Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs. 55.18 Crs. of Airlife Gases Pvt. Ltd. ('AGPL' or 'The Company')
ParticularsFacilities** | Amount(Rs.Crs.) | Tenure | Rating# | |
---|---|---|---|---|
Fund Based | 23.30 | Long Term |
BWR BB -
/Stable Assignment |
|
Non Fund Based | 31.88 | Short Term |
BWR A4 +
Assignment |
|
Grand Total | 55.18 | (Rupees Fifty Five Crores and Eighteen lakhs Only) |
Brickwork Ratings (BWR) has assigned the ratings at ‘BWR BB-/Stable/BWR A4+’ for the bank loan facilities of AGPL.
The ratings derive strength from promoters’ experience, location advantage, and contracts with counterparties with relatively strong credit profiles. The ratings, however, are constrained by project execution & stabilization risk given the ongoing capex and susceptibility to changes in Government regulations.
Outlook: Stable
BWR believes that AGPL’s business risk profile will be maintained over the medium term benefiting from the extensive experience of its management. The Stable outlook indicates a low likelihood of a rating change over the medium term.
KEY RATING DRIVERSCredit Strengths:
AGPL is promoted and managed by Mr. Kiran Karnawat who has extensive experience of over 15 years in the same line of business. The executive vice president Mr. Deepak Dhobale also has experience of more than 15 years in the Industrial gases Industry. The long experience of the promoters supports the business risk profile of the company to a large extent with established and longstanding relations with the suppliers and customers. Moreover, the company is supported by experienced and qualified second-line management.
AGPL has contracts with strong counterparties such as Oil and Natural Gas Corporation and Indian Oil Corporation Limited among others. While the contracts are short-term, these are repetitive in nature which along with the long-standing relationship with the promoters (through their previous stints) provide comfort.
Credit Risks:
The company is setting up fully functional Industrial Filling Stations and Helium Transfill (He T’ Fill) at Pune. The estimated cost of the project is Rs.41.50 crore which is being funded through a debt Equity mix of 75:25. The debt portion comprises a term loan of Rs. 17.9 crores (fully tied up, Rs. 1.2 crs. Disbursed as on 31 October 2021) and a Foreign letter of Guarantee of Rs. 16.88 crores (yet to be issued). The promoters have fully infused the committed Equity and have also infused USL to the tune of Rs 18.7 crores, which will be reimbursed on disbursement of term loan. The company is expected to commence with full operations from January 2022 and as on date 90% of work is completed as per the Management. Successful commencement of the plant as envisaged (within budgeted costs and time) and subsequent stabilization of the same with optimum capacity utilization thereby achieving the envisaged revenue and accruals remains critical from the credit prospects of the company.
AGPL has vulnerability to economic cycles and any slowdown in operations in end-users industries. The end-user industries majorly consist of Healthcare equipment manufacturers, Fiber optics, Oil & Gas, and Aerospace and research, which are exposed to cyclicity in tandem with the economic cycles.
The hazardous nature of industrial gases poses a threat to the environment and human life as well and hence is highly regulated by the government. Furthermore, such facilities require stringent approvals from multiple authorities and any delays or revocations of the approvals can impact operations.
BWR has essentially relied upon the audited financials of the company up to FY2021, projections up to FY24, publicly available information and information/clarifications provided by the management. To arrive at its ratings, BWR has applied its rating methodology as detailed in the Rating Criteria.
RATING SENSITIVITIES
Positive Factors
Negative Factorslt;/p>
The liquidity position of the company is adequately marked by sufficient cushion available to fund the ongoing capex carried out by the company characterized by a sanctioned term loan worth Rs. 17.90 crore which is partially disbursed as on date with repayments to commence from August 2022 post a nine-month Moratorium from the first disbursement. Moreover, the company has sanctioned working capital limits worth Rs. 20.40 crore which will be disbursed after successful completion of the project. The free cash & bank balance stood at Rs. 2.7 crore as on September 30, 2021. Liquidity is further supported by unsecured loans from promoters of over Rs 18 crore as on September 30, 2021.
ABOUT THE ENTITYAirLife Gases Pvt Ltd is a company limited by shares incorporated in April 2019 and is involved as a packaged gas supplier with a distribution network across the country to cater to industrial gases requirements in the Indian market for Argon & Argo Shield Bulk, Mini Bulk, Packaged Gas and Helium gas. The company is a new entrant in this business; however, the promoter Mr. Kiran Karnawat has a successful history of running and scaling such business in the past. The company is based out of Pune and is in the process of setting up fully functional Industrial Filling Stations and Helium Transfill (He T’ Fill). The operations have partially commenced from May 2021 onwards.
The company has achieved revenues of over Rs 20 crore up to November 30, 2021, with a profit before tax of over Rs 3 crore.
KEY FINANCIAL INDICATORS (Standalone)Key Parameters | Units |
FY 20-21 (Audited) |
FY 19-20 (Audited) |
---|---|---|---|
Operating Revenue | Rs.Crs. | Not Available | Not Available |
EBITDA | Rs.Crs. | -2.26 | -0.45 |
PAT | Rs.Crs. | -2.36 | -0.45 |
Tangible Net Worth | Rs.Crs. | 6.23 | -0.44 |
Total Debt/Tangible Net Worth | Times | 0.42 | -1.15 |
Current Ratio | Times | 2.80 | 0.26 |
Facilities | Current Rating (2021) | 2020 | 2019 | 2018 | |||||
---|---|---|---|---|---|---|---|---|---|
Type | Tenure | Amount (Rs.Crs.) |
Rating | Date | Rating | Date | Rating | Date | Rating |
Fund Based | LT | 23.30 |
BWR BB-/Stable
(Assignment) |
NA |
NA
|
NA |
NA
|
NA |
NA
|
Non Fund Based | ST | 31.88 |
BWR A4+
(Assignment) |
NA |
NA
|
NA |
NA
|
NA |
NA
|
Grand Total | 55.18 | (Rupees Fifty Five Crores and Eighteen lakhs Only) |
BWR complexity levels are meant for educating investors. The BWR complexity levels are available at www.brickworkratings.com / download / ComplexityLevels.pdf. Investors queries can be sent to info@brickworkratings.com.
Hyperlink/Reference to applicable CriteriaAnalytical Contacts | |
---|---|
Arbez Noshir Karbhari Ratings Analyst arbez.k@brickworkratings.com |
Chintan Dilip Lakhani Director- Ratings chintan.l@brickworkratings.com |
1-860-425-2742 | media@brickworkratings.com |
SL.No. | Name of the Bank/Lender | Type Of Facilities | Long Term(Rs.Crs.) | Short Term(Rs.Crs.) | Total(Rs.Crs.) |
---|---|---|---|---|---|
1 | Union Bank of India | Term LoanSanctioned | 17.90 | _ | 17.90 |
2 | Union Bank of India | Standby LC/ILC/FLC/BGSanctioned | _ | 15.00 | 15.00 |
3 | Union Bank of India | Working Capital (CC)Sanctioned | 5.40 | _ | 5.40 |
4 | Union Bank of India | Foreign Letter of GuaranteeSanctioned | _ | 16.88 | 16.88 |
Total | 23.30 | 31.88 | 55.18 | ||
TOTAL (Rupees Fifty Five Crores and Eighteen lakhs Only) |
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