Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 62.75 Crs. of East West Freight Carriers Ltd
ParticularsFacilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||
---|---|---|---|---|---|
Previous | Present | Previous (24 Mar 2022) |
Present | ||
Fund Based | 39.19 | 54.25 | Long Term |
BWR BBB- /Negative
Reaffirmation |
BWR BBB -
/Negative Reaffirmation |
(0.00) | (4.30) | ||||
2.00 | 8.00 | Short Term |
BWR A3+
Assignment |
BWR A3 +
Reaffirmation |
|
Non Fund Based | 0.50 | 0.50 | Short Term |
BWR A3+
Reaffirmation |
BWR A3 +
Reaffirmation |
(0.50) | (0.00) | ||||
(0.00) | (8.00) | ||||
Grand Total | 41.69 | 62.75 | (Rupees Sixty Two Crores and Seventy Five lakhs Only) |
BWR has essentially relied upon the audited financials up to FY22, provisional financials of H1FY23, projected financials up to FY25, publicly available information, and information/clarifications provided by the company's management.
The ratings reaffirm factors of experienced management, moderate capital structure and debt service coverage metrics, and adequate liquidity position. However, the ratings are constrained by improved revenue, remaining a moderate scale of operations, low profitability margins, low order book position, and working capital-intensive nature of operations.
The ‘Negative’ outlook indicates a low likelihood of rating change over the medium term. BWR expects that East West Freight Carriers Ltd's business risk profile will be maintained over the medium term. The outlook may be revised to Stable in case of better-than-expected operating income and improvement in financial risk profile debt-protection indicators.
KEY RATING DRIVERSCredit Strengths:
The company stands to benefit from experienced and qualified management. It has an average 10 Years relationship with its top 5 customers. The Company has a widespread logistical network with 14 Branches spread all over the country as marketing offices and they cater to exports to 176 different countries.
Improved and the company has a moderate capital structure marked by the tangible net worth and gearing ratio were around Rs.26.30 Crs and 3.17 times respectively, as on 31st March 2022 against the Rs.23.40 Crs and 3.31 times, as on 31 Mar 2021.
Improved and the company has moderate debt service coverage metrics marked by the interest service coverage metric (ISCR), and debt service coverage metric (DSCR) were around 1.65 times, and 1.16 times, respectively, as on 31st March 2022 against the 1.13 times, and 0.86 times, respectively, as on 31st March 2021.
The company revenue improved to Rs.229.59 Crs in FY22 against Rs.161.26 Crs in FY21. On a provisional basis, the company has reported the revenue of around Rs.133.38 Crs for 6MFY23.
The profitability margins were low marked by net profit margin and operating margin were 1.21% and 5.22% in FY22 against (0.22%) and 5.58% in FY21 respectively.
The company usually accepts orders on a short period basis and also not made any agreements for job arrangements. Hence, it does not maintain any order book position. The company gets order worth of around Rs.18.00 Crs every month.
BWR has applied its rating methodology as detailed at the end of the document. BWR has adopted a standalone approach for arriving at its ratings.
RATING SENSITIVITIES
Positive:
Increase in scale of operations and profitability on a sustained basis
Improvement in the liquidity position.
Prudent working capital management and timely recovery of receivables
Specific credit metrics that could lead to an upgrade of the company’s rating include (1) Improvement in the capital, (2) ISCR and DSCR greater than 3.00 times on a sustained basis.
Negative:
Deterioration in the scale of operations
Deterioration in financial risk profile.
A stretch in the receivables cycle of the company
The liquidity indicator of the company marked by the current ratio marginally improved to 2.49 times, as on 31 Mar 2022 from 2.07 times as on March 2021; however remains adequate and above benchmark levels. The Working capital cycle of the company remains improved over the previous year at 91 days for FY22 largely due to a reduction in the receivable cycle. Adequate net cash accruals of Rs.4.40 Crs, Rs.4.81 Crs and 5.46 Crs against the approximate CPLTD would be around Rs.3.60 Crs in FY23, FY24, and FY25 respectively. The cash and cash equivalents were around Rs.8.84 Crs, as on March 31, 2022. The working capital utilization limits remained at around 95% for the past 12 months ending December 2022.
ABOUT THE ENTITYEast-West Freight Carriers Ltd was incorporated in 1976 having a registered office in Mumbai, Maharashtra. It is in the business of providing air and ocean freight transportation, third-party logistics solutions, Non-Vessel Operating Common Carrier (NVOCC) operations, warehousing, custom clearances, and other Value Added Services. The Company is specialized in handling DGR Cargo and it has obtained a license to handle logistics of DGR Cargo under the Danger Goods Regulation Act. The Company has a widespread logistical network with 14 Branches spread all over the country as marketing offices and they cater to exports to 176 different countries.
KEY FINANCIAL INDICATORS (Standalone)Key Parameters | Units |
FY 21-22 (Audited) |
FY 20-21 (Audited) |
FY 22-23 (Provisional - Midterm_H1) |
---|---|---|---|---|
Operating Revenue | Rs.Crs. | 229.59 | 161.26 | 133.38 |
EBITDA | Rs.Crs. | 11.99 | 9.00 | 4.49 |
PAT | Rs.Crs. | 2.78 | -0.36 | 0.45 |
Tangible Net Worth | Rs.Crs. | 26.30 | 23.40 | 27.09 |
Total Debt/TNW | Times | 3.17 | 3.31 | 3.64 |
Current Ratio | Times | 2.49 | 2.07 | 2.60 |
NA
RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)Facilities | Current Rating (2023) | 2022 | 2021 | 2020 | |||||
---|---|---|---|---|---|---|---|---|---|
Type | Tenure | Amount (Rs.Crs.) |
Rating | Date | Rating | Date | Rating | Date | Rating |
Fund Based | LT | 54.25 |
BWR BBB-/Negative
(Reaffirmation) |
24Mar2022 |
BWR BBB- Negative
(Reaffirmation) |
NA |
NA
|
24Dec2020 |
BWR BBB- Negative
(Reaffirmation) |
FB SubLimit | LT | (4.30) |
BWR BBB-/Negative
(Reaffirmation) |
NA |
NA
|
NA |
NA
|
NA |
NA
|
Fund Based | ST | 8.00 |
BWR A3+
(Reaffirmation) |
24Mar2022 |
BWR A3+
(Assignment) |
NA |
NA
|
NA |
NA
|
Non Fund Based | ST | 0.50 |
BWR A3+
(Reaffirmation) |
24Mar2022 |
BWR A3+
(Reaffirmation) |
NA |
NA
|
24Dec2020 |
BWR A3+
(Reaffirmation) |
NFB SubLimit | ST | (8.00) |
BWR A3+
(Reaffirmation) |
NA |
NA
|
NA |
NA
|
NA |
NA
|
Grand Total | 62.75 | (Rupees Sixty Two Crores and Seventy Five 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 | |
---|---|
Prashanth Boorala Ratings Analyst Board : +91 40 2331 0161 / 2331 0071 prashanth.b@brickworkratings.com |
Nagaraj K Associate Director - Ratings Board : +91 80 4040 9940 nagaraj.ks@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 | Kotak Mahindra Bank | Loans against PropertyOut-standing | 18.29 | _ | 18.29 | |
2 | Standard Chartered Bank | Loans against PropertyOut-standing | 9.48 | _ | 9.48 | |
3 | Standard Chartered Bank | OverdraftSanctioned | _ | _ | 0.00 | |
Sub-Limit (Bonds & Guarantees) Sanctioned | (0.00) | |||||
4 | Standard Chartered Bank | Import Invoice FinancingSanctioned | _ | 8.00 | 8.00 | |
Sub-Limit (Bank Guarantee) Sanctioned | (8.00) | |||||
Sub-Limit (OD) Sanctioned | (4.30) | |||||
5 | State Bank Of India (SBI) | GECL 1.0Out-standing | 2.38 | _ | 2.38 | |
6 | State Bank Of India (SBI) | CECLOut-standing | _ | _ | 0.00 | |
7 | State Bank Of India (SBI) | GECLOut-standing | 2.20 | _ | 2.20 | |
8 | State Bank Of India (SBI) | Cash CreditSanctioned | 21.90 | _ | 21.90 | |
9 | State Bank Of India (SBI) | Bank GuaranteeSanctioned | _ | 0.50 | 0.50 | |
Total | 54.25 | 8.50 | 62.75 | |||
TOTAL (Rupees Sixty Two Crores and Seventy Five lakhs Only) |
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