Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 33.20 Crs. of Ravileela Granites Limited
ParticularsFacilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||
---|---|---|---|---|---|
Previous | Present | Previous (17 Aug 2020) |
Present | ||
Fund Based | 11.00 | 33.20 | Long Term |
BWR BB/Stable
Reaffirmation |
BWR BB
/Stable Reaffirmation |
Grand Total | 11.00 | 33.20 | (Rupees Thirty Three Crores and Twenty lakhs Only) |
BWR has essentially relied upon the audited financials upto FY20, provisional financials of FY21, projected financials upto FY23, publicly available information and information/clarifications provided by the company's management.
The rating reaffirms factors of experienced management and adequate liquidity position. However, the rating is constrained by revenue and remains a small scale of operations and low profitability margins, low debt service coverage metrics, low order book position, customer and geographic concentration risk, vulnerability of margins to foreign exchange fluctuations and working capital intensive nature of operations.
The ‘Stable’ outlook indicates a low likelihood of rating change over the medium term. BWR expects that Ravileela Granites Ltd business risk profile will be maintained over the medium term. The outlook may be revised to Positive in case of better than expected operating income and improvement in financial risk profile debt-protection indicators. The outlook may be revised to Negative if the operating metrics weaken or if larger than anticipated capex leads to deterioration in credit metrics and liquidity
Credit Strengths:
The company stands to benefit from the experienced and qualified management who have around three decades of experience in the granite industry.
The company has moderate capital structure marked by the moderate tangible net worth and gearing ratio were around Rs.16.00 Crs and 3.15 times, respectively, as on 31st March 2021 against the Rs.15.48 Crs and 3.08 times, respectively, as on 31st March 2020.
The complete manufacturing unit started at ongole. The Transport costs are lower at the situated factory and the FOB charges are lower again because of the proximity of the Chennai and Krishnapatnam ports. The working capital is not blocked because of the GST issues as SEZ companies need not pay GST for inputs to the industry.
The company reported the revenue of Rs.32.09 Crs in FY21 and Rs.31.68 Crs in FY20 as against Rs.41.85 Crs in FY19. The profitability margins were low marked by net profit margin and operating margin were 1.71% and (1.68%) in FY21 against 1.32% and 11.38% in FY20 respectively. On a provisional basis, the company has reported the revenue of around Rs.17.52 Crs for H1FY22
The Company having a major portion of its revenue from exports, the margins are susceptible to fluctuations in exchange rate in the absence of adequate hedging mechanisms.
The company derives around 70% of its revenue from two clients. The company also generates around 70% of its revenue from exports to the USA. Hence the company is exposed to client and geographic concentration risk.
The company holds a high inventory of a wide range of granite variants to meet its customer requirements. As a result the company’s working capital intensity continues to remain high.
As it is an entity, a standalone approach has been adopted and BWR has applied its rating methodology as detailed in the Rating Criteria detailed below (hyperlinks provided at the end of this rationale).
RATING SENSITIVITIES
Upward - Sustained improvement in scale of operations with improved profitability margins and capital structure. Specific credit metrics that could lead to an upgrade of the company's rating include (1) Total Debt/Tangible net worth below 1.00 times on a continuous basis, (2) DSCR and ISCR greater than 3.0 times on a continuous basis. Execute order book position timely.
Downward - Specific credit metrics that could lead to a downgrade if there is any decline in revenue, debt service coverage metrics and further there is a significant deterioration in the credit profile of the company.
The liquidity position of the Company is adequate as its current ratio as on March 31, 2021 is moderate at 1.08 times and its had a cash & bank balance of Rs.7.38 Crs. The average CC utilisation for last 12 months is 90% and the company is expected to generate the net cash accruals of Rs.4.49 Crs and Rs.5.33 Crs respectively in FY22 and FY23 as against the CPLTD of Rs.1.80 Crs and Rs.2.01 Crs respectively.
Ravileela Granites Limited is a BSE Listed company, promoted by Mr. P Srinivas Reddy and incorporated in the year of 1990. It is basically engaged in manufacturing and processing of granite slabs of various colours and quantities consisting of polished, honed and straight edges in any size and thickness. RGL has been into the export business for the past 25 years catering to various customers in the US and Europe.
The company closed the plant at Sampannabolu (V), which is situated 40 kms from Hyderabad to process slabs from rough granite blocks with an installed capacity of 160000 Sq.Mtrs per annum. Due to outdated machinery, labour problems, etc. Ravileela Granites Limited is set up a new plant for manufacture of Granite slabs at SEZ, Ongole with a capacity of 14,400 CBM 38,88,000 Sq Meters per annum at a project cost of Rs.24.85 Crs. The company operations commenced from January 2020.
KEY FINANCIAL INDICATORS (Standalone)Key Parameters | Units |
FY 20-21 (Audited) |
FY 19-20 (Audited) |
---|---|---|---|
Operating Revenue | Rs.Crs. | 32.09 | 31.68 |
EBITDA | Rs.Crs. | -0.54 | 3.61 |
PAT | Rs.Crs. | 0.55 | 0.42 |
Tangible Net Worth | Rs.Crs. | 16.00 | 15.48 |
Total Debt/Tangible Net Worth | Times | 3.15 | 3.08 |
Current Ratio | Times | 1.08 | 1.03 |
Facilities | Current Rating (2021) | 2020 | 2019 | 2018 | |||||
---|---|---|---|---|---|---|---|---|---|
Type | Tenure | Amount (Rs.Crs.) |
Rating | Date | Rating | Date | Rating | Date | Rating |
Fund Based | LT | 33.20 |
BWR BB/Stable
(Reaffirmation) |
17Aug2020 |
BWR BBStable
(Reaffirmation) |
31Jan2019 |
BWR BBStable
(Assignment) |
NA |
NA
|
Grand Total | 33.20 | (Rupees Thirty Three Crores and Twenty 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 | |
---|---|
Prashanth Boorala Ratings Analyst Board : +91 40 2331 0161 / 2331 0071 prashanth.b@brickworkratings.com |
Nagaraj K Associate Director - Ratings Board : +91 80 4040 9940 nagaraj.ks@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 | Union Bank of India | Term LoanProposed | 20.15 | _ | 20.15 | |
2 | Union Bank of India | Working Capital Term LoanOut-standing | 2.05 | _ | 2.05 | |
3 | Union Bank of India | Cash CreditSanctioned | 11.00 | _ | 11.00 | |
Total | 33.20 | 0.00 | 33.20 | |||
TOTAL (Rupees Thirty Three Crores and Twenty lakhs Only) |
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