Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 14.72 Crs. of Anandam Textiles
ParticularsFacilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||
---|---|---|---|---|---|
Previous | Present | Previous (20 Jul 2020) |
Present | ||
Fund Based | 13.00 | 12.72 | Long Term |
BWR BB-/Stable to Negative
Reaffirmation |
BWR BB -
/Negative to Stable Reaffirmation |
2.00 | 2.00 | Short Term |
BWR A4
Reaffirmation |
BWR A4
Reaffirmation |
|
Grand Total | 15.00 | 14.72 | (Rupees Fourteen Crores and Seventy Two lakhs Only) |
The rating reaffirmation, inter alia, factors in the partner’s experience in the textiles industry for more than two decades and established relationships with customers and suppliers.
However the rating is constrained by low scale of operations, and weak debt protection metrics. The outlook for the firm has been revised to Stable from Negative, considering improvement in revenue for FY 20-21, improvement in EBITDA compared to FY 2019 and and increase in Net Worth considering the impact of Covid-19 on the textile industry. The ability of the firm to increase its revenue, profitability and improve capital structure given the current scenario for the textile industry remain the key rating sensitivities.
KEY RATING DRIVERSCredit Strengths:
The Firm is located in Rajapalayam cluster and thus has a competitive advantage in terms of skilled labor, logistics, production knowledge and vendors making the firm more efficient and cost effective.
The firm witnesses a stable growth in Net worth across the years
withdrawal of capital by the Partners for any personal contingency would adversely affect the capital structure of the firm.
Entry barriers in the industry are low on account of limited capital and technology requirement and also low differentiation in the end product leading to intense competition and limiting the pricing power resulting in low profitability
The firm`s revenue from operations has declined by 9.6% as per Provisional FS
The firm purchases majority of the raw materials from five suppliers, which in-turn leads to supplier concentration. This supplier/ vendor concentration can potentially cause different business operation challenges in the event of an outage. Again, top five customers constitutes majority of the firm's total sales. Losing one of such major customers may have an impact on firm's sales revenue, profit and cash flow in such a high concentration scenario.
Total Debt/ TNW is greater than 2.50 for the past 3FYs , resulting in high gearing. However ,there is an improvement from 2.92 (FY2019) to 2.59 (FY 2021-P).
EBITDA for the FY2020 has declined by 12% which is mainly due to increase in operating expenses by 12.6%.
The firm's ROCE has declined from 9.40% to 7.08 % as per Audited Financial statements for the FY20.
The liquidity position of the firm is moderate reflected by the current ratio of 1.30 times in FY20. However, the debt protection metrics is below benchmark with ISCR and DSCR at 1.90 times and 0.85 times.
ABOUT THE ENTITYAnandam Textiles was established in April 1993 at Rajapalayam, Tamil Nadu. It is a partnership firm, promoted by Mr.Murgaraj and Mrs. Bhama. The firm is engaged in manufacturing of yarn of 30s to 40s count and fabrics, with its manufacturing unit located at Kalangaperi road, Rajapalayam. The unit has 7680 spindles and an installed capacity of manufacturing 10 lakhs kilo of yarn per annum and 10 lakhs meter of fabric per annum. The products that are manufactured are being sold to local traders and textile mills. It also does exports to Sri Lanka, China and Kuwait, which together accounts to ~9.70% of the total sales.
KEY FINANCIAL INDICATORS (Standalone)Key Parameters | Units |
FY 19-20 (Audited) |
FY 18-19 (Audited) |
---|---|---|---|
Operating Revenue | Rs.Crs. | 22.64 | 20.41 |
EBITDA | Rs.Crs. | 1.25 | 1.42 |
PAT | Rs.Crs. | 0.32 | 0.40 |
Tangible Net Worth | Rs.Crs. | 3.75 | 3.49 |
Total Debt/Tangible Net Worth | Times | 2.63 | 2.92 |
Current Ratio | Times | 1.30 | 2.08 |
Facilities | Current Rating (2021) | 2020 | 2019 | 2018 | |||||
---|---|---|---|---|---|---|---|---|---|
Type | Tenure | Amount (Rs.Crs.) |
Rating | Date | Rating | Date | Rating | Date | Rating |
Fund Based | LT | 12.72 |
BWR BB-/Negative to Stable
(Reaffirmation) |
20Jul2020 |
BWR BB-Stable to Negative
(Reaffirmation) |
08Apr2019 |
BWR BB-Stable
(Reaffirmation) |
09Mar2018 |
BWR BB-Stable
(Assignment) |
Fund Based | ST | 2.00 |
BWR A4
(Reaffirmation) |
20Jul2020 |
BWR A4
(Reaffirmation) |
08Apr2019 |
BWR A4
(Assignment) |
NA |
NA
|
Grand Total | 14.72 | (Rupees Fourteen Crores and Seventy Two 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 CriteriaAnalytical Contacts | |
---|---|
Dharni Sakthi K N. Ratings Analyst dharnisakthi.kn@brickworkratings.com |
Varadarajan R Associate Director - Ratings Board : +91 044 24663326 varadarajan.r@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 | Tamilnadu Mercantile Bank Limited | Term LoanSanctioned | 3.22 | _ | 3.22 | |
2 | Tamilnadu Mercantile Bank Limited | Cash CreditSanctioned | 5.00 | _ | 5.00 | |
3 | Tamilnadu Mercantile Bank Limited | Cash CreditSanctioned | 4.50 | _ | 4.50 | |
4 | Tamilnadu Mercantile Bank Limited | Working Capital Demand Loan | _ | _ | 0.00 | |
5 | Tamilnadu Mercantile Bank Limited | PC/PCFC/FDB/BRD/FBESanctioned | _ | 2.00 | 2.00 | |
Total | 12.72 | 2.00 | 14.72 | |||
TOTAL (Rupees Fourteen Crores and Seventy Two lakhs Only) |
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