Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 32.28 Crs. of Sadhav Shipping Ltd
ParticularsFacilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||
---|---|---|---|---|---|
Previous | Present | Previous (13 Feb 2020) |
Present | ||
Fund Based | 10.68 | 15.70 | Long Term |
BBB-
/Stable Reaffirmed |
BWR BBB -
/Stable Reaffirmation |
Non Fund Based | 16.58 | 16.58 | Short Term |
A3
Reaffirmed |
BWR A3
Reaffirmation |
Grand Total | 27.26 | 32.28 | (Rupees Thirty Two Crores and Twenty Eight lakhs Only) |
BWR believes the Sadhav Shipping Limited 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 DRIVERSCredit Strengths:
Company is a family managed business with Captain Kamal Choudhury & Mrs. Sadhana K. Choudhury. Captain Kamal Choudhary, CMD, had worked with SCI for 12 years where he commanded tankers, general cargo vessels, semi container vessels as well as passenger vessels. Mrs. Sadhana K. Choudhury, holds a post graduation in Arts (History) and has more than a decade of teaching experience. Since inception she has been involved with SSL and manages the Administration and Public Relations departments.
Sadhav Shipping Ltd was incorporated in 1996. Promoters of the company have experience of more than 3 decades in this industry which helps to build a healthy relationship with its customers & suppliers.
Operating revenues of the company have improved by almost 17% during FY20 to touch Rs.61 crs (P.Y Rs.52.11 crs) and has been consistent in FY21 (prov.) at Rs.60.58 Crs.The revenue of the company has shown a CAGR of 7% for the past four years and based on the growth pattern, BWR expects that the company to grow on similar lines going forward.
Overall gearing of the company as indicated by Total Debt/TNW has improved from 1.82x in FY18 to 1.66x in FY19 and 0.89x in FY20. TOL/TNW are also improved from 2.60x in FY18 to 2.12x in FY20 and then further improved to 4.88x in FY-20 due to control over payables holding period. During FY22, overall gearing as indicated by Total Debt/TNW and TOL/TNW is expected to remain stable as the company continues to obtain higher credit periods from suppliers and positive effects of reduction in term debt and improvement in net worth position.
The Company has bagged two consecutive high value orders from Oil & Natural Gas Corporation Limited (ONGC) of Rs 85 Crs. The first one is for Offshore Supply Vessel (OSV) Canara Pride which started operations in March 2021 and the second one for OSV Adwita which started operation in May 2021. The Adwita contract is a re-contract after finishing its first contract in January 2021. The company has also bagged lucrative contracts in the port services sector thereby broadening the service bouquet with existing clients viz. Paradip Port Trust and Mumbai Port Trust. They have also gained extensions for existing contracts of Oil Spill Response and Speed Boats in Mumbai, Paradip and Vizag. Addition of contracts and the renewal of existing contracts has resulted in an Order Book of Rs 292.80 Crs. as on 25.05.2021 against Rs. 301 Crs. as on 31-Dec-2020. The average tenure for order is between 3 to 5 years.
Credit Risks:
The company operates & manages a fleet of 24 vessels of which 14 are owned by them, the rest are either chartered in from third party owners or owned by clients directly. The company is exposed to redeployment, repricing & risks associated with the vessel coupled with the competitive Industry scenario limiting price flexibility. The company’s operations also remain exposed to fluctuations in the charter rates.
The company operates a fleet of vessels and its operations are marked by large working capital requirements. Gross current assets were at 63 days as on March 31, 2020, mainly on account of large receivables and current assets in the form of security deposit for contracts to be executed. The Debt of the company has decreased to Rs. 24.24 Crs in FY20 from Rs 36.79 Crs in FY19. However it’s still relatively higher on account of the capital intensive nature of operations.
SSL’s scale of operations is modest with a topline of Rs 61 crs in FY21 and was on similar lines in FY20. While the growth prior to that has been in double digits, it is also attributable to the lower base effect.
Upward: Sustenance of profit margins leading to improved liquidity and financial risk profile of the business could lead to a positive rating action.
Downward: Lower than expected growth in revenues, profitability, increase in working-capital requirements of the company would be negative for the rating.
LIQUIDITY INDICATORS - Adequate
For FY22 and FY23, cash accruals of Rs.13.33 crs and Rs.14.56 crs are expected against repayment obligations of Rs. 3.25 crs and Rs. 4.50 crs respectively. The company has availed interest moratorium on cash credit from March 2020 to August 2020 on loan repayments during FY21, the same had been converted into FITL and repaid completely as on 31-Mar-2021. The company also availed WCTL under GECL facility of Rs.3.33 crs to meet liquidity mismatches. However, no proposal for One Time Restructuring under a one time loan recast window announced by RBI has been availed. The Cash & Cash Equivalent as on 31st March 2021 is Rs 2.24 Crores approx including FD of Rs 1.93 Crores and Term Deposit of Rs 0.25 Crores and Current Account balance of Rs 0.05 Crores. The average WC utilisation for the last 6 months has been around 88%.
ABOUT THE ENTITYSadhav Shipping Limited (SSL) was incorporated in 1996 with the objective of owning & operating tanker barges, tugs and merchant vessels in addition to undertaking ship management for other owners. SSL owns & operates tanker barges, bulk cargo barges, security boats and anchor handling tug vessels. It also carries lighterage operations and is involved in the operations & management of vessels for ONGC. The company operates & manages a fleet of 24 vessels of which 14 are owned by itself, whereas the rest are either chartered from third party owners or owned by clients directly. The registered office of the firm is located at Masjid in Mumbai, Maharashtra, whereas its corporate office is at Andheri in Mumbai, Maharashtra.
KEY FINANCIAL INDICATORS (Standalone)Key Parameters | Units |
FY 19-20 (Audited) |
FY 18-19 (Audited) |
---|---|---|---|
Operating Revenue | Rs.Crs. | 61.00 | 52.11 |
EBITDA | Rs.Crs. | 17.46 | 16.58 |
PAT | Rs.Crs. | 5.21 | 1.72 |
Tangible Net Worth | Rs.Crs. | 27.36 | 22.16 |
Total Debt/Tangible Net Worth | Times | 0.89 | 1.66 |
Current Ratio | Times | 1.14 | 1.07 |
Facilities | Current Rating (2021) | 2020 | 2019 | 2018 | |||||
---|---|---|---|---|---|---|---|---|---|
Type | Tenure | Amount (Rs.Crs.) |
Rating | Date | Rating | Date | Rating | Date | Rating |
Fund Based | LT | 15.70 |
BWR BBB-/Stable
(Reaffirmation) |
13Feb2020 |
BBB-/Stable
(Reaffirmed) |
NA |
NA
|
22Mar2018 |
BBB-/Stable
(Upgrade) |
Non Fund Based | ST | 16.58 |
BWR A3
(Reaffirmation) |
13Feb2020 |
A3
(Reaffirmed) |
NA |
NA
|
22Mar2018 |
A3
(Upgrade) |
Grand Total | 32.28 | (Rupees Thirty Two Crores and Twenty Eight 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.
Analytical Contacts | |
---|---|
Gaurav Agnihotri Senior Rating Analyst gaurav.a@brickworkratings.com |
Chintan Dilip Lakhani Director- Ratings chintan.l@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 | Term LoanSanctioned | 4.83 | _ | 4.83 |
2 | Term LoanSanctioned | 0.26 | _ | 0.26 |
3 | Cash CreditSanctioned | 7.28 | _ | 7.28 |
4 | GECLSanctioned | 3.33 | _ | 3.33 |
5 | Bank GuaranteeSanctioned | _ | 16.58 | 16.58 |
Total | 15.70 | 16.58 | 32.28 | |
TOTAL (Rupees Thirty Two Crores and Twenty Eight lakhs Only) |
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