RATING RATIONALE

20Aug2024

Awadh Enterprises

Brickwork Ratings upgrades the long rating and removes the ratings from ISSUER NOT COOPERATING* category and withdrawn the short term rating for the Bank Loan Facilities of Rs. 7.75 Crs. of Awadh Enterprises.

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (14 May 2024)	Present
Fund Based	10.25	7.75	Long Term	BWR C Continues to be in ISSUER NOT COOPERATING* category/Downgraded	BWR B + /Stable Upgrade and Removed from the ISSUER NOT COOPERATING* category
Non Fund Based	5.00	0.00	Short Term	BWR A4 Continues to be in ISSUER NOT COOPERATING* category/Reaffirmed	Withdrawal
Grand Total	15.25	7.75	(Rupees Seven 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 Client confirmed via e-mail that the proposed cash credit Rs 4.0 Cr had been converted into sanctioned cash credit limit.

RATING ACTION / OUTLOOK

BWR had initially assigned the long term rating of BWR BB-/Stable and the short term rating of BWR A4 for the bank loan facilities of Rs 15.25 Cr of Awadh Enterprises on 08 June 2018. On 28 Apr 2020 the long term rating was downgraded to BWR B+/Stable and the short term rating was reaffirmed at BWR A4 and the ratings migrated to Issuer Not Cooperating category as the issuer did not cooperate. On 19 May 2021 the long term rating was downgraded to BWR B/Stable and the short term rating was reaffirmed at BWR A4 and the ratings continued under Issuer Not Cooperating category. On 18 Apr 2022 the long term rating was downgraded to BWR B-/Stable and the short term rating was reaffirmed at BWR A4 and the ratings continued under Issuer Not Cooperating category. On 07 Apr 2023 the long term rating was downgraded to "BWR C+" and the short term rating was reaffirmed at BWR A4 and the ratings continued under Issuer Not Cooperating category. On 14 May 2024 the long term rating was downgraded to "BWR C" and the short term rating was reaffirmed at BWR A4 and the ratings continued under Issuer Not Cooperating category.

The rating draws strength from location advantage of the company and moderate financial risk profile. The rating of the company is constrained by the risk associated with the nature of competition in industry and constitution for proprietorship companies.

BWR believes that the business risk profile of “Awadh Enterprises” 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 there is significant improvement in revenues, and profit margins of the company. The rating outlook may be revised to “Negative” if there is any deterioration in the financial risk profile including liquidity of the company.

KEY RATING DRIVERS

Credit Strengths:

Locational Advantage :
Awadh enterprise was located in Satna, MadhyaPradesh.The Company operating its business mainly in Madhya Pradesh and Uttar Pradesh because firm’s customers are mainly from M.P and Uttar Pradesh, So there is also locational advantage to work from M.P and U.P since it is affordable to get supply from Jharkhand and Chattisgarh and M.P at lower cost.
Moderate Financial profile :
The Operating income of the company has decreased from 74.15cr in FY 2022 to 63.05cr in FY 2023 and again it is decreased to 24.92cr in FY2024 due to shutdown of their customers business however they are trying to exploring new customers for expansion of business. PAT has decreased from 1.89cr in FY2022 to 1.64cr in FY2023 and there is marginal increase in PAT from 1.64cr in FY2023 to 1.66cr in FY2024, Even though there is a decrease in Operating income the company has maintain a stability in their net profit by decreasing their operating expenses. So that the net margin has been increased slightly from 2.55% in FY2022 to 2.60% in FY2023 and again it is increased to 6.66% in FY2024.The tangible net worth of the company also decreased from 4.56cr in FY2023 to 2.18cr in FY2024.This is because of the company has withdraw the amount to invest in the shares of M/s Shanti Gopal Concast Limnited due to this the non current investments of the company has increased from 6.20 Cr in FY2023 to 7.04 Cr in FY2024. The Current ratio of the company stands at 1.41 times in FY2024. ISCR of the company stands at 1.83 times in FY2024 which is in accepted level. DSCR has decreased from 0.98 times in FY2022 to 0.61 times in FY2023 and it is increased to 0.89 times in FY2024.

Credit Risks:

Competition in the Industry :
The Company has facing huge no. of competitors especially in Madyapradesh where the company was located. Because Madhya Pradesh and it's surrounding states are one of the top Largest Coal Producing States in India so that most of the companies are engaged in that area which leads to increase the competition.
Constitution(For Proprietorships and Partnership cases) :
Since it is a a proprietorship firm, Withdrawal of capital by the proprietor/Partners for any personal contingency would adversely affect the capital structure of the firm.

ANALYTICAL APPROACH - Standalone

The Company has no subsidiary, associate or joint ventures as on 23/07/2024. BWR has taken a standalone approach for the bank loan rating review of the company. BWR has applied its rating methodolgy as detalaled in the rating criteria(hyperlinks provided at the end of this rationale).

RATING SENSITIVITIES

Going forward, the ability of the company to improve its financial profile and maintaining adequate liquidity will remain the key rating sensitivities.

Positive: Rating may be upgraded in case of substantial improvement in revenues and profit of the company, or on account of any other favourable factor.

Negative: Rating may be downgraded in case there is deterioration in financial profile of the company including the liquidity of the company or on account of any unforeseen unfavourable events.

LIQUIDITY INDICATORS - Adequate

The company has cash and bank balance of 2.54 Cr in FY2024. The current ratio of the company stands at 1.41 times in FY2024. The company's average utilisation of cash credit is 13.03% during the last six months. The current portion of long term debt is 1.71 Cr and the net cash accruals is 1.86 Cr in FY2024. ISCR of the company stands at 1.83 times in FY2024. The DSCR of the company stands at 0.89 times in FY2024. The Company has no group companies. Taking all the above points into consideration the firm liquidity position is defined as Adequate.

ABOUT THE ENTITY

Macro Economic Indicator	Sector	Industry	Basic Industry
Energy	Oil, Gas & Consumable Fuels	Consumable Fuels	Trading - Coal

M/s Awadh Enterprises, established in 2013 as a proprietorship firm, having its registered office at Satna, Madhya Pradesh. It is being managed by proprietor Amit Agrawal. Awadh enterprise was located in Satna, MadhyaPradesh. Firm is engaged in trading of coal. The company imports its raw materials form Jharkhand, Chattishgarh and Uttar Pradesh. The Company operating its business mainly in Madhya Pradesh and Uttar Pradesh because firm’s customers are mainly from M.P and Uttar Pradesh, So there is also locational advantage to work from M.P and U.P since it is affordable to get supply from Jharkhand and Chattisgarh and M.P at lower cost. Shyam Coal Company and Northern Coalfields limited are the two main suppliers for awadh enterprises.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 21 - 22 (Audited)	FY 22 - 23 (Audited)	FY 23 - 24 (Provisional)
Operating Revenue	Rs.Crs.	74.15	63.05	24.92
EBITDA	Rs.Crs.	4.51	4.03	4.02
PAT	Rs.Crs.	1.89	1.64	1.66
Tangible Net Worth	Rs.Crs.	6.45	4.56	2.18
Total Debt / Tangible Net Worth	Times	5.09	5.22	8.95
Current Ratio	Times	15.43	2.00	1.41

KEY COVENANTS OF THE FACILITY RATED

The terms of sanction include covenants normally stipulated for such facilities.

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

Creadit Rating Agency Status and Reason for Non-Cooparation Date of Press Release
CRISIL Despite repeated attempts to engage with the management, CRISIL Ratings failed to receive any information on the financial performance from the Awadh Enterprises and bankers feedback from the banker. CRISIL Ratings has reaffirmed the long term rating at CRISIL B (Stable) and continued under Issuer Not Cooperating category on 17 Oct 2023. 17Oct2023

Creadit Rating Agency	Status and Reason for Non-Cooparation	Date of Press Release
CRISIL	Despite repeated attempts to engage with the management, CRISIL Ratings failed to receive any information on the financial performance from the Awadh Enterprises and bankers feedback from the banker. CRISIL Ratings has reaffirmed the long term rating at CRISIL B (Stable) and continued under Issuer Not Cooperating category on 17 Oct 2023.	17Oct2023

ANY OTHER INFORMATION

Not applicable

RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)

Facilities	Current Rating (2024)			2024 (History)		2023		2022		2021
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	7.75	BWR B+/Stable (Upgrade and Removed from the ISSUER NOT COOPERATING* category)	14May2024	BWR C (Continues to be in ISSUER NOT COOPERATING* category/Downgraded)	07Apr2023	BWR C+ (Continues to be in ISSUER NOT COOPERATING* category/Downgraded)	18Apr2022	BWR B- Stable (Downgrade/ISSUER NOT COOPERATING*)	19May2021	BWR BStable (Downgrade/ISSUER NOT COOPERATING*)
Non Fund Based	ST	0.00	Withdrawal (0)	14May2024	BWR A4 (Continues to be in ISSUER NOT COOPERATING* category/Reaffirmed)	07Apr2023	BWR A4 (Continues to be in ISSUER NOT COOPERATING* category/Reaffirmed)	18Apr2022	BWR A4 (Reaffirmation/ISSUER NOT COOPERATING*)	19May2021	BWR A4 (Reaffirmation/ISSUER NOT COOPERATING*)
Grand Total		7.75	(Rupees Seven Crores and Seventy Five lakhs Only)

*** The Client confirmed via e-mail that the proposed cash credit Rs 4.0 Cr had been converted into sanctioned cash credit limit. Hyperlink/Reference to applicable Criteria

Analytical Contacts
Krishnappa Murugesh Ratings Analyst krishnappa.m@brickworkratings.com	V.K.Kukreja Associate Director - Ratings Board : +91 11 2341 2232 kukreja.vk@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

Awadh Enterprises

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.)	Complexity of the Instrument
1	Bank of Baroda	Cash Credit - Sanctioned	7.75	_	7.75	Simple##
2	Bank of Baroda	Cash Credit - Proposed	_	_	0.00	Simple##
3	Bank of Baroda	Bank Guarantee - Sanctioned	_	_	0.00	Simple##
Total			7.75	0.00	7.75
TOTAL (Rupees Seven Crores and Seventy Five lakhs Only)

* The Client confirmed via e-mail that the proposed cash credit Rs 4.0 Cr had been converted into sanctioned cash credit limit.

## 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.

ANNEXURE-II

INSTRUMENT DETAILS

Instrument	Issue Date	Amount (Rs.Crs)	Coupon Rate (%)	Maturity Date	ISIN Particulars	Complexity of the Instrument
Nil	Nil	Nil	Nil	Nil	Nil	Nil

ANNEXURE-III

List of entities consolidated

Name of Entity	% Ownership	Extent of consolidation	Rationale for consolidation
Nil	Nil	Nil	Nil

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