RATING RATIONALE
04Oct2021

Agarwal Ferro Metallic Pvt Ltd

Brickwork Ratings revises the ratings for the Bank Loan Facilities of Rs. 24.90 Crs. of Agarwal Ferro Metallic Pvt Ltd

Particulars
Facilities** Amount (Rs.Crs.) Tenure Rating#
Previous Present Previous
(01 Jun 2021)
Present
Fund Based 22.30 24.90 Long Term BWR B+/Stable
Downgrade/ISSUER NOT COOPERATING*
BWR BB - /Stable
Upgrade
Non Fund Based (1.50) (1.50) Short Term BWR A4
Reaffirmation/ISSUER NOT COOPERATING*
BWR A4
Reaffirmation
Grand Total 22.30 24.90 (Rupees Twenty Four Crores and Ninety 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

BWR has upgraded/reaffirmed the ratings of Agarwal Ferro Metallic Pvt Ltd (AFMPL) to BWR BB- (Stable)/A4. The upgradation/reaffirmation in the ratings reflect the extensive experience of the promoters, Satisfactory net worth ,comfortable current ratio, and moderate gearing levels. However, the ratings are constrained by low profitability margins, below benchmark debt coverage metrics, high industry risk, and geographical concentration risk.

The ‘stable’ outlook indicates a low likelihood of the rating change over the medium term. BWR believes that AFMPL will continue to benefit from the extensive experience of the promoters.

KEY RATING DRIVERS


Credit Strengths:


Credit Risks:

ANALYTICAL APPROACH - Standalone

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

RATING SENSITIVITIES

Going forward, the ability of the company to sustain growth in the topline, improve profitability margins, improve the financial risk as well as liquidity risk profile will be the key rating sensitivities.

Positive: The rating may be upgraded when there is any substantial increase in the turnover, profitability margins and improvement in the overall financial risk profile and liquidity profile.

Negative: The rating may be downgraded if there is any steep decline in the receipts, profitability margins, gearing  and deterioration in the overall financial risk profile.

LIQUIDITY INDICATORS - Adequate

The unencumbered cash and cash equivalents is Rs. 0.22 Cr for FY21 (Prov). The Current ratio of the company is above the benchmark at 1.85 times and gearing ratio (Analyzed) of the company is stood at 1.83 times for FY21 (Prov). The debt protection metrics stood moderate marked at  ISCR at 0.93x and DSCR at 1.02x for FY21(Prov) . The term debt obligation of Long Term debt for FY21(Prov) is Rs. 1.99 Cr and Net Cash accruals (PAT+Dep.) for FY21 (Prov)  is Rs.2.83  Crs. Average credit utilization for last 6 months as per the banker’s feedback is 90 %. 

Therefore, the overall liquidity position is adequate.

ABOUT THE ENTITY

Incorporated in 2006, Agarwal Ferro Metallic is a Aligarh, Uttar Pradesh based closely held private limited company engaged in manufacturing and trading of TMT bars, ingots and other allied products. The furnace and the rolling mill of the company is located in Aligarh only with an installed capacity of 16000 and 36000 tons per year respectively. The company is promoted by the Agarwal family of Aligarh and the promoters have over three to five decades of experience in the line of business.

KEY FINANCIAL INDICATORS (Standalone)
Key Parameters Units FY 19-20
(Audited)
FY 18-19
(Audited)
Operating Revenue Rs.Crs. 172.10 173.93
EBITDA Rs.Crs. 5.25 5.54
PAT Rs.Crs. 0.96 0.97
Tangible Net Worth Rs.Crs. 11.32 10.36
Total Debt/Tangible Net Worth Times 2.89 3.61
Current Ratio Times 1.49 1.42

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 24.90
BWR BB-/Stable
(Upgrade)
01Jun2021
BWR B+Stable
(Downgrade/ISSUER NOT COOPERATING*)
17Apr2020
BWR BB-Stable
(Upgrade)
11Jan2019
BWR B+Stable
(Upgrade)
NA
NA
NFB SubLimit ST (1.50)
BWR A4
(Reaffirmation)
01Jun2021
BWR A4
(Reaffirmation/ISSUER NOT COOPERATING*)
17Apr2020
BWR A4
(Reaffirmation)
11Jan2019
BWR A4
(Reaffirmation)
NA
NA
Grand Total 24.90 (Rupees Twenty Four Crores and Ninety lakhs Only)
COMPLEXITY LEVELS OF THE INSTRUMENTS - Simple

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

Nisha Nagar

Ratings Analyst nisha.n@brickworkratings.com

Hari Kishan Yadav

Associate Director - Ratings hari.ky@brickworkratings.com
1-860-425-2742 | media@brickworkratings.com
Agarwal Ferro Metallic 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 Canara Bank Cash CreditSanctioned 17.00 _ 17.00
Sub-Limit (Letter of Credit) Sanctioned (1.50)
2 Canara Bank Term LoanSanctioned 7.90 _ 7.90
Total 24.90 0.00 24.90
TOTAL (Rupees Twenty Four Crores and Ninety lakhs Only)
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