RATING RATIONALE
27Jan2023

East West Freight Carriers Ltd

Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 62.75 Crs. of East West Freight Carriers Ltd

Particulars
Facilities** 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)
#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
*** The mandate was logged on 19 September 2022 for a total rating amount of Rs.62.19 Crs. The client has requested for total facilities to be rated as Rs.62.75 Crs, which includes the new enhancement limits of Kotak LAP and GECL 1.0 Ext and also enhanced existing facility of Import Invoice Financing. The SCB has sanctioned the main facility of Import Invoice Financing of Rs. 8.00 Crs with the sub-limits of OD of Rs.4.30 Crs and BG of Rs.8.00 Crs and also capped total amount is Rs.8.00 Crs. Present OD and BG are considered under the sublimit under the Import Invoice Financing.


RATING ACTION / OUTLOOK

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 DRIVERS

Credit Strengths:


Credit Risks:

ANALYTICAL APPROACH - Standalone

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

LIQUIDITY INDICATORS - Adequate

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 ENTITY

East-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

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

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)
*** The mandate was logged on 19 September 2022 for a total rating amount of Rs.62.19 Crs. The client has requested for total facilities to be rated as Rs.62.75 Crs, which includes the new enhancement limits of Kotak LAP and GECL 1.0 Ext and also enhanced existing facility of Import Invoice Financing. The SCB has sanctioned the main facility of Import Invoice Financing of Rs. 8.00 Crs with the sub-limits of OD of Rs.4.30 Crs and BG of Rs.8.00 Crs and also capped total amount is Rs.8.00 Crs. Present OD and BG are considered under the sublimit under the Import Invoice Financing. 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

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
East West Freight Carriers 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 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)
* The mandate was logged on 19 September 2022 for a total rating amount of Rs.62.19 Crs. The client has requested for total facilities to be rated as Rs.62.75 Crs, which includes the new enhancement limits of Kotak LAP and GECL 1.0 Ext and also enhanced existing facility of Import Invoice Financing. The SCB has sanctioned the main facility of Import Invoice Financing of Rs. 8.00 Crs with the sub-limits of OD of Rs.4.30 Crs and BG of Rs.8.00 Crs and also capped total amount is Rs.8.00 Crs. Present OD and BG are considered under the sublimit under the Import Invoice Financing.

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About Brickwork Ratings

Brickwork Ratings (BWR), a Securities and Exchange Board of India [SEBI] registered Credit Rating Agency and accredited by Reserve Bank of India [RBI], offers credit ratings of Bank Loan, Non- convertible / convertible / partially convertible debentures and other capital market instruments and bonds, Commercial Paper, perpetual bonds, asset-backed and mortgage-backed securities, partial guarantees and other structured / credit enhanced debt instruments, Security Receipts, Securitization Products, Municipal Bonds, etc. BWR has rated over 12,000 medium and large corporates and financial institutions’ instruments. BWR has also rated NGOs, Educational Institutions, Hospitals, Real Estate Developers, Urban Local Bodies and Municipal Corporations. BWR has Canara Bank, a leading public sector bank, as one of the promoters and strategic partner. BWR has its corporate office in Bengaluru and a country-wide presence with its offices in Ahmedabad, Chandigarh, Chennai, Hyderabad, Kolkata, Mumbai and New Delhi along with representatives in 150+ locations.

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