Brickwork Ratings has removed the ratings from Issuer Not Category and upgraded the ratings for aggregate Bank Loan Facilities of Rs. 14.10 Crs of Amar Trades Ltd.
ParticularsFacilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||
---|---|---|---|---|---|
Previous | Present | Previous (22 Jun 2021) |
Present | ||
Fund Based | 5.50 | 5.50 | Long Term |
BWR BB- /Stable
Downgrade/ISSUER NOT COOPERATING* |
BWR BB
/Stable Upgrade |
2.00 | 2.00 | Short Term |
BWR A4
Downgrade/ISSUER NOT COOPERATING* |
BWR A4 +
Upgrade |
|
Non Fund Based | 6.60 | 6.60 | Short Term |
BWR A4
Downgrade/ISSUER NOT COOPERATING* |
BWR A4 +
Upgrade |
Grand Total | 14.10 | 14.10 | (Rupees Fourteen Crores and Ten lakhs Only) |
Brickwork Ratings has relied upon the Audited financials of the company for FY 19, FY 20 and Provisional financials of FY 21 along with its projected financials for FY 22 and FY 23, information available in public domain, as well as feedback from the company and its bankers for arriving at the present rating.
Based on a review, Brickwork Ratings has removed the rating from Issuer Not Cooperating category and upgraded the rating of the long term bank loan facilities of Amar Trades Ltd. for Rs.5.50 Crs from BWR BB-, Stable to BWR BB, Stable and the rating for the short term bank loan facilities for Rs.8.60 Crs from BWR A4 to BWR A4+ (aggregate rated amount Rs.14.10 Crs). The rating upgrade factors in the experienced management, comfortable financial risk profile, long track record of operations and long standing relationship with Customers and Suppliers and the reputed and government Client base of the company, as well as its adequate liquidity position. The rating is, however, constrained by the moderate scale of operations, recent decline in revenue, working capital intensive nature of business, susceptibility to the performance of end-user industries, and cyclical demand in the ferroalloy industry.
The 'Stable' outlook indicates a low likelihood of rating change over the medium term. BWR believes that the business risk profile of Amar Trades Ltd. will be maintained over this period. The rating outlook may be revised to 'Positive' in case the revenues and profit show sustained improvement. The rating outlook may be revised to 'Negative' if the revenues go down and profit margins show lower than expected figures on a continuous basis.
KEY RATING DRIVERSCredit Strengths:
The promoters of the Company have more than four decades experience in manufacturing & Trading of Ferro alloys metal trading business.The Directors of the company Mr. Arun Kumar Ghoshal and Mr. Bibhu Ranjan Bhattacharya, have more than two decades of experience in diversified lines of business like manufacturing of Ferro alloys metal, and trading in steel & Ferro Alloys. Mr Ghoshal looks after the overall management of the company.
The financial risk profile of the company remained comfortable, marked by low gearing, comfortable networth and moderate debt coverage indicators. The leverage indicator based on TNW remained below unity at 0.22 times in FY21 Provisional compared to 0.79 times in FY 20. The ISCR and DSCR remained comfortable at 1.32 times and 1.67 times respectively in FY 21 Provisional compared to 1.04 times and 1.18 times in FY 20.
The company was established in 1983. It has also established relations with reputed customers and suppliers across various industries.
Its customer profile especially in Steel & Ferro Alloys industries are mainly Government or PSU entities like Steel Authority India Limited, , Bhilai Steel plant. It also deals with reputed private players like Bhushan Power and Steel., Tata Steel, Jindal Steel, Modern Steel Makers etc.
Though the company was established in 1983, the scale of operations of the company remained moderate marked by total operating income of Rs.28.23 crore with a PAT of Rs.0.27 crore in FY20.
The Total operating Income has declined by 44.34% to Rs.28.23 Crs in FY 21 Provisional compared to Rs.50.72 Crs in FY 20 owing to decline in aggregate demand for ferro alloys mainly due to the Covid-19 pandemic.
The operations of the company are working capital intensive as reflected from its high working capital utilization during the last twelve months. Further the working capital conversion cycle of the company stood at 174 days in FY 21 provisional mainly on account of high receivables of 164 days.
Ferroalloys are intermediates for the steel industry. Hence, the prospects for the ferroalloy industry are linked to the overall fortunes of the steel industry, which is inherently cyclical and is correlated with economic development, which directly affects its fortunes. This is the inherent risk of the steel industry and consequently, the company is also similarly at risk.
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
Negative
The liquidity of the company stands adequate as reflected by the comfortable cash credit utilisation ~at 71% for the last six months ended November 2021. The company did not have any major debt-led capex plans in FY21. Liquidity is further supported by a comfortable ISCR & DSCR of 1.32 times and 1.67 times respectively in FY 2021 (provisional). The current ratio stood comfortable at 1.76 times in FY 21 (provisional) (FY20:1.85 times) while cash and Bank Balances stood comfortable at Rs.5.58 Crs in FY 21 (provisional). The Net Cash accruals stood at Rs.0.36 Crs in FY 21 provisional, as against debt repayment obligations of Rs.0.20 Crs.
ABOUT THE ENTITYAmar Trades Ltd. (ATL) is a Kolkata based closely held company promoted by Mr. Binay Pada Kumar in 1983. The company is engaged in manufacturing of various Ferro alloys, such as Ferro Molybdenum, Ferro Vanadium, Ferro Titanium, Ferro Nickel and Ferro Aluminium.
KEY FINANCIAL INDICATORS (Standalone)Key Parameters | Units |
FY 19-20 (Audited) |
FY 18-19 (Audited) |
---|---|---|---|
Operating Revenue | Rs.Crs. | 50.72 | 77.08 |
EBITDA | Rs.Crs. | 0.86 | 1.32 |
PAT | Rs.Crs. | 0.04 | 1.13 |
Tangible Net Worth | Rs.Crs. | 11.18 | 11.15 |
Total Debt/Tangible Net Worth | Times | 0.79 | 0.81 |
Current Ratio | Times | 1.85 | 1.92 |
Facilities | Current Rating (2021) | 2021 (History) | 2020 | 2019 | 2018 | ||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Type | Tenure | Amount (Rs.Crs.) |
Rating | Date | Rating | Date | Rating | Date | Rating | Date | Rating |
Fund Based | LT | 5.50 |
BWR BB/Stable
(Upgrade) |
22Jun2021 |
BWR BB- Stable
(Downgrade/ISSUER NOT COOPERATING*) |
02Jan2020 |
BWR BBStable
(Reaffirmation) |
NA |
NA
|
30Jul2018 |
BWR BBStable
(Assignment) |
Fund Based | ST | 2.00 |
BWR A4+
(Upgrade) |
22Jun2021 |
BWR A4
(Downgrade/ISSUER NOT COOPERATING*) |
02Jan2020 |
BWR A4+
(Reaffirmation) |
NA |
NA
|
30Jul2018 |
BWR A4+
(Assignment) |
Non Fund Based | ST | 6.60 |
BWR A4+
(Upgrade) |
22Jun2021 |
BWR A4
(Downgrade/ISSUER NOT COOPERATING*) |
02Jan2020 |
BWR A4+
(Reaffirmation) |
NA |
NA
|
30Jul2018 |
BWR A4+
(Assignment) |
Grand Total | 14.10 | (Rupees Fourteen Crores and Ten 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.
Analytical Contacts | |
---|---|
Saroj Kumar Das Ratings Analyst sarojkumar.d@brickworkratings.com |
Anuradha Gupta Director - Ratings anuradha.g@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 | Canara Bank | Open Cash Credit / Cash Credit (Hypothecation/Pledge)Sanctioned | 5.50 | _ | 5.50 | |
2 | Canara Bank | Bill Discounted (BD)Sanctioned | _ | 2.00 | 2.00 | |
3 | Canara Bank | Bank GuaranteeSanctioned | _ | 1.10 | 1.10 | |
4 | Canara Bank | Letter of CreditSanctioned | _ | 5.50 | 5.50 | |
Total | 5.50 | 8.60 | 14.10 | |||
TOTAL (Rupees Fourteen Crores and Ten lakhs Only) |
The Rating Rationale is sent to you for the sole purpose of dissemination through your print, digital or electronic media. While it may be used by you acknowledging credit to BWR, please do not change the wordings in the rationale to avoid conveying a meaning different from what was intended by BWR. BWR alone has the sole right of sharing (both direct and indirect) its rationales for consideration or otherwise through any print or electronic or digital media.
About Brickwork RatingsBrickwork Ratings (BWR), a Securities and Exchange Board of India [SEBI] registered Credit Rating Agency and accredited by Reserve Bank of India [RBI], offers credit ratings of Bank Loan, Non- convertible / convertible / partially convertible debentures and other capital market instruments and bonds, Commercial Paper, perpetual bonds, asset-backed and mortgage-backed securities, partial guarantees and other structured / credit enhanced debt instruments, Security Receipts, Securitization Products, Municipal Bonds, etc. BWR has rated over 11,400 medium and large corporates and financial institutions’ instruments. BWR has also rated NGOs, Educational Institutions, Hospitals, Real Estate Developers, Urban Local Bodies and Municipal Corporations. BWR has Canara Bank, a leading public sector bank, as one of the promoters and strategic partner. BWR has its corporate office in Bengaluru and a country-wide presence with its offices in Ahmedabad, Chandigarh, Chennai, Hyderabad, Kolkata, Mumbai and New Delhi along with representatives in 150+ locations.
Disclaimer
Brickwork Ratings India Pvt. Ltd. (BWR), a Securities and Exchange Board of India [SEBI] registered Credit Rating Agency and accredited by the Reserve Bank of India [RBI], offers credit ratings of Bank Loan facilities, Non- convertible / convertible / partially convertible debentures and other capital market instruments and bonds, Commercial Paper, perpetual bonds, asset-backed and mortgage-backed securities, partial guarantees and other structured / credit enhanced debt instruments, Security Receipts, Securitization Products, Municipal Bonds, etc. [ hereafter referred to as "Instruments"]. BWR also rates NGOs, Educational Institutions, Hospitals, Real Estate Developers, Urban Local Bodies and Municipal Corporations.
BWR wishes to inform all persons who may come across Rating Rationales and Rating Reports provided by BWR that the ratings assigned by BWR are based on information obtained from the issuer of the instrument and other reliable sources, which in BWR's best judgment are considered reliable. The Rating Rationale / Rating Report & other rating communications are intended for the jurisdiction of India only. The reports should not be the sole or primary basis for any investment decision within the meaning of any law or regulation (including the laws and regulations applicable in Europe and also the USA).
BWR also wishes to inform that access or use of the said documents does not create a client relationship between the user and BWR.
The ratings assigned by BWR are only an expression of BWR's opinion on the entity / instrument and should not in any manner be construed as being a recommendation to either, purchase, hold or sell the instrument.
BWR also wishes to abundantly clarify that these ratings are not to be considered as an investment advice in any jurisdiction nor are they to be used as a basis for or as an alternative to independent financial advice and judgment obtained from the user's financial advisors. BWR shall not be liable to any losses incurred by the users of these Rating Rationales, Rating Reports or its contents. BWR reserves the right to vary, modify, suspend or withdraw the ratings at any time without assigning reasons for the same.
BWR's ratings reflect BWR's opinion on the day the ratings are published and are not reflective of factual circumstances that may have arisen on a later date. BWR is not obliged to update its opinion based on any public notification, in any form or format although BWR may disseminate its opinion and analysis when deemed fit.
Neither BWR nor its affiliates, third party providers, as well as the directors, officers, shareholders, employees or agents (collectively, "BWR Party") guarantee the accuracy, completeness or adequacy of the Ratings, and no BWR Party shall have any liability for any errors, omissions, or interruptions therein, regardless of the cause, or for the results obtained from the use of any part of the Rating Rationales or Rating Reports. Each BWR Party disclaims all express or implied warranties, including, but not limited to, any warranties of merchantability, suitability or fitness for a particular purpose or use. In no event shall any BWR Party be liable to any one for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of any part of the Rating Rationales and/or Rating Reports even if advised of the possibility of such damages. However, BWR or its associates may have other commercial transactions with the company/entity. BWR and its affiliates do not act as a fiduciary.
BWR keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of the respective activity. As a result, certain business units of BWR may have information that is not available to other BWR business units. BWR has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with each analytical process.
BWR clarifies that it may have been paid a fee by the issuers or underwriters of the instruments, facilities, securities etc., or from obligors. BWR's public ratings and analysis are made available on its web site, www.brickworkratings.com. More detailed information may be provided for a fee. BWR's rating criteria are also generally made available without charge on BWR's website.
This disclaimer forms an integral part of the Ratings Rationales / Rating Reports or other press releases, advisories, communications issued by BWR and circulation of the ratings without this disclaimer is prohibited.
BWR is bound by the Code of Conduct for Credit Rating Agencies issued by the Securities and Exchange Board of India and is governed by the applicable regulations issued by the Securities and Exchange Board of India as amended from time to time.