Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 19.21 Crs. of Amartex Industries Limited
Particulars| Facilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||
|---|---|---|---|---|---|
| Previous | Present | Previous (08 Sep 2020) |
Present | ||
| Fund Based | 22.41 | 19.21 | Long Term |
BWR BB+/Stable
Upgrade |
BWR BB +
/Stable Reaffirmation |
| (1.00) | (1.00) | Short Term |
BWR A4+
Upgrade |
BWR A4 +
/Stable Reaffirmation |
|
| Grand Total | 22.41 | 19.21 | (Rupees Nineteen Crores and Twenty One lakhs Only) | ||
BWR reaffirmed the long-term rating as BWR BB+ with “Stable” Outlook and short-term rating as BWR A4+ for the bank loan facilities of Amartex Industries Limited.
The rating draws strength from the management experience and moderate financial profile of the company. However, the rating is constrained on account of volatility in cotton prices and threat of competition form e-commerce.
BWR believes that the business risk profile of “Amartex Industies Limited.” 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 going forward. 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 DRIVERSCredit Strengths:
The promoter of the company Mr. Arun Grover has an extensive experience of over three decades in the textile and retail industry. The established track record of operations with growing efficiency and ability to operate through various economic cycles and changes in the industry is an outcome which is cushioned by experience of the promoters and top management.
Total operating income has decreased from Rs.70.64crs in FY20(A) to Rs.55.23crs in FY21(A), which indicates a decline of 21.81%. The sales were decreased due to COVID. The company has achieved revenue of Rs.30.03crs from 01.04.2021 to 30.09.2021 against the projected revenue of Rs.90.00crs in FY22(P). Tangible net worth has increased from Rs.32.60crs in FY20(A) to Rs.36.64crs in FY21(A). Debt/Equity ratio of the firm has marginally improved from 0.49x in FY20(A) to 0.39x in FY21(A). Net profit Margin of the company deteriorated from 10.96x in FY20(A) to 7.29x in FY21(A). Operating profit margin of the company Improved from 9.00x in FY20(A) to 9.50x in FY21(A). ISCR marginally Improved from 2.47x in FY20(A) to 2.50x in FY21(A). DSCR Improved from 1.36x in FY20(A) to 2.90x in FY21(A). Current Ratios of the company improved from 1.56x in FY20(A) to 1.81x in FY21(A).
The Yarn segment is susceptible to volatility in cotton and cotton yarn prices, reflected by fluctuations in the operating margin. Cotton and yarn demand are driven by international demand-supply dynamics.
Intense competition in the industry constraints the bargaining power. Moreover, the fast growth of ecommerce is changing the buying pattern, AIL is exposed to intense competition from ecommerce. However, the company has started an e-commerce business and launched Home delivery “app”.
For arriving at its ratings, 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 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.
Negative: Rating may be downgraded in case there is deterioration in financial profile of the company including the liquidity of the company.
LIQUIDITY INDICATORS - Adequate
The company has cash and cash equivalents of Rs.0.26crs as on FY21(A). Long-Term-Borrowings of Rs.2.38crs in FY21(A) includes secured loan of Rs.2.38crs from IDBI Bank. CPLTD of Rs.0.79crs is reported in FY21 against net cash accruals of Rs.4.48crs. Average utilization of CC limit is around 61% for the last 7 months during the period of Mar 2021- Sept 2021. Current Ratio stood at 1.81x as on FY21(A). Conversion cycle of 178 days reported as on FY21(A). The company had ISCR and DSCR of 2.50x and 2.90x in FY20(A) respectively.
Holding/Subsidiary Company: NIL
ABOUT THE ENTITYAmartex Industries Limited (‘AIL’ or ‘The Company’) was incorporated in 1988 which was initially incorporated under the name of M/S Amar Suiting Manufacturing Company Pvt Ltd which was changed to AIL in 1998. The company is mainly promoted by Mr. Arun Grover. AIL’s main line of business involves an end-to-end process of manufacturing fabric to retail of garments. AIL runs supermarket chain with 12 stores in 12 cities located in North India, which retail garments, home decor and FMCG products. At present the company has weaving unit with an install capacity of 20 lacs meter per annum at Panchkula and Dying & processing capacity of 57 lacs meters per annum at Derabassi, Distt. Mohali (Punjab) and for manufacturing of ready to wear garments 8 lacs Pcs per annum at Ludhiana.
KEY FINANCIAL INDICATORS (Standalone)| Key Parameters | Units |
FY 20-21 (Audited) |
FY 19-20 (Audited) |
|---|---|---|---|
| Operating Revenue | Rs.Crs. | 55.23 | 70.64 |
| EBITDA | Rs.Crs. | 5.25 | 6.36 |
| PAT | Rs.Crs. | 4.03 | 7.74 |
| Tangible Net Worth | Rs.Crs. | 36.64 | 32.60 |
| Total Debt/Tangible Net Worth | Times | 0.39 | 0.49 |
| Current Ratio | Times | 1.81 | 1.56 |
NA
NA
RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)| Facilities | Current Rating (2021) | 2020 | 2019 | 2018 | |||||
|---|---|---|---|---|---|---|---|---|---|
| Type | Tenure | Amount (Rs.Crs.) |
Rating | Date | Rating | Date | Rating | Date | Rating |
| Fund Based | LT | 19.21 |
BWR BB+/Stable
(Reaffirmation) |
08Sep2020 |
BWR BB+Stable
(Upgrade) |
15May2019 |
BWR BB-Stable
(Assignment) |
NA |
NA
|
| FB SubLimit | ST | (1.00) |
BWR A4+/Stable
(Reaffirmation) |
08Sep2020 |
BWR A4+
(Upgrade) |
15May2019 |
BWR A4
(Assignment) |
NA |
NA
|
| Grand Total | 19.21 | (Rupees Nineteen Crores and Twenty One 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.
Hyperlink/Reference to applicable Criteria| Analytical Contacts | |
|---|---|
|
Akash Chaubey Ratings Analyst akash.c@brickworkratings.com |
V.K.Kukreja Associate Director - Ratings Board : +91 11 2341 2232 kukreja.vk@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 | IDBI Bank | Cash CreditSanctioned | 19.21 | _ | 19.21 | |
| Sub-Limit (ILC/FLC/BG) | (1.00) | |||||
| Total | 19.21 | 0.00 | 19.21 | |||
| TOTAL (Rupees Nineteen Crores and Twenty One lakhs Only) | ||||||
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