RATING RATIONALE
17Aug2021

Andromeda Packaging Pvt. Ltd.

Brickwork Ratings upgrades the rating for the Bank Loan Facilities of Rs. 29.65 Crs. of Andromeda Packaging Pvt. Ltd.

Particulars
Facilities** Amount (Rs.Crs.) Tenure Rating#
Previous Present Previous
(14 Apr 2021)
Present
Fund Based 18.37 29.65 Long Term BWR B+ /Stable; Issuer Not Cooperating
Downgraded
BWR BB /Stable
Upgrade
Grand Total 18.37 29.65 (Rupees Twenty Nine Crores and Sixty 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


RATING ACTION / OUTLOOK

Brickwork Ratings (BWR) has upgraded the long term rating to "BWR BB" with a "Stable" outlook for the bank loan facilities amounting Rs 29.65 Crores of Andromeda Packaging Pvt. Ltd. The rating draws strength from the vast experience of the promoters in the industry, long standing relationship with its customers, average financial risk profile and increase in revenue. However, the rating is constrained by high gearing ratio, stretched liquidity and volatility in the raw material price.

The ‘Stable’ outlook indicates a low likelihood of rating change over the medium term. BWR expects that the business risk profile of Andromeda Packaging Pvt. Ltd. will be maintained over the medium term. The rating outlook may be revised to 'Positive' in case the company improves its scale of operations, gearing and liquidity position. The rating outlook may be revised to 'Negative' if there is any deterioration in the financial risk profile of the company.

KEY RATING DRIVERS

Credit Strengths:


Credit Risks:

ANALYTICAL APPROACH - Standalone

For arriving at its rating, BWR has applied its rating methodology as detailed in the Rating Criteria detailed below (hyperlinks provided at the end of this rationale).

RATING SENSITIVITIES

Going forward the ability of the company to improve its scale of operation, to increase its revenue and profitability margin, to maintain its financial risk profile and to improve its liquidity position will be the key rating sensitivities.

Positive: The ratings may be upgraded if revenue, profitability and overall credit profile show substantial improvement.

Negative: The rating may be downgraded if there is a significant deterioration in the business and financial risk profile of the company from its current level.

LIQUIDITY INDICATORS - Stretched

Liquidity seems stretched although the current ratio is moderate at 1.85 times in FY20 as against 1.35 times in FY19 and it is expected to reduce marginally to 1.58 times in FY21. Cash and cash equivalents increased slightly to Rs 0.11 Crores as on 31 March 2020 as against Rs 0.04 Crores as on 31 March 2019 and is expected to increase slightly to Rs 0.13 Crores as on 31 March 2021. The Net Cash Accruals/Long Term Debt is low at 0.04 times in FY20 as against 0.06 times in FY19. The Net Cash Accruals/Long Term Debt in FY21 stands at 0.13 times due to decrease in long term borrowings. The net cash accruals are just adequate to cover for the debt repayment obligations. Also, given the proposed loans and increased debt obligations, the company's ability to achieve the estimated net cash accrual remains a rating sensitivity. Working capital utilization of Bank of Maharashtra cash credit limit remains moderate. Days Receivables has reduced marginally to a reasonable 49 days in FY20 from 59 days in FY19 and in FY21, there is further reduction in days receivable to 53 days.

ABOUT THE ENTITY

M/s. Andromeda Packaging Private Limited incorporated in 1994 and has been in operation for 27 years with Mr Suresh Kumar Lath and his son Mr Nikhil Lath at the helm of affairs. The unit is into manufacturing of corrugated packaging solution targeted to various industries which include automobile industry, healthcare industry, food industry etc. The main raw material which is used for the manufacture of corrugated boxes is Kraft Paper which is completely environment friendly.

KEY FINANCIAL INDICATORS (Standalone)
Key Parameters Units FY 19-20
(Audited)
FY 18-19
(Audited)
Operating Revenue Rs.Crs. 49.00 35.31
EBITDA Rs.Crs. 2.42 1.31
PAT Rs.Crs. 0.36 0.29
Tangible Net Worth Rs.Crs. 6.49 6.13
Total Debt/Tangible Net Worth Times 4.07 2.79
Current Ratio Times 1.85 1.35

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

NA

RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)
Facilities Current Rating (2021) 2021 (History) 2020 2019 2018
Type Tenure Amount
(Rs.Crs.)
Rating Date Rating Date Rating Date Rating Date Rating
Fund Based LT 29.65
BWR BB/Stable
(Upgrade)
14Apr2021
BWR B+/Stable; Issuer Not Cooperating
(Downgraded)
NA
NA
19Dec2019
BWR BB-/Stable
(Assigned)
NA
NA
Grand Total 29.65 (Rupees Twenty Nine Crores and Sixty Five lakhs Only)
COMPLEXITY LEVELS OF THE INSTRUMENTS - NA

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

Nimmy Anand

Ratings Analyst nimmy.a@brickworkratings.com

Nagaraj K

Associate Director - Ratings Board : +91 80 4040 9940 nagaraj.ks@brickworkratings.com
1-860-425-2742 | media@brickworkratings.com
Andromeda Packaging Pvt. 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 Bank of Maharashtra Cash CreditSanctioned 11.50 _ 11.50
2 Bank of Maharashtra Cash CreditProposed 3.50 _ 3.50
3 Bank of Maharashtra Term LoanSanctioned 2.48 _ 2.48
4 Bank of Maharashtra Term LoanSanctioned 4.27 _ 4.27
5 Bank of Maharashtra Term LoanSanctioned 1.00 _ 1.00
6 Bank of Maharashtra GECLSanctioned 2.90 _ 2.90
7 Bank of Maharashtra Term LoanSanctioned 3.00 _ 3.00
8 Bank of Maharashtra Term LoanProposed 1.00 _ 1.00
Total 29.65 0.00 29.65
TOTAL (Rupees Twenty Nine Crores and Sixty Five lakhs Only)
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