RATING RATIONALE
01Dec2021

Ghaziabad Ship Breakers Pvt Ltd

Brickwork Ratings revises the long term rating and reaffirms the short term rating for the Bank Loan Facilities of Rs. 112.20 Crs. of Ghaziabad Ship Breakers Pvt Ltd

Particulars
Facilities** Amount (Rs.Crs.) Tenure Rating#
Previous Present Previous
(11 Dec 2020)
Present
Fund Based (15.00) (15.00) Long Term BWR BB/Stable
Reaffirmation
BWR BB + /Stable
Upgrade
Non Fund Based 112.20 112.20 Short Term BWR A4+
Reaffirmation
BWR A4 +
Reaffirmation
Grand Total 112.20 112.20 (Rupees One Hundred Twelve Crores and Twenty 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 taken a Standalone view of Ghaziabad Ship Breakers Pvt Ltd   and essentially relied upon the audited financial results up to FY21, management certified provisional sales for 7MFY22, Projected financials for FY22-FY23 and information/clarification provided by the entity's Management.

The rating upgrade  in long term rating and reaffirmation in short term rating factors the consistent purchase of ships, moderate financial risk profile marked by comfortable leverage and adequate liquidity position. The rating also factors extensive experience of the promoters in the ship breaking business along with financial support and locational advantage of the Alang Bhavnagar-Gujarat. However, the profit margins are vulnerable to volatility in the prices of steel, adverse fluctuations in forex rates and exposure of its revenues to the cyclicality inherent in the ship breaking and metal industry. The entity is exposed to intense competition from a large number of players operating in Bhavnagar, Gujarat as well as international competitors and the regulatory risks due to environmental issues.

BWR believes that Ghaziabad Ship Breakers Pvt Ltd's business risk profile will be maintained over the medium term. The ‘Stable’ outlook indicates a low likelihood of rating change over the medium term.

KEY RATING DRIVERS

Credit Strengths:


Credit Risks:

ANALYTICAL APPROACH - Standalone

For arriving at its ratings, BWR has considered standalone financials of the company and applied its rating methodology as detailed in the Rating Criteria .

RATING SENSITIVITIES

Positive:  Timely completion of ship dismantling, its sales, and thereby collection of the receivables, growth in operations & profitability will be positive for ratings.

Negative: Any deterioration in the financial risk profile coupled with increased debt level, stretched liquidity position , further operating losses will be negative for the ratings.

LIQUIDITY INDICATORS - Adequate

The company has availed a non-fund based foreign Letter of Credit and stand by line of credit for purchasing the ships for shipbreaking activity ranging from 120 to 300 days and a cash credit limit for other operational requirements. Also, the company provides an upfront cash margin for the opening of the LC. Liquidity position has remained comfortable with the surplus available in the form of inventory and receivables. The working capital cycle is healthy as reflected in short receivable cycles of 17 days  in FY21.  

ABOUT THE ENTITY

Incorporated in 1986, Ghaziabad Ship Breakers Pvt Ltd(GSBPL) is engaged in ship breaking and recycling business. The Company is located in Bhavnagar, Gujarat and promoted by Tarsemlal Gupta and family.

KEY FINANCIAL INDICATORS (Standalone)
Key Parameters Units FY 20-21
(Audited)
FY 19-20
(Audited)
Operating Revenue Rs.Crs. 78.08 6.97
EBITDA Rs.Crs. -1.26 1.94
PAT Rs.Crs. 1.02 0.35
Tangible Net Worth Rs.Crs. 21.41 20.40
Total Debt/Tangible Net Worth Times 0.39 0.73
Current Ratio Times 1.29 1.23

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

Not Applicable

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 NA
NA
NA
NA
18Jul2019
BWR BBStable
(Upgrade)
15Jun2018
BWR BB- Stable
(Reaffirmation)
FB SubLimit LT (15.00)
BWR BB+/Stable
(Upgrade)
21Jul2020
BWR BB Stable
(Reaffirmation)
NA
NA
NA
NA
NA
NA
11Dec2020
BWR BBStable
(Reaffirmation)
NA
NA
NA
NA
Non Fund Based ST 112.20
BWR A4+
(Reaffirmation)
21Jul2020
BWR A4+
(Reaffirmation)
18Jul2019
BWR A4+
(Reaffirmation)
15Jun2018
BWR A4+
(Reaffirmation)
NA
NA
11Dec2020
BWR A4+
(Reaffirmation)
NA
NA
NA
NA
Grand Total 112.20 (Rupees One Hundred Twelve Crores and Twenty 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

Kunjal Dabhi

Rating Analyst Board : +91 79 66174046 / 47 kunjal.r@brickworkratings.com

Vidya Shankar

Principal Director - Ratings Board : +91 80 4040 9940 vidyashankar@brickworkratings.com
1-860-425-2742 | media@brickworkratings.com
Ghaziabad Ship Breakers 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 State Bank Of India (SBI) Letter of CreditSanctioned _ 100.00 100.00
Sub-Limit (Cash Credit) Sanctioned (15.00)
2 State Bank Of India (SBI) Credit Exposure Limit (CEL)Sanctioned _ 2.20 2.20
3 State Bank Of India (SBI) Standby line of Credit (SLC)Sanctioned _ 10.00 10.00
Total 0.00 112.20 112.20
TOTAL (Rupees One Hundred Twelve Crores and Twenty lakhs Only)
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