RATING RATIONALE
02Dec2021

Dynamic Ship Recyclers Pvt. Ltd.

Brickwork Ratings upgrade the long-term ratings and reaffirm the short-term ratings for the Bank Loan Facilities of Rs. 37.14 Crs. of Dynamic Ship Recyclers Pvt. Ltd.

Particulars
Facilities** Amount (Rs.Crs.) Tenure Rating#
Previous Present Previous
(03 Dec 2020)
Present
Fund Based 5.50 5.50 Long Term BWR B+/Stable
Reaffirmation
BWR BB - /Stable
Upgrade
Non Fund Based 31.64 31.64 Short Term BWR A4
BWR A4
Reaffirmation
Grand Total 37.14 37.14 (Rupees Thirty Seven Crores and Fourteen 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 relied upon the company’s audited financial results up to FY19, FY20, FY21 publicly available information, and the information/clarifications provided by the company. The rating affirmation factors the company’s performance till date and revenue visibility backed by the recent purchase of Ships and its moderate financial risk profile marked by comfortable leverage and coverage indicators. The rating also factors extensive experience of the promoters in the ship breaking business along with the locational advantage of the company. However, the profit margins are low and are vulnerable to changes in metal prices, adverse movement in forex rates, and are exposed to cyclicality inherent in the Ship Breaking Industry

KEY RATING DRIVERS

Credit Strengths:


Credit Risks:

ANALYTICAL APPROACH - Standalone

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

Positive triggers: Ratings could be upgraded if there is a healthy revenue ramp-up and improvement in profitability on a sustained basis. Further, strengthening the net worth with capital infusion may lead to a rating upgrade.

Negative Triggers: Ratings could be downgraded in case the company is unable to scale up the operations, leading to loss that further weakens its liquidity position.

LIQUIDITY INDICATORS - Adequate

Liquidity position has remained comfortable with the surplus available in the form of inventory, receivables,  etc, and characterized by the adequate buffer in working capital limits. Some comfort can be derived from the cushion in working capital limits (average utilization of ~15.76% from (1.4.2021 to 31.03.2021) and the surplus available in the form of free cash balance.  The receivable cycle is short at 24 and 20 days in the last two fiscals FY20 & FY21 respectively. The build-up fixed deposit at regular intervals to service the maturing letter of credit will remain key rating sensitivity. The cash accruals of the company are not sufficient to service the debt obligations. However, the promoters have demonstrated their ability to infuse funds year on year to support the operations. The resourcefulness of the promoters is likely to support the liquidity profile of the company in the near to medium term. The NCA is negative in FY21. However, the same improved to Rs. 0.38 Crs in provisional results by ending 30th Sep 2021 and Rs.0.60 Cr. in FY22 (Prov.) The liquidity is expected to improve in FY22 due to an improvement in EBITDA. 

ABOUT THE ENTITY

Dynamic Ship Recyclers Pvt. Ltd. incorporated in 2002, by Mr. Sohil Hamidani and  Mr. Hanif Hamidani, DSRPL is engaged in ship breaking and trading of ferrous and non-ferrous metals at Alang, Gujarat. DSRPL purchases ships directly from ship owners or through sales agents for recycling them. Items like electrical equipment, machine parts, etc. are sold directly to end-users. While scrap is sold in the market to scrap traders and manufacturing units, who use the scrap to produce steel. 

KEY FINANCIAL INDICATORS (Standalone)
Key Parameters Units FY 20-21
(Audited)
FY 19-20
(Audited)
Operating Revenue Rs.Crs. 70.45 26.89
EBITDA Rs.Crs. -0.29 1.90
PAT Rs.Crs. 0.21 0.22
Tangible Net Worth Rs.Crs. 6.69 6.48
Total Debt/Tangible Net Worth Times 0.37 0.72
Current Ratio Times 1.79 1.23
KEY COVENANTS OF THE FACILITY RATED

NA


NON-COOPERATION WITH PREVIOUS CREDIT RATING AGENCY

NA

ANY OTHER INFORMATION

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 5.50
BWR BB-/Stable
(Upgrade)
03Dec2020
BWR B+Stable
(Reaffirmation)
30Aug2019
BWR B+Stable
(Assignment)
NA
NA
Non Fund Based ST 31.64
BWR A4
(Reaffirmation)
03Dec2020
BWR A4
()
30Aug2019
BWR A4
()
NA
NA
Grand Total 37.14 (Rupees Thirty Seven Crores and Fourteen 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

Urvi Shah

Rating Analyst urvi.s@brickworkratings.com

Dileep Narayan Singh

Director dileep.s@brickworkratings.com
1-860-425-2742 | media@brickworkratings.com
Dynamic Ship Recyclers 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 Punjab & Sind Bank Cash CreditSanctioned 5.50 _ 5.50
2 Punjab & Sind Bank Letter of CreditSanctioned _ 31.64 31.64
Total 5.50 31.64 37.14
TOTAL (Rupees Thirty Seven Crores and Fourteen lakhs Only)
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About Brickwork Ratings

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