Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 85.00 Crs. of Arunnachala Impex Pvt. Ltd. (AIPL or the Company)
ParticularsFacilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||
---|---|---|---|---|---|
Previous | Present | Previous (18 May 2021) |
Present | ||
Fund Based | 60.00 | 80.00 | Long Term |
BWR BBB-/Stable
Assigned |
BWR BBB -
/Stable Reaffirmation |
Non Fund Based | 5.00 | 5.00 | Short Term |
BWR A3
Assigned |
BWR A3
Reaffirmation |
(7.00) | (7.00) | ||||
(5.00) | (5.00) | ||||
Grand Total | 65.00 | 85.00 | (Rupees Eighty Five Crores Only) |
BWR Reaffirms the Ratings of BWR BBB-/A3 (Stable) for Bank Facilities of Arunnachala Impex Pvt. Ltd.(AIPL or the Company)
KEY RATING DRIVERSCredit Strengths:
The main promoters of AIPL, Mr. Selvaraj and Mrs. Kalaivani, have 31 years and 16 years respectively in trading of pulses. The promoters have established a healthy business relationship with customers which enables them to receive repeat orders from them.
As on March 31, 2021 (prov.), Tangible Networth of AIPL improved to Rs.41.52 Crs as against Rs.33.79 Crs as on March 31, 2020. Total Gearing of the Company has improved to 1.07x as on March 31, 2021 (prov.) as against 1.82x as on March 31, 2020 due to repayment of unsecured loans. ISCR of the Company for FY21 (prov.) remained comfortable at 2.28x as against 2.05x in FY20. Due to efficient inventory management and faster debtor realisation, operating cycle of AIPL remained comfortable at 23 days as on March 31, 2021 (prov.) as against 32 days as on March 31, 2020.
AIPL generates majority of its revenue from its customers located in Tamil Nadu, which limits the scale of its operations and also exposes it to the risk of adverse demand supply scenario in the state and heightened geographic concentration risk. Further, the Company faces stiff competition from a large number of organised as well as unorganised players in the market.
AIPL is mainly engaged in trading of agro commodities, whose prices are volatile in nature. However, the low inventory holding policy of the company mitigates the risk to some extent. But given the trading nature of the business, the operating profit margins remain low which have declined to 1.72% in FY21 (provl.) as against 2.82% in FY20.
BWR has relied upon Audited Financials upto FY20, Provisional financial results of FY21, projections upto FY24, publicly available information and information/clarifications provided by the management.
RATING SENSITIVITIES
Positive: If the Company manages to increase its scale of operations and overall credit risk profile would be positive for the ratings.
Negative: Decrease in revenue or deterioration in credit metrices would be negative for the ratings.
LIQUIDITY INDICATORS - Adequate
The Current ratio of the Company is moderate at 1.41x as on March 31, 2021. The average working capital utilisation of the Company for the last 6 months ended August 2021 is around 78% and the Company has Cash & Bank balance of Rs.7.38 Crs as on August 31, 2021. Further, the Company is expected to generate cash accruals of Rs.9.16 Crs in FY22 as against a principal repayment of Rs.1.69 Crs.
ABOUT THE ENTITYArunnachala Impex Pvt. Ltd. (AIPL) is a Chennai based company incorporated in July 2005 by Mr. Selvaraj and Mrs. Kalaivani. AIPL is engaged in trading of pulses, sugar, other agri commodities and gunny bags. The Company receives orders from Tamil Nadu Government on tender basis and it also supplies to other local traders in the market. Pulses trading accounts for nearly 85% of its revenues.
KEY FINANCIAL INDICATORS (Standalone)Key Parameters | Units |
FY 19-20 (Audited) |
FY 18-19 (Audited) |
---|---|---|---|
Operating Revenue | Rs.Crs. | 646.37 | 444.48 |
EBITDA | Rs.Crs. | 18.20 | 4.03 |
PAT | Rs.Crs. | 7.06 | 3.25 |
Tangible Net Worth | Rs.Crs. | 33.79 | 25.73 |
Total Debt/Tangible Net Worth | Times | 1.82 | 2.03 |
Current Ratio | Times | 1.42 | 1.20 |
Facilities | Current Rating (2021) | 2020 | 2019 | 2018 | |||||
---|---|---|---|---|---|---|---|---|---|
Type | Tenure | Amount (Rs.Crs.) |
Rating | Date | Rating | Date | Rating | Date | Rating |
Fund Based | LT | 80.00 |
BWR BBB-/Stable
(Reaffirmation) |
18May2021 |
BWR BBB-Stable
(Assigned) |
NA |
NA
|
NA |
NA
|
Non Fund Based | ST | 5.00 |
BWR A3
(Reaffirmation) |
18May2021 |
BWR A3
(Assigned) |
NA |
NA
|
NA |
NA
|
NFB SubLimit | ST | (7.00) |
BWR A3
(Reaffirmation) |
NA |
NA
|
NA |
NA
|
NA |
NA
|
(5.00) |
BWR A3
(Reaffirmation) |
NA |
NA
|
NA |
NA
|
NA |
NA
|
||
Grand Total | 85.00 | (Rupees Eighty Five Crores 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 | |
---|---|
Prashant Sahadev Mondkar Ratings Analyst Board : +91 22 2831 1426, +91 22 2831 1439 prashant.sm@brickworkratings.com |
Chintan Dilip Lakhani Director- Ratings chintan.l@brickworkratings.com |
1-860-425-2742 | media@brickworkratings.com |
SL.No. | Name of the Bank/Lender | Type Of Facilities | Long Term(Rs.Crs.) | Short Term(Rs.Crs.) | Total(Rs.Crs.) | |
---|---|---|---|---|---|---|
1 | Bank of India | Cash CreditSanctioned | 20.00 | _ | 20.00 | |
Sub-Limit (Bank Guarantee) Sanctioned | (5.00) | |||||
2 | Bank of India | ILC/FLCSanctioned | _ | 5.00 | 5.00 | |
3 | Indian Bank | Open Cash Credit / Cash Credit (Hypothecation/Pledge)Sanctioned | 13.00 | _ | 13.00 | |
4 | Indian Bank | Open Cash Credit / Cash Credit (Hypothecation/Pledge)Proposed | 47.00 | _ | 47.00 | |
5 | Indian Bank | Term LoanProposed | _ | _ | 0.00 | |
Total | 80.00 | 5.00 | 85.00 | |||
TOTAL (Rupees Eighty Five Crores Only) |
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