Permanent Magnets Ltd. — Capital/Financing Update 2024

Apr 17, 2024

Date : April 17, 2024

PERMANENT MAGNETS LIMITED

B-3, MIDC, Village Mira, Mira Road (East), Thane - 401107, Maharashtra, India

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Phone : +91-22-68285454 Facsimile : +91-22-29452128 Email : sales@pmlindia.com Website : www.pmlindia.com

To,

Corporate Relation Department

The Bombay Stock Exchange Limited Phiroze Jeejeebhoy Tower, Dalal Street, Mumbai - 400 001

Sub: Intimation under Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015- Credit Rating

Security Code : 504132

Dear Sir/Madam,

Pursuant to Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, we would like to inform you that the Acuité Ratings & Research Limited has assigned the rating as under in respect of the Company’s banking facilities:

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Product Quantum Long Term Rating Short Term Rating
(Rs. Cr)
Bank Loan Ratings 16.86 ACUITE BBB-
| Stable |
Upgraded
Bank Loan Ratings 17.62 ACUITE A3
Upgraded
Total Outstanding Quantum (Rs. Cr) 34.48
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The Credit rating Letter with Press Release received from Acuité Ratings & Research Limited is enclosed herewith.

We request you to take the same on record.

Thanking you,

Yours Faithfully,

FOR PERMANENT MAGNETS LIMITED

RACHANA Digitally signed by PARESH RACHANA PARESH SAWANT Date: 2024.04.17 10:14:02 SAWANT +05'30' RACHANA RANE COMPANY SECRETARY

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Regd Office: Harsh Avenue, 302, 3[rd] Floor, opp. Silvassa Police Station, Silvassa Vapi 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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Rating Letter - Intimation of Rating Action

Letter Issued on : April 16, 2024 Letter Expires on : March 08, 2025 Annual Fee valid till : March 08, 2025

PERMANENT MAGNETS LIMITED

Plot no B-3,MIDC Industrial Area, Village Mira, Mira Road(East), Thane -Plot No. 22, Mira Co-Op. Industiral Eastate, Mira Road( East Mumbai 401104 MAHARASHTRA

Scan this QR Code to verify authenticity of this rating

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Kind Attn.: Sharad Taparia,Managing Director (Tel. No.9820966529)

Sir / Madam,

Sub.: Rating(s) Upgraded - Bank Loans of PERMANENT MAGNETS LIMITED

Please note that the current rating(s) and outlook, instrument details, and latest rating action for the aforementioned instrument are as under:

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
Bank Loan Ratings	16.86	ACUITE BBB-	Stable
Bank Loan Ratings	17.62	-	ACUITE A3
Total Outstanding Quantum (Rs. Cr)	34.48	-	-

Acuité reserves the right to revise the rating(s) , along with the outlook, at any time, on the basis of new information, or other circumstances which Acuité believes may have an impact on the rating(s). Such revisions, if any, would be appropriately disseminated by Acuité as required under prevailing SEBI guidelines and Acuité‘s policies.

This letter will expire on March 08, 2025 or on the day when Acuité takes the next rating action, whichever is earlier. It may be noted that the rating(s) is subject to change anytime even before the expiry date of this letter. Hence lenders / investors are advised to visit https://www.acuite.in/ OR scan the QR code given above to confirm the current outstanding rating(s).

Acuité will re-issue this rating letter on March 09, 2025 subject to receipt of surveillance fee as applicable. If the rating(s) is reviewed before March 08, 2025 , Acuité will issue a new rating letter.

Please note that under extant SEBI regulations and as per the terms of the rating agreement, once a rating is accepted and outstanding, the issuer is required to promptly furnish the ”No Default Statement‘ on the first working day of every month.

Sd/Chief Rating Officer

This is a system generated document. No signature is required.

Annexures: A. Details of the Rated Instrument

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Acuité Ratings & Research Limited SEBI Registered | RBI Accredited 708, Lodha Supremus, Lodha iThink Techno Campus, Kanjurmarg (East), Mumbai - 400042 | +919930708000 | www.acuite.in | CIN: U74999MH2005PLC155683

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Annexure A. Details of the rated instrument

Annexure A. Details of the rated instrument	Annexure A. Details of the rated instrument	Annexure A. Details of the rated instrument	Annexure A. Details of the rated instrument	Annexure A. Details of the rated instrument
Lender's Name	Facilities	Scale	Amt. (Rs. Cr)	Rating Assigned (Outlook)
Not Applicable	Proposed Short Term Bank Facility	Short-term	2.22
Central Bank of India	Cash Credit	Long-term	4.68	ACUITE BBB-
Central Bank of India	Letter of Credit	Short-term	11.40
State Bank of India	Cash Credit	Long-term	3.82	ACUITE BBB-
State Bank of India	Letter of Credit	Short-term	4.00
Not Applicable	Proposed Long Term Bank Facility	Long-term	1.86	ACUITE BBB-
State Bank of India	Term Loan	Long-term	6.50	ACUITE BBB-
Total Facilities			34.48	-

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 , Acuité ‘s rating scale and its definitions.

Any inadvertent omission or error in the rating letter which is discovered or brought to the notice of Acuite shall be rectified as soon as reasonably practicable not later than 48 hours of such discovery or notice. Such error or omission shall not render Acuite liable to any person for any kind of loss or damage including, but not limited to, any special, incidental, indirect or consequential damages caused by errors or omissions, provided such omission or error is rectified as soon as possible after discovery/notice.

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Press Release

April 16, 2024

PERMANENT MAGNETS LIMITED Rating Upgraded

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
Bank Loan Ratings	16.86	ACUITE BBB-	Stable
Bank Loan Ratings	17.62	-	ACUITE A3
Total Outstanding	34.48	-	-

Rating Rationale

Acuité has upgraded the long-term rating to ‘ACUITE BBB-’ (read as ACUITE triple B minus) from 'ACUITE BB+’ (read as ACUITE double B plus) and the short-term rating to ‘ACUITE A3’ (read as ACUITE A three) from 'ACUITE A4+’ (read as ACUITE A four plus)' on the Rs. 34.48 crore bank facilities of Permanent Magnets Limited (PML). The outlook is 'Stable'.

Rationale for upgrade

The rating has been upgraded considering PML’s sustained improvement in the operating performance along with a healthy financial risk profile. The operating revenue stood at Rs.183.53 Cr in FY2023 as against Rs.129.75 Cr in FY2022 reporting growth of 41.44 percent. The EBITDA margins stood at 24.98 percent in FY2023 as against 22.76 percent in FY2022. Further, the company achieved a revenue of Rs.147.88 Cr till 9MFY24 with operating margin of 20.25 percent and expecting to achieve turnover of Rs.200-210 Cr in FY2024. The financial risk profile is healthy marked by healthy net worth, low gearing and comfortable debt protection metrics. The net worth of the company stood at 110.84 Cr as on March 31 2023 as against Rs.82.08 Cr as on March 31 2022. the gearing level of the company stood low at 0.05 times as on March 31 2023, as against 0.03 times as on March 31, 2022. Further, the debt protection metrics of the company are comfortable with Interest coverage ratio (ICR) and Debt service coverage ratio (DSCR) of 35.41 times and 27.68 times as of March 31, 2023. The rating further continues to factor in the longstanding experience of the management and PML’s established track record of operations.

The rating however remains constrained due to intensive working capital operations, high reliance on non-fund-based working capital limits.

About the Company

Mumbai based, Permanent Magnets Limited (PML) was incorporated in the year 1960, by Mr. Kantilal Morarji Desai, which was sold off to Taparia Group in the year 1965. It is the flagship company of the 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 has its manufacturing facility at Mira road, Mumbai and is currently promoted and managed by Taparia family.

Unsupported Rating

Not Applicable

Analytical Approach

Acuité has considered the standalone business and financial risk profiles of Permanent Magnets Limited (PML) to arrive at this rating

Key Rating Drivers

Strengths

Experienced management and established track record of operations

PML is in operations since 1960 and has market presence in India as well as the USA, Europe and Brazil. The Promoters, Mr. Sharad Taparia, Managing Director have 27 years of work experience in the magnet industry. The promoters are assisted by the second line of management who are well experienced in the industry. On the back of the experienced management, the company has been able to maintain its long-term association with customers and suppliers with the few of the customers been associated for more than two to three decades.

The operating income of PML is improving YoY and stood at Rs.183.53 Cr as on FY2023 as against Rs.129.75 Cr in

FY2022 reporting growth of 41.44 percent in FY2023. The improvement in operating income is due to two primary reason i.e company’s ability to get higher wallet share in product categories of electricity meter operations and increase in demand under automobile segment. The EBITDA margins are improving YoY and stood at 24.98 percent in FY2023 as against 22.76 percent in FY2022. The PAT margin of the company stood at 16.21 percent in FY2023 as against 14.68 percent in FY2022. The ROCE of the company is improving YoY and stood comfortable at 41.70 percent in FY2023 as against 35.95 percent in FY2022. Further, the company has achieved a revenue of Rs.147.88 Cr till 9MFY24 with operating margin of 20.25 percent and expecting to achieve turnover of Rs.200-210 Cr in FY2024. The growth of the company is subdued in FY2024 is due to relatively lesser demand under EV segments and postponement of export orders.

With the introduction of new products like alloy casting, modules and components, etc, and venturing into forward integration, Acuite believes that company will be able to seize its growth momentum and improve their scale of operations over the medium term.

Healthy financial risk profile

The financial risk profile of the PML is healthy marked by high net worth, comfortable debt protection metrics and low gearing ratio. The net worth of the company stood at 110.84 Cr as on March 31 2023 as against Rs.82.08 Cr as on March 31 2022 aided by sizeable accretion to reserves. The company has paid dividend of Rs.1.03 Cr in FY2023. The company follows a conservative leverage policy as reflected in the gearing level of the company of 0.05 times as on March 31 2023, as against 0.03 times as on March 31, 2022. The total debt of the company which stood at Rs.5.98 crore includes Rs.4.02 Cr of long-term debt, Rs.1.84 Cr of short term debt and Rs.0.12 Cr of current maturities of long term debt. The long-term debt includes Rs. 1.76 crore (interest on the central excise loan). Further, the Total outside liabilities to total net worth (TOL/TNW) stood low at 0.35 times as on FY2023 as against 0.39 times as on FY2022. The Debt/ EBITDA stood at 0.13 times as on March 31 2023 as against 0.09 times as on March 31 2022. Further, the debt protection metrics of the company are comfortable with interest coverage ratio (ICR) of 35.41 times as of March 31,2023 as against 33.85 in the previous year. The debt service coverage ratio (DSCR) improved to 27.68 times as of March 31,2023 as against 25.36 times in the previous year. The NCA/ TD stood at 5.89 times for FY2023. PML is planning to shift the entire plant & machinery location to a new site. The total CAPEX cost is Rs.25-30 Cr. The entire CAPEX is being funded through internal accruals and term loan. The company is expecting to finish the CAPEX by FY2027.

Acuite believes that financial risk profile of the PML will continue to remain healthy owing to strong net worth and high operating margins.

Weaknesses

Working capital intensive nature of operations

The operations of the company are working capital intensive in nature marked by high GCA days of 221 days for March 31 2023 as against 233 days for March 31 2022 on account of high debtors and inventory days. Receivables days stood high at 109 days as on March 31, 2023 as against 106 days as on March 31 2022. High receivable days is due to few billings being concentrated towards the end of every fiscal year. Inventory days stood at 142 days as on March 31, 2023 as against 136 days as on March 31 2022. Post COVID-19, due to the high lead time & disturbance in the logistics, company has increased their inventory holding levels. Raw materials consists of 75 percent of their total inventories. The creditor days improved in FY2023 however stood high at 108 days as on March 31 2023 as against 142 days as on March 31 2022. The fund-based limits are almost unutilised; however the LC limits are fully utilised for the last twelve months as of January 2024.

The working capital operation of the PML will continue to intensive owing to nature of business operations.

Highly competitive and fragmented industry

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

Rating Sensitivities

Timely completion of capex without cost overrun Any further elongation of working capital cycle

Liquidity Position: adequate

PML has an adequate liquidity marked by adequate net cash accruals to its maturing debt obligations. The company generated cash accruals of Rs.35.24 crore for FY2023 as against the nil current maturities in the same year. Going forward the company is expected to generate net cash accruals in the range of Rs.32.67 – 40.82 Cr as against less than Rs. 1.00 Cr CPLTD repayment obligations. The company maintained unencumbered cash and bank balances of Rs.7.70 crore as on 31 March 2023. The current ratio stood high at 3.56 times as on March 31 2023.

However, the non-fund-based limits remained highly utilised at 100.00 percent for the last twelve months as of January 2024. Moreover, the working capital management of the company is intensive in nature marked by Gross Current Assets (GCA) of 221 days as of 31st March 2023 as compared to 233 days as of 31st March 2022. Acuité believes that going forward, the absence of any committed term liabilities would further strengthen the liquidity profile of the company.

Outlook: Stable

Acuite believes that PML will maintain a "stable" outlook in the medium term and will continue to benefit over the medium term due to its experienced management, healthy operating profit margins and net worth. The outlook may

be revised to “Positive” if the company demonstrates substantial and sustained growth in its revenues and/or operating margins from the current levels while maintaining its capital structure. Conversely, the outlook may be revised to “Negative”, if company generates lower-than anticipated cash accruals thereby impacting its financial risk profile, particularly its liquidity.

Other Factors affecting Rating None

Key Financials

Key Financials
Particulars	Unit	FY 23(Actual)	FY 22(Actual)
OperatingIncome	Rs. Cr.	183.53	129.75
PAT	Rs. Cr.	29.75	19.05
PAT Margin	(%)	16.21	14.68
Total Debt/Tangible Net Worth	Times	0.05	0.03
PBDIT/Interest	Times	35.41	33.85

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

Not Applicable

Any other information

None

Applicable Criteria

• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm

• Manufacturing Entities: https://www.acuite.in/view-rating-criteria-59.htm

• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm

Note on complexity levels of the rated instrument

In order to inform the investors about complexity of instruments, Acuité has categorized such instruments in three levels: Simple, Complex and Highly Complex. Acuite’s categorisation of the instruments across the three categories is based on factors like variability of the returns to the investors, uncertainty in cash flow patterns, number of counterparties and general understanding of the instrument by the market. It has to be understood that complexity is different from credit risk and even an instrument categorized as 'Simple' can carry high levels of risk. For more details, please refer Rating Criteria “Complexity Level Of Financial Instruments” on www.acuite.in.

Rating History

Date	Name of Instruments/Facilities	Term	Amount (Rs. Cr)	Rating/Outlook
17 Feb 2023	Cash Credit	Long Term	4.68	ACUITE BB+
	Cash Credit	Long Term	3.82	ACUITE BB+
	Proposed Long Term Bank Facility	Long Term	1.86	ACUITE BB+
	Term Loan	Long Term	6.50	ACUITE BB+
	Proposed Short Term Bank Facility	Short Term	2.22	ACUITE A4+ (Upgraded from ACUITE A4)
	Letter of Credit	Short Term	11.40	ACUITE A4+ (Upgraded from ACUITE A4)
	Letter of Credit	Short Term	4.00	ACUITE A4+ (Upgraded from ACUITE A4)
09 Dec 2021	Letter of Credit	Short Term	2.96	ACUITE A4 (Reaffirmed)
	Letter of Credit	Short Term	8.44	ACUITE A4 (Reaffirmed)
	Proposed Short Term Bank Facility	Short Term	6.22	ACUITE A4 (Reaffirmed)
	Proposed Long Term Bank Facility	Long Term	8.36	ACUITE C
	Cash Credit	Long Term	3.82	ACUITE C
	Cash Credit	Long Term	4.68	ACUITE C

Annexure - Details of instruments rated

Lender’s Name	ISIN	Facilities	Date Of Issuance	Coupon Rate	Maturity Date	Quantum (Rs. Cr.)	Complexity Level	Rating
State Bank of India	Not avl. / Not appl.	Cash Credit	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	3.82	Simple	ACUITE BBB-
Central Bank of India	Not avl. / Not appl.	Cash Credit	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	4.68	Simple	ACUITE BBB-
Central Bank of India	Not avl. / Not appl.	Letter of Credit	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	11.40	Simple	ACUITE A3
State Bank of India	Not avl. / Not appl.	Letter of Credit	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	4.00	Simple	ACUITE A3
Not Applicable	Not avl. / Not appl.	Proposed Long Term Bank Facility	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	1.86	Simple	ACUITE BBB-
Not Applicable	Not avl. / Not appl.	Proposed Short Term Bank Facility	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	2.22	Simple	ACUITE A3
State Bank of India	Not avl. / Not appl.	Term Loan	Not avl. / Not appl.	Not avl. / Not appl.	30 Nov 2028	6.50	Simple	ACUITE BBB-

Contacts

Mohit Jain Contact details exclusively for investors and Senior Vice President - Rating Operations lenders Thejaswini P V Mob: +91 8591310146 Senior Analyst - Rating Operations Email ID: analyticalsupport@acuite.in

About Acuité Ratings & Research

Acuité is a full-service Credit Rating Agency registered with the Securities & 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. Acuité has assigned 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 Kanjurmarg, 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. Ratings assigned by Acuité 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. Ratings assigned by Acuité 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. Please visit https://www.acuite.in/faqs.htm to refer FAQs on Credit Rating.

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