Permanent Magnets Ltd. — Audit Report / Information 2019

Jul 18, 2019

PERMANENTMAGNETSLIMITED

B-3, MIDC, Village Mira, Mira Road East, Thane - 401104, Maharashtra, India

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Phone : +91-22-62165400-10 Facsimile : +91-22-29452128 Email : sales@pmlindia.com Website : www.pmlindia.com

Date : 18[th] July, 2019

To,

Corporate Relation Department Bombay Stock Exchange Limited Phiroze Jeejeebhoy Towers Dalal Street, Fort, Mumbai - 400 001

Sub: Intimation of Re-affirmation of Credit Rating

Scrip Code : 504132

Dear Sir/Madam,

Pursuant to Regulation 30 and any other applicable regulation, if any, of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015,We inform the Stakeholders that Company received the re-affirmation of rating from Acuité Ratings & Research Limited (erstwhile SMERA Ratings Limited), Credit Rating Agency.

The Rating Rationale is enclosed herewith.

Request you to kindly take the same on record.

Thanking You,

Yours faithfully,

For PERMANENT MAGNETS LIMITED

RACHANA Digitally signed by RACHANA VISHWANATH VISHWANATH RANE Date: 2019.07.18 12:35:13 RANE +05'30'

RACHANA RANE COMPANY SECRETARY

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RegdOffice: Harsh Avenue, 302, 3[rd] Floor, opp. Silvassa Police Station, SilvassaVapi Main Road, Silvassa- 396 230. Dadra and Nagar Haveli (U.T.) (All correspondence has to be made at our Mira Road address only) CIN-L27100DN1960PLC000371

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Press Release

Permanent Magnets Limited

July 01, 2019

Rating Reaffirmed

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Total Bank Facilities Rated*	Rs.34.48 Cr.
Long Term Rating	ACUITE C
Short Term Rating	ACUITE A4

* Refer Annexure for details

Rating Rationale

Acuité has reaffirmed long-term rating of ‘ ACUITE C ’ (read as ACUITE C) and short term rating of 'ACUITE A4' (read as ACUITE A four) to the Rs.34.48 crore bank facilities of Permanent Magnets LIMITED (PML). The outlook is 'Stable' .

Mumbai based, Permanent Magnets Limited was incorporated in year 1960 by Mr. Kantilal Morarji Desai, P (PML) which was sold off to Mr. Taparia in year 1965. It is the flagship company of the Taparia Group. PML is engaged in manufacturing of Alnico (Aluminium, Nickel and Cobalt) Magnets & Magnetic assemblies, Parts and accessories of Electricity Meters, Gas Meters and Electrical vehicles. The company have its manufacturing facility at Mira road, Mumbai.

Analytical Approach

Acuité has considered standalone business and financial risk profile of PML to arrive at the rating.

Key Rating Drivers

Strengths

• Established track record of operations

• PML is in operations since 1960 and has market presence in India as well as USA, Europe and Brazil. The company has established relationship with customers and suppliers. The Promoters, Mr. Sharad Taparia (Managing Director), Mr. Mukul Taparia (Non-Executive Director) and Ms. Sunaina Taparia (Non-Executive Director) have more than five decades of experience in the magnet industry. The promotes are assisted by second line of management comprising Mr. Sukhmal Jain (Sr. Vice President-Finance) and Mr. P. A. Kamath (President) who are well experienced in the industry.

Acuité expects that the company to benefit from its established market presence and healthy relationship with customers and suppliers in the long run.

• Healthy financial risk profile

PML has healthy financial risk profile marked by improvement in net worth, gearing and debt coverage indicators. The networth stood at Rs.33.18 crore as on March 31, 2019 as compared to Rs.18.38 crore as on March 31, 2018. The debt to equity ratio improved to 0.25 times as on March 31, 2019 as compared to 0.77 times as on March 31, 2018. The total debt of Rs.8.43 crore as on March 31, 2019 includes long term debt of Rs.2.59 crore and working capital borrowing (cash credit) of Rs.5.84 crore. The interest coverage ratio stood healthy at 15.80 times as on March 31, 2019 as compared to Rs.5.93 crore as on March 31, 2018. The DSCR stood at 9.78 times as on March 31, 2019 as compared to 4.00 times as on March 31, 2018. Total outstanding liabilities to total net worth stood healthy at 0.98 times as on March 31, 2019 as compared to 2.18 times as on March 31, 2018.

Acuité expects that PML will have continue to have healthy financial risk profile in absence of significant debt funded capex while maintaining its profitability margins.

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Acuité Ratings & Research Limited (erstwhile SMERA Ratings Limited)

www.acuite.in

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Weaknesses

• Delay in in servicing debt obligation

There is continuous instance of delay in servicing its debt obligation. (not rated by Acuité).

• Highly competitive and fragmented industry

The company is exposed to intense competition from organized as well as unorganized players in the industry. PML is exposure to volatility in the prices of raw materials and foreign exchange fluctuations can have impact on the margins of the company. However, company has natural hedge which will mitigate the forex risk to some extent.

Liquidity Position:

PML has adequate liquidity marked by adequate net cash accruals to its maturing debt obligations. Bank limit utilisation was ~80% utilized for the six months ended May 31, 2019. Utilisation is expected to remain moderate on account of adequate net cash accruals generation. PML has generated net cash accruals of RS. 0.93 -16.37 crore over the last 4 years as against debt obligation of Rs. 0.32- 0.53 crore over the same period. The remaining accrual will provide cushion liquidity. Current ratio was moderate at 1.89 times as on March 31, 2019.

- About the Rated Entity Key Financials

	Unit	FY19 (Actual)	FY18 (Actual)	FY17 (Actual)
Operating Income	Rs. Cr.	120.89	92.97	72.05
EBITDA	Rs. Cr.	23.65	8.60	4.28
PAT	Rs. Cr.	14.80	5.39	1.19
EBITDA Margin	(%)	19.57	9.25	5.94
PAT Margin	(%)	12.25	5.80	1.65
ROCE	(%)	61.89	30.72	11.53
Total Debt/Tangible Net Worth	Times	0.25	0.77	0.93
PBDIT/Interest	Times	15.80	5.93	2.75
Total Debt/PBDIT	Times	0.35	1.44	2.71
Gross Current Assets (Days)	Days	174	194	194

Status of non-cooperation with previous CRA (if applicable)

None

Any other information Not Applicable

Applicable Criteria

• Default Recognition - https://www.acuite.in/view-rating-criteria-17.htm

• Financial Ratios And Adjustments - https://www.acuite.in/view-rating-criteria-20.htm

• Manufacturing Entities - https://www.acuite.in/view-rating-criteria-4.htm

Note on complexity levels of the rated instrument

https://www.acuite.in/criteria-complexity-levels.htm

Rating History (Upto last three years)

Rating History	(Upto last three years)
Date	Name of Instrument / Facilities	Term	Amount (Rs. Cr.)	Ratings/Outlook
17-Apr-2018	Cash Credit	LongTerm	8.25	ACUITE C(Assigned)
	Cash Credit	LongTerm	6.75	ACUITE C(Assigned)
	Term Loans	LongTerm	1.08	ACUITEC (Assigned)
	Proposed Bank Facilities	LongTerm	0.78	ACUITE C(Assigned)
	Letter of Credit	Short Term	13.62	ACUITE A4(Assigned)
	Letter of Credit	Short Term	4.00	ACUITE A4(Assigned)

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Acuité Ratings & Research Limited (erstwhile SMERA Ratings Limited)

www.acuite.in

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*Annexure – Details of instruments rated

Name of the Facilities	Date of Issuance	Coupon Rate	Maturity Date	Size of the Issue (Rs. Cr.)	Ratings/Outlook
Cash Credit	Not Applicable	Not Applicable	Not Applicable	8.25	ACUITE C (Reaffirmed)
Cash Credit	Not Applicable	Not Applicable	Not Applicable	6.75	ACUITE C (Reaffirmed)
Term Loans	Not Applicable	Not Applicable	Not Applicable	0.72 (Reduced from Rs.1.08 crore)	ACUITE C (Reaffirmed)
Proposed Bank Facilities	Not Applicable	Not Applicable	Not Applicable	1.14 (Enhanced from Rs.0.78 crore)	ACUITE C (Reaffirmed)
Letter of Credit	Not Applicable	Not Applicable	Not Applicable	11.40 (Reduced from Rs.13.62 crore)	ACUITE A4 (Reaffirmed)
Letter of Credit	Not Applicable	Not Applicable	Not Applicable	4.00	ACUITE A4 (Reaffirmed)
Proposed Bank Facilities	Not Applicable	Not Applicable	Not Applicable	2.22	ACUITE A4 (Reaffirmed)

Contacts	Contacts
	Analytical		Rating Desk
	Vinayak Ramakrishna Nayak Head - Financial Sector Ratings Tel: 022-49291111 vinayak.nayak@acuite.in Ayushi Rathore Analyst - Rating Operations Tel: 022-49294062 ayushi.rathore@acuiteratings.in		Varsha Bist Manager - Rating Desk Tel: 022-49294922 rating.desk@acuite.in

About Acuité Ratings & Research:

Acuité Ratings & Research Limited (Erstwhile SMERA Ratings Limited) is a full-service Credit Rating Agency registered with the Securities and Exchange Board of India (SEBI). The company received RBI Accreditation as an External Credit Assessment Institution (ECAI), for Bank Loan Ratings under BASEL-II norms in the year 2012. Since then, it has assigned more than 6,000 credit ratings to various securities, debt instruments and bank facilities of entities spread across the country and across a wide cross section of industries. It has its Registered and Head Office in Mumbai.

Disclaimer: An Acuité rating does not constitute an audit of the rated entity and should not be treated as a recommendation or opinion that is intended to substitute for a financial adviser's or investor's independent assessment of whether to buy, sell or hold any security. Acuité ratings are based on the data and information provided by the issuer and obtained from other reliable sources. Although reasonable care has been taken to ensure that the data and information is true, Acuité, in particular, makes no representation or warranty, expressed or implied with respect to the adequacy, accuracy or completeness of the information relied upon. Acuité is not responsible for any errors or omissions and especially states that it has no financial liability whatsoever for any direct, indirect or consequential loss of any kind arising from the use of its ratings. Acuité ratings are subject to a process of surveillance which may lead to a revision in ratings as and when the circumstances so warrant. Please visit our website (www.acuite.in) for the latest information on any instrument rated by Acuité.

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Acuité Ratings & Research Limited (erstwhile SMERA Ratings Limited)

www.acuite.in