1

BHUYAN ASSOCIATES PVT. LIMITED

Ratings
Facilities Amount (Rs. crore) Ratings
1
Remarks
Long-term Bank Facilities 3.50 CARE BB
(Double B)
Assigned
Short-term Bank Facilities 1.85 CARE A4
(A Four)
Assigned
Total Bank Facilities 5.35
Rating Rationale
The ratings assigned to the bank facilities of Bhuyan Associates Pvt. Ltd. (BAPL) are primarily constrained by its small scale of
operations, susceptibility of profitability to raw material price volatility and foreign exchange fluctuation risk, supplier
concentration risk and its presence in a highly fragmented and competitive nature of the industry.
The aforesaid constraints are partially offset by the promoters longstanding experience in the packaging industry, long track
record of operations and strategic location of the plant.
The ability of the company to increase its scale of operations along with the improvement in the profitability margins and combat
the pressure of volatility in the raw material prices shall be the key rating sensitivities.
Background
BAPL, incorporated in September 2000, was promoted by Mr Gautam Saha and his brother, Mr Uttam Saha of Assam to
manufacture printed co-extruded polythene films and tabular polythene rolls, primarily used by food processing units, oil mills,
confectionery establishments, etc for packaging their products. The companys manufacturing facility is located at Guwahati
(Assam), having an installed capacity of 3,600 metric tonnes per annum (MTPA) for polypropylene (PP) and bags.
Credit Risk Assessment
Experienced promoters
BAPL is promoted by Mr Gautam Saha (aged 48 years) and Mr Uttam Kumar Saha (aged 45 years), both being commerce
graduates. Both of them have more than two decades of experience in this line of business, through group companies like
Monsoon Polymers Pvt. Ltd., Chilarai Udyog Pvt. Ltd. and Supreme Extrusions, all engaged in similar line of business.
The company, through their promoters longstanding experience, has developed a good relationship with its customers, and its
client base include Emami Ltd. (CARE AA+/ CARE A1+), Godrej Consumer Products Pvt. Ltd., Krishna Food Processing,
etc.
Strategic location of plant
BAPLs plant is strategically located in the industrial area of Guwahati, Assam, which is well connected through roads and
railways. There are several food processing units, oil mills, confectionery establishments, etc, in proximity of the plant which
uses PP bags for packaging, thus facilitating off take of BAPLs finished products. Being located in the traditionally backward
region (north-east India), the company has access to cheap labour and is also entitled to receive certain subsidies in the future.
Small size of operations
Though the company is in existence for more than a decade, the operations of the company are relatively small with a total
operating income and PAT of Rs.21.3 crore and Rs.0.6 crore respectively in FY12 (refers to the period April 1, 2011 to March
31, 2012). Furthermore, the total capital employed was also low at Rs.7.0 crore as on March 31, 2012. The small size restricts
the financial flexibility of the company in times of stress and it suffers on account of the lack of economies of scale.

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Complete definition of the ratings assigned are available at www.careratings.com and other CARE publications

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Raw material price volatility and foreign exchange fluctuation risk
The primary raw materials used by the company are PP and LLDPE granules, which is a derivative of crude oil. The raw material
cost accounted for 80% - 85% of the total cost of sales in the past three years. The company sources its raw materials primarily
from Reliance Industries Limited, Haldia Petrochemicals Ltd., Mitsubishi Corporation India Pvt. Ltd. and Exxon Mobil Chemical
Asia Pacific Pte Ltd, which are large players in the industry where bargaining power of BAPL is very low. The company also
imports approximately 25% of its raw material requirement from countries like Canada, Singapore and UAE, thus exposing
BAPL to forex fluctuation risk. As the company does not have any delineated policy to hedge its forex risk and raw material price
volatility, it remains exposed to the same.
Highly fragmented and competitive nature of industry
Indian flexible packaging industry is highly fragmented with a large number of small to medium scale unorganised players.
Fungible nature of the products with no visible differentiators, easy availability of raw materials, low capital intensity and short
gestation period has resulted in a highly competitive market for flexible packaging industry.
Financial Performance
(Rs. crore)
For the period ended / as at Mar.31, 2010 2011 2012
(12m, A) (12m, A) (12m, A)
Working Results
Net Sales 16.7 18.4 20.7
Total Operating income (TOI) 17.4 19.2 21.3
PBILDT 1.5 1.2 1.4
Interest 0.4 0.3 0.3
Depreciation 0.4 0.4 0.3
PBT 0.6 0.5 0.7
PAT (after deferred tax) 0.5 0.4 0.6
Gross Cash Accruals (GCA) 1.0 0.8 0.9
Financial Position
Equity Capital 1.2 1.2 1.2
Networth 3.2 3.6 4.2
Total capital employed 5.3 5.8 7.0
Total debt 2.1 2.2 2.7
Key Ratios
Growth
Growth in Total income (%) (3.25) 10.58 11.30
Growth in PAT (after D.Tax) (%) 14.20 (25.81) 52.01
Profitability
PBILDT/TOI (%) 8.36 6.21 6.39
PAT (after deferred tax)/ Total income (%) 3.11 2.09 2.85
ROCE (%) 20.92 15.19 17.98
Average cost of borrowing (%) 18.25 15.02 13.00
Solvency
Long-term Debt Equity ratio (times) 0.24 0.08 0.16
Overall gearing ratio(times) 0.65 0.61 0.64
Interest coverage(times) 3.88 3.64 4.21
Term debt/GCA (years) 0.78 0.35 0.74
Total debt/GCA (years) 2.14 2.85 2.99

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For the period ended / as at Mar.31, 2010 2011 2012
(12m, A) (12m, A) (12m, A)
Liquidity
Current ratio(times) 1.67 1.71 2.11
Quick ratio(times) 0.80 0.83 1.10
Turnover
Average collection period (days) 26 28 32
Average creditors (days) 4 0 2
Average inventory (days) 34 47 46
Operating cycle (days) 56 75 76


DISCLAIMER
CAREs ratings are opinions on credit quality and are not recommendations to sanction, renew, disburse or recall the concerned bank facilities or to buy, sell or
hold any security. CARE has based its ratings on information obtained from sources believed by it to be accurate and reliable. CARE does not, however,
guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of
such information. Most entities whose bank facilities/instruments are rated by CARE have paid a credit rating fee, based on the amount and type of bank
facilities/instruments.


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mail: R Suryanarayan@careratings.com
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