Suchita Millenium Projects Pvt. Ltd.

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs. 49.38 Crs. of Suchita Millenium Projects Pvt. Ltd.

Particulars

Facilities**	Amount(Rs.Crs.)	Tenure	Rating#
Fund Based	7.00	Long Term	BWR BBB /Stable Assignment
Fund Based	(4.00)	Long Term	BWR BBB /Stable Assignment
Non Fund Based	42.38	Short Term	BWR A3 + Assignment
Non Fund Based	(0.45)	Short Term	BWR A3 + Assignment
Grand Total	49.38	(Rupees Forty Nine Crores and Thirty Eight lakhs Only)

#Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank Loan facilities,consolidation or instruments are provided in Annexure RATING ACTION / OUTLOOK

BWR has essentially relied upon the audited financial statements of Suchita Millenium Projects Pvt Ltd for FY19, FY20, FY21, provisional financial statements of FY22 and projected financial statements for FY23 and FY24, publicly available information and information/clarifications provided by the entity’s management and its bankers.

BWR has assigned ratings of BWR BBB,Stable to the long term bank loan facilities of Rs. 7.00 crores of the company, and a rating of BWR A3+ to its short term bank loan facilities for Rs. 42.38 crores (aggregate rated amount Rs. 49.38 crores). The rating draws strength from the long track record of the company in dealership business and its established market position as dealers of well known brands in the heavy earth moving machinery industry, comfortable financial risk profile (including adequate liquidity), vast management experience, its direct engagement in the business of providing support to activities identified by the Government as thrust areas, and its exclusive dealership status for Volvo and TEREX vehicles / equipment in eastern India .However, the rating is constrained by susceptibility to cyclicality in the end-user industry, supplier concentration risk, competitive nature of the industry and inherent risk associated with the trading business.

BWR believes that the business risk profile of Suchita Millenium Projects Pvt Ltd will be maintained over the medium term. The 'Stable' outlook indicates a low likelihood of rating change over the medium term. The rating outlook may be revised to 'Positive' in case the revenues, profit, and financial indicators show sustained improvement. The rating outlook may be revised to 'Negative' if the revenues go down and profit margins as well as financials show lower than expected figures.

Going forward, the ability of the entity to accelerate its scale of operations, increase its profit margins, strengthen the overall financial risk profile, and expand its dealership base, shall be the key rating sensitivities.

KEY RATING DRIVERS

Credit Strengths:

Long track record in dealership business and established market position :

SMPPL is an authorised dealer of Volvo CE, Volvo PENTA, EPIROC MINING, Chicago PNEUMATIC, LIEBHERR, MILLER & WACKER NEUSON for WB, Bihar and Sikkim. The company also benefits from Volvo's established product portfolio and its brand recall on account of its global position in the construction equipment industry. Also, SMPPL is the dealer of TEREX mobile, static, and wheeled crushers for the eastern parts of India. The company has nine branches across WB and Bihar, covering major markets including Siliguri, Haldia, Durgapur, Suri, Rampurhat, Patna, Dehri on Sone, and Darbhanga.
Comfortable Financial Risk Profile :
The company has a comfortable financial risk profile, as reflected by gearing of 0.86 times in FY22(P). In FY22(P) ISCR and DSCR stands at 10.08 times and 1.37 times, respectively.OPM and NPM stand at 6.77 times and 3.05 times, respectively, in FY22 (P). The current ratio stands comfortable at 1.45 times in FY22 (P).
Management Experience :
Mr. Raghupati Bhuwalka, Ms. Amita Bhuwalka, and Ms. Kanchan Lata Bhuwalka are the promoters of the company.The promoters of the company have more than two decades of experience in the industry. They have established healthy relationships with various reputed customers & suppliers in the industry.
Engaged in the business of providing support to activities identified by the Government as thrust areas :
The earth moving equipment market in India has been witnessing strong growth over the last few years on account of increasing demand from the construction sector across the country. The demand is also growing owing to increasing government spending on infrastructure development, including residential and non-residential projects especially in the north east, and augurs well for the company. Further, increasing mining activities are also driving the market for earth moving equipment. This continuous growth in infrastructure, mining, and construction projects is anticipated to enhance the application scope of earth moving equipment.
Exclusive dealers for Volvo and TEREX in Eastern India :
For VOLVO, there are only 3 dealers in the eastern region, and for WB and Sikkim SMPPL is the only dealer, whereas for TEREX SMPPL is the only dealer in the eastern region. SMPPL generates 65-70% of its income from the sale of machines and spares, rentals, and post-sale services.

Credit Risks:

Susceptibility to cyclicality in end-user industry :
SMPPL's volumes and revenues remain susceptible to the cyclicality in the earthmoving and commercial vehicle industries, which in turn are linked to the real estate, construction, and infrastructure industries, which are all cyclical and strongly correlated to economic cycles. In the past, because of the economic recession, the construction sector faced a slowdown, with several projects getting delayed or cancelled, affecting the company’s fortunes as well.
Supplier Concentration Risk :
SMPPL purchases almost 90% of its products from Volvo and Terex. Hence, the company is exposed to a supplier concentration risk.
Competitive nature of the industry :
The demand for construction equipment is growing owing to increasing government spending on infrastructure development, and , the earth moving equipment market in India has been witnessing strong growth over the last few years. Further, increasing mining activities are also driving the market for earth moving equipment. However, the company is exposed to intense competition from other Volvo dealers in neighbouring states and from dealers of other earth-moving equipment manufacturers, such as JCB India Ltd, Komatsu India Pvt Ltd., and Tata Hitachi Construction Machinery Company Pvt Ltd.
Inherent Risk Associated with the Trading business :
The company is exposed to the risks associated with the trading nature of business like inherently low profitability margins, lowvalue addition, low product diff erentiation etc.

ANALYTICAL APPROACH - Standalone

To arrive at its ratings, BWR has relied upon the standalone audited financials up to FY21 , provisional financials of FY22 and projected financials of FY23 and FY24.

RATING SENSITIVITIES

Going forward, the ability of the entity to accelerate its scale of operations, increase its profit margins, and strengthen the overall financial risk profile shall be the key rating sensitivities.

Positive:

Increase in scale of operations and profits.
Improvement in EBITDA margin and Net profit Margin on a consistent basis
Increase its Net Worth, improvement in the operating efficiency of the company

Negative:

Decline in Revenue & deterioration of the financial position of the company, including deterioration in liquidity on a continuous basis.
Delay in payments of its debt obligations.

LIQUIDITY INDICATORS - Adequate

The liquidity position of the company is adequate.

The average utilisation of the CC facility of ICICI Bank is 33.62% from April 2, 2021 to March 31, 2022 and CC facility of AXIS Bank is 2.38 % for the month of Mar-22(CC facility started in Mar-22 only)

ISCR stands at 10.08 times in FY22 (P), compared to 6 times in FY21 (A). The same has shown a consistent improvement over the past three fiscals. The company has taken a cash credit of Rs. 2 crore from Axis Bank and has also taken a secured equipment loans from HDFC Bank and Axis Bank during FY22.DSCR is currently at 1.37 times (FY22 (P)) compared to 2.66 times in FY21 (A) on account of increased equipment loans and new cash credit facility from Axis Bank.
The current ratio stands comfortable at 1.45 times in FY22 (P) against 1.04 times in FY21 (A).
Net cash accruals reflect a consistent upward trend since the last three fiscals. Net Cash Accruals have improved to Rs. 16.82 Crs. in FY22(P) (from Rs. 11.84 Crs. in FY21(A)) , against finance charges of Rs. 2.14 Cr.
Cash & cash equivalents reflect a consistent upward trend since the last three fiscals, increasing to Rs. 16.20 Crs in FY22(P) from Rs. 7.29 Crs in FY21(A).

ABOUT THE ENTITY

Kolkata-based Suchita Millenium Projects Pvt. Ltd., or SMPPL, was incorporated on April 12, 2005. It is an authorised dealer of Volvo CE, Volvo PENTA, EPIROC MINING, Chicago PNEUMATIC, LIEBHERR, MILLER & WACKER NEUSON for WB, Bihar and Sikkim. The company is the dealer of TEREX mobile, static, and wheeled crushers for the eastern and central parts of India. The company has nine branches across WB and Bihar, covering major markets including Siliguri, Haldia, Durgapur, Suri, Rampurhat, Patna, Dehri on Sone, and Darbhanga. Mr. Raghupati Bhuwalka, Ms. Amita Bhuwalka, and Ms. Kanchan Lata Bhuwalka are the promoters of the company.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 21-22 (Provisional)	FY 20-21 (Audited)
Operating Revenue	Rs.Crs.	318.50	229.29
EBITDA	Rs.Crs.	21.57	14.02
PAT	Rs.Crs.	9.70	7.32
Tangible Net Worth	Rs.Crs.	37.94	28.24
Total Debt/Tangible Net Worth	Times	1.10	1.24
Current Ratio	Times	1.45	1.04

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

RATING HISTORY FOR LAST THREE YEARS (including withdrawal and suspended)

Facilities	Current Rating (2022)			2021		2020		2019
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	7.00	BWR BBB/Stable (Assignment)	NA	NA	NA	NA	NA	NA
FB SubLimit	LT	(4.00)	BWR BBB/Stable (Assignment)	NA	NA	NA	NA	NA	NA
Non Fund Based	ST	42.38	BWR A3+ (Assignment)	NA	NA	NA	NA	NA	NA
NFB SubLimit	ST	(0.45)	BWR A3+ (Assignment)	NA	NA	NA	NA	NA	NA
Grand Total		49.38	(Rupees Forty Nine Crores and Thirty Eight lakhs Only)

COMPLEXITY LEVELS OF THE INSTRUMENTS - Simple

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 Criteria

Analytical Contacts
Soubhik Bhattacharjee Ratings Analyst soubhik.b@brickworkratings.com	Anuradha Gupta Director - Ratings anuradha.g@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

Suchita Millenium Projects Pvt. Ltd.

ANNEXURE-I

Details of Bank Facilities rated by BWR

SL.No.	Name of the Bank/Lender	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)
1	Axis Bank Ltd.	Cash Credit - Sanctioned	2.00	_	2.00
2	Axis Bank Ltd.	Bank Guarantee - Sanctioned	_	28.00	28.00
3	ICICI Bank	Letter of Credit - Sanctioned	_	0.45	0.45
	Sub-Limit (Bank Guarantee) - Sanctioned		(0.45)
4	ICICI Bank	Bank Guarantee - Sanctioned	_	0.18	0.18
5	ICICI Bank	Bank Guarantee - Sanctioned	_	13.75	13.75
6	ICICI Bank	Cash Credit - Sanctioned	5.00	_	5.00
	Sub-Limit (WCDL) - Sanctioned	(4.00)
Total			7.00	42.38	49.38
TOTAL (Rupees Forty Nine Crores and Thirty Eight lakhs Only)

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