Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 63.95 Crs. of Anjani Synthetics Ltd
ParticularsFacilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||
---|---|---|---|---|---|
Previous | Present | Previous (31 Mar 2020) |
Present | ||
Fund Based | 50.00 | 63.95 | Long Term |
BWR BBB (Stable)
Reaffirmation |
BWR BBB
/Stable Reaffirmation |
(5.00) | (5.00) | ||||
(40.00) | (40.00) | ||||
Non Fund Based | (1.00) | (1.00) | Short Term |
BWR A3
Reaffirmation |
BWR A3
Reaffirmation |
(0.24) | (0.24) | ||||
Grand Total | 50.00 | 63.95 | (Rupees Sixty Three Crores and Ninety Five lakhs Only) |
BWR has considered the standalone financials of the Company and essentially relied upon the audited financial statements up to FY20, management certified provisional financials as of 31st December 2020, projected financials up to FY22 and publicly available information and clarifications provided by the entity’s management.
The rating reaffirmation draws strength from a comfortable financial risk profile and adequate liquidity position. The Company also benefits from the vast business experience of about two decades of the promoters in the line of the textile industry. Revenues are impacted in the beginning of FY21 due to the Covid-19 pandemic and slowdown in the demand. However, the scale of operation picked at a normal pace from the third quater. These strengths are, however, partially offset by the moderate profitability on account of the susceptibility to volatility in cotton prices in intensely competitive textile industry, and the high working capital requirements of the business.
BWR believes that the business risk profile will be maintained over the medium term. The 'Stable' outlook indicates a low likelihood of rating change over the medium term.
KEY RATING DRIVERS
Credit Strengths:
Established in 1984, ASL's operations are managed by Mr Vasudev Agrawal, who has more than two decades of experience in the textile business. The Company benefits from longstanding existence in the industry and the business supports healthy relationships with customers and suppliers.
The company has reported a total operating income of Rs. 326.28 Crs in FY20 against Rs. 307.48 Crs in FY19. ASL has achieved sales of Rs. 165.28 Crs in 9MFY21. revenue comprised of 77% of manufacturing, job works up to 20% and rest 77% is sales from manufacturing. The operational income is estimated to remain low in fiscal 2021 on account of the uncertainty arising due to the COVID-19 pandemic and slowdown in demand. Going forward, the longstanding relationship with customers and healthy capacity utilisation levels will remain helpful for stable operations.
ASL's financial risk profile is comfortable reflected by healthy capital structure, low gearing and debt protection metrics. Due retained profits of past years, the tangible net worth is Rs. 64.03 Crs in FY20. Debt /TNW is 1.15x and 0.84x in FY19 & FY20 respectively in absence of any major long term liability. Promoters have supported the company by infusing the USL of Rs. 2.66 Crs in FY20. Debt coverage indicators such as ISCR & DSCR are comfortable at 2.20x and 1.50x as of 31st March, 2020.
Credit Risks:
The textile industry is highly fragmented and competitive with the presence of many organised and unorganised players. ASL’s margins remain vulnerable to fluctuation in the key raw material prices, namely cotton and yarn. As a result, the operating profit margins have remained thin at 5.59% and 5.18% & net profit margin at 0.98% and 1.09% in FY19 & FY20 respectively.
ASL's operations are characterised by the high working capital intensity business due to holding a large inventory between 2-3 months. Receivable days remained high at 115 and 108 days in the last two fiscals. However, the low utilization of cash credit in the last six months on the back of the covid line of emergency imparts some comfort.
Positive: Substantial and sustained growth in operating income, profitability and consequent increase in debt protection metrics and cash accrual.
Negative: Deterioration in operating margin, stretched working capital cycle driven by a pile-up of inventory or elongated receivables impacting the liquidity.
LIQUIDITY INDICATORS - Adequate
ASL'S liquidity remained adequate in the absence of any major long term liability over the medium term. The company has generated net cash accruals of Rs. 8.28 Crs in FY19 and Rs. 7.86 Crs in FY20. The entity has availed the covid line of emergency of Rs. 5 Crs and GECL of Rs. 9.79 Crs which will support the liquidity in the near term. Average cash credit limit utilisation remained below 50% over the last 3 months. Its is expected that net cash accruals will remain at Rs 7-9 crore each in fiscals 2021 and 2022, should sufficiently cover yearly debt obligation and support liquidity.
ABOUT THE ENTITY
Incorporated in 1984, Anjani Synthetics Limited (ASL) is carrying out an activity of grey fabric processing, printing, bleach, dye etc at Ahmedabad, Gujarat. ASL has a total installed capacity for processing 60 million meters of grey fabric per annum. ASL's product range includes all type of Shirting / Suiting, Dress Materials, Bed Sheets etc and certified with ISO 9001:2008.
KEY FINANCIAL INDICATORS (Standalone)Key Parameters | Units |
FY 19-20 (Audited) |
FY 18-19 (Audited) |
---|---|---|---|
Operating Revenue | Rs.Crs. | 326.28 | 307.48 |
EBITDA | Rs.Crs. | 16.89 | 17.20 |
PAT | Rs.Crs. | 3.57 | 3.00 |
Tangible Net Worth | Rs.Crs. | 64.03 | 59.50 |
Total Debt/Tangible Net Worth | Times | 0.84 | 1.15 |
Current Ratio | Times | 1.33 | 1.27 |
Not applicable
RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)Facilities | Current Rating (2021) | 2020 | 2019 | 2018 | |||||
---|---|---|---|---|---|---|---|---|---|
Type | Tenure | Amount (Rs.Crs.) |
Rating | Date | Rating | Date | Rating | Date | Rating |
Fund Based | LT | 63.95 |
BWR BBB/Stable
|
31Mar2020 |
BWR BBB (Stable)
|
02Apr2019 |
BWR BBB (Stable)
|
22Feb2018 |
BWR BBB (Stable)
|
FB SubLimit | LT | (5.00) |
BWR BBB/Stable
|
NA |
NA
|
NA |
NA
|
NA |
NA
|
(40.00) |
BWR BBB/Stable
|
NA |
NA
|
NA |
NA
|
NA |
NA
|
||
Non Fund Based | ST | NA |
NA
|
31Mar2020 |
BWR A3
|
02Apr2019 |
BWR A3
|
22Feb2018 |
BWR A3
|
NFB SubLimit | ST | (1.00) |
BWR A3
|
NA |
NA
|
NA |
NA
|
NA |
NA
|
(0.24) |
BWR A3
|
NA |
NA
|
NA |
NA
|
NA |
NA
|
||
Grand Total | 63.95 | (Rupees Sixty Three Crores and Ninety 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 | |
---|---|
Kunjal Dabhi Rating Analyst Board : +91 79 66174046 / 47 kunjal.r@brickworkratings.com |
Dileep Narayan Singh Director Ratings dileep.s@brickworkratings.com |
1-860-425-2742 | media@brickworkratings.com |
SL.No. | Type Of Facilities | Long Term(Rs.Crs.) | Short Term(Rs.Crs.) | Total(Rs.Crs.) | ||
---|---|---|---|---|---|---|
1 | Cash CreditSanctioned | 50.00 | _ | 50.00 | ||
Sub-Limit (Bank Guarantee) Sanctioned | (1.00) | |||||
Sub-Limit (CEL) Sanctioned | (0.24) | |||||
Sub-Limit (EPC/PCFC/FBD/EBR) Sanctioned | (5.00) | |||||
Sub-Limit (Working capital demand loan) Sanctioned | (40.00) | |||||
2 | Covid -19 Emergency Line CreditOut-standing | 4.16 | _ | 4.16 | ||
3 | GECLSanctioned | 9.79 | _ | 9.79 | ||
Total | 63.95 | 0.00 | 63.95 | |||
TOTAL (Rupees Sixty Three Crores and Ninety Five lakhs Only) |
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About Brickwork RatingsBrickwork 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 11,400 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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