Rationale

 The assigned rating considers Time Technoplast Limited's (TTL) extensive operating track record in the plastic packaging industry with an established market presence. The company enjoys a leading market position for most of its product segments in the domestic and global markets with varied product mix and exposure to diverse end-user industries. Furthermore, over the last few years, its product mix has improved through the addition of new products, which is likely to yield diversificationrelated benefits and aid in revenue growth and profitability. TTL's financial profile is strong, as characterised by low gearing and healthy coverage indicators. Nonetheless, ICRA notes the company's high borrowing rates. The company is present in the highly fragmented packaging industry, characterised by intense competition, which limits its pricing flexibility. Furthermore, the price of its key raw material—high-density polyethylene (HDPE)—is derived from crude oil, thereby exposing TTL's profit margins to volatility in raw material price movement. With around 65-70% of its raw material requirement being met through imports, it is exposed to volatile foreign currency exchange rates. However, TTL hedges a predominant share of its foreign exchange exposure, thereby mitigating the risk to an extent. Furthermore, TTL's liquidity profile is adequate, supported by undrawn fund-based working capital and term loan limits. During FY2021, revenue for the consolidated entity declined by 16% while OPM and NPM also witnessed some moderation due to adverse impact of Covid-19 pandemic and related containment measures on domestic operations in H1 FY2021. Nonetheless, the capital structure and coverage indicators remained comfortable. During Q1 FY2022, while there was some impact on sequential basis due to the impact of second wave of pandemic, the company reported healthy growth on YoY basis. With the expected recovery in economic activity and expected contribution from new product segments, the financial performance is expected to witness healthy improvement.