IT infrastructure services segment. DCM also has presence in real estate.
https://www.crisil.com/mnt/winshare/Ratings/RatingList/RatingDocs/DCM\_Limited\_August\_14\_2019\_RR.html 1/7 The engineering products division was set up in 1974, in Ropar (Punjab), as a division of DCM. The division was hived off into DCME in 2004, following the restructuring of DCM's debt. DCME was merged with DCM in fiscal 2016. The engineering division
16/08/2019 Rating Rationale is one of India's large independent manufacturers of grey iron castings, supplied to automotive players (cars, multi-utility vehicles, tractors, light commercial vehicles, heavy commercial vehicles, and earth-moving equipment). DCM also specialises in cylinder heads, cylinder blocks, and housing.
Key Financial Indicators
| Ason/fortheperiodendedMarch31 | Unit | 2019 | 2018 |
|---|---|---|---|
| Operatingincome | Rscrore | 1100.04 | 960.20 |
| ReportedPAT | Rscrore | 2.00 | -35.54 |
| PATmargin | % | 0.18 | -3.7 |
| Adjusteddebt/adjustednetworth | Times | 1.09 | 1.51 |
| Interestcoverage | Times | 2.40 | 1.03 |
Any other information: Not applicable
Note on complexity levels of the rated instrument:
CRISIL complexity levels are assigned to various types of financial instruments. The CRISIL complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL complexity levels for instruments that they consider for investment. Users may also call the Customer Service Helpdesk with queries on specific instruments.
Annexure - Details of Instrument(s)
| ISIN | NameofInstrument | Allotmentdate | Couponrate(%) | Maturitydate | Amount(Rs.Cr) | Ratingassignedwithoutlook |
|---|---|---|---|---|---|---|
| NA | BillDiscounting | NA | NANA | 15 | CRISILD | |
| NA | CashCredit | NA | NA | NA | 190 | CRISILD |
| NA | Letterofcredit&BankGuarantee | NA | NA | NA | 13.25 | CRISILD |
| NA | LongTermLoan | NA | NA | Jan-2023 | 100.51 | CRISILD |
| NA | Overdraft | NA | NA | NA | 9 | CRISILD |
| NA | ProposedLongTermBankLoanFacility | NA | NA | NA | 48.12 | CRISILD |
Annexure - Rating History for last 3 Years
| Current | 2019 (History) | 2018 | 2017 | 2016 | Start of2016 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Instrument | Type | OutstandingAmount | Rating | Date | Rating | Date | Rating | Date | Rating | Date | Rating | Rating |
| FundbasedBankFacilities | LT/ST | 362.63 | CRISILD/CRISILD | 13-08-19 | CRISILBB+/WatchNegative/CRISILA4+/WatchNegative | 21-11-18 | CRISILBB+/WatchNegative/CRISILA4+/WatchNegative | 08-12-17 | CRISILBB+/WatchNegative/CRISILA4+/WatchNegative | 28-10-16 | CRISILBBB-/WatchNegative/CRISILA3/WatchNegative | CRISILBBB/Stable/CRISILA3+ |
| 20-05-19 | CRISILBB+/WatchNegative/CRISILA4+/WatchNegative | 28-08-18 | CRISILBB+/WatchNegative/CRISILA4+/WatchNegative | 12-09-17 | CRISILBB+/WatchNegative/CRISILA4+/WatchNegative | 29-01-16 | CRISILBBB-/Negative/CRISIL A3 | |||||
| 20-02-19 | CRISILBB+/WatchNegative/CRISILA4+/WatchNegative | 29-05-18 | CRISILBB+/WatchNegative/CRISILA4+/WatchNegative | 09-06-17 | CRISILBBB-/WatchNegative/CRISILA3/WatchNegative | 19-01-16 | CRISILBBB-/Negative/CRISIL A3 | |||||
| 13-02-19 | CRISILBB+/WatchNegative/CRISILA4+/WatchNegative | 08-03-18 | CRISILBB+/WatchNegative/CRISILA4+/WatchNegative | 25-05-17 | CRISILBBB-/WatchNegative | |||||||
| 17-05-17 | CRISILBBB-/WatchNegative | |||||||||||
| 07-02-17 | CRISILBBB-/WatchNegative/CRISILA3/WatchNegative | |||||||||||
| https://www.crisil.com/mnt/winshare/Ratings/RatingList/RatingDocs/DCM_Limited_August_14_2019_RR.html | 2/7 |
| Non16/08/2019FundbasedBankFacilities | LT/ST | 13.25 | CRISILD | 13-08-19 | CRISILA4+/WatchNegative | 21-11-18 | CRISILA4+/WatchNegative | 08-12-17Rating Rationale | CRISILA4+/WatchNegative | 28-10-16 | CRISILA3/WatchNegative | CRISILA3+ |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 20-05-19 | CRISILA4+/WatchNegative | 28-08-18 | CRISILA4+/WatchNegative | 12-09-17 | CRISILA4+/WatchNegative | 29-01-16 | CRISIL A3 | |||||
| 20-02-19 | CRISILA4+/WatchNegative | 29-05-18 | CRISILA4+/WatchNegative | 09-06-17 | CRISILA3/WatchNegative | 19-01-16 | CRISIL A3 | |||||
| 13-02-19 | CRISILA4+/WatchNegative | 08-03-18 | CRISILA4+/WatchNegative | 25-05-17 | CRISILA3/WatchNegative | |||||||
| 17-05-17 | CRISILA3/WatchNegative | |||||||||||
| 07-02-17 | CRISILA3/WatchNegative |
All amounts are in Rs.Cr.
Annexure - Details of various bank facilities
| Current | facilities | Previousfacilities | ||||
|---|---|---|---|---|---|---|
| Facility | Amount(Rs.Crore) | Rating | Facility | Amount(Rs.Crore) | Rating | |
| BillDiscounting | 15 | CRISILD | BillDiscounting | 15 | CRISILBB+/WatchNegative | |
| CashCredit | 190 | CRISILD | CashCredit | 190 | CRISILBB+/WatchNegative | |
| Letterofcredit&BankGuarantee | 13.25 | CRISILD | Letterofcredit&BankGuarantee | 13.25 | CRISILA4+/WatchNegative | |
| LongTermLoan | 100.51 | CRISILD | LongTermLoan | 100.51 | CRISILBB+/WatchNegative | |
| Overdraft | 9 | CRISILD | Overdraft | 9 | CRISILA4+/WatchNegative | |
| ProposedLongTermBankLoanFacility | 48.12 | CRISILD | ProposedLongTermBankLoanFacility | 48.12 | CRISILBB+/WatchNegative | |
| Total | 375.88 | -- | Total | 375.88 | -- |
| Linkstorelatedcriteria |
|---|
| CRISILsApproachtoFinancialRatios |
| CRISILsBankLoanRatings-process,scaleanddefaultrecognition |
| Ratingcriteriaformanufaturingandservicesectorcompanies |
| CRISILsApproachtoRecognisingDefault |
| CRISILsCriteriaforratingshorttermdebt |
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16/08/2019 Rating Rationale