Aaryan Lamifab Pvt. Ltd.

Brickwork Ratings reaffirm the ratings for the Bank Loan Facilities of Rs. 8.04 Crs. of Aaryan Lamifab Pvt. Ltd.

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (11 Jan 2021)	Present
Fund Based	8.04	8.04	Long Term	BWR BB/Stable Assignment	BWR BB /Stable Reaffirmation
Grand Total	8.04	8.04	(Rupees Eight Crores and Four 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 reaffirmed the ratings of Aaryan Lamifab Pvt Ltd to BWR BB/stable. The Reaffirmation of the ratings reflects the improvement in operating margin , Net margin , ISCR, Deterioration in DSCR and declining in sales. The tangible net worth of the company has slightly improved in FY21(audited) and projected to increase more in FY22(projections). The ‘Stable’ outlook indicates a likelihood of rating change over the medium term. The company continues to derive comfort from the extensive experience of more than four decades of the promoters in the industry. The rating outlook may be revised to positive with improvements in the profitability and liquidity metrics. The rating is, however, upgraded by the Liquidity position , Debt protection metrics and improvement in Financial parameters. The rating is, constrained by Elongated Receivable days and stiff competition from established players in the market. BWR expects that the firm’s performance is likely to be maintained over the next few years.

KEY RATING DRIVERS

Credit Strengths:

Locational Advantage :
The company/Firm is located in Bahadurgarh cluster and thus has a competitive advantage in terms of skilled labor, logistics, production knowledge and vendors making the company more efficient and cost effective.
Established experience of management :
The Company is a private limited entity efficiently managed by Mr. Ankit Gupta, Mr. Amit Bansal and Mrs. Sweety Bansal who are highly skilled businessmen and have more than a decade of experience in the same line of business. Mr. Amit Bansal has 20 years of experience in the same line of business.
Improved profit margin and net worth :
The operating profit margin and the net profit margin of the company marginally increased from 3.46% & 1.02% in FY 20 to 6.7% & 1.45% in FY 21. The tangible net worth of the company is Rs. 8.46 Crs. TNW has improved due to retention of profit and additional paid-up capital brought in the company by the shareholders in FY 20.

Credit Risks:

Competition in the Industry :
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
High Gearing and average debt protection metrics :
The Gearing of the company is stretched with Total Debt/TNW and TOL/TNW standing at 3.56x & 9.59x in FY 21. The Debt Protection Metrics of the co. is average i.e. DSCR is 1.25x in FY21 indicating difficulty to meet the debt obligations in the future.
Elongated receivables days :
The company’s account receivable is high at 222 days which is a concern. However, it is substantially offset by the nearly matching payable days at 222 days, thus causing the conversion cycle to remain low at 25 days in FY 20.
Impact of Covid-19 Pandemic :
Due to the pandemic, there was a slack in the demand for laminated fabrics as it has its application in various industries such as clothing, footwear, automobiles, upholstery, etc. which was severely impacted as all the operations were closed, disruption of the supply chain, migration of laborers and decrease in demand among people for clothing, transportation, traveling, construction and footwear, also impacted the manufacturing of laminated fabrics.

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

Going forward, the ability of the company to further increase its scale of operations by improving its revenue, profitability margins, improvement in the overall financial profile, as usual maintaining its debt obligations and efficiently managing its working capital will be the key rating sensitivities.

Positive: The ratings may be upgraded if revenue, profitability, liquidity, gearing and overall credit profile show substantial improvement.

Negative: The rating may be downgraded in case there is a significant deterioration in the business and financial risk profile of the company from its current level.

LIQUIDITY INDICATORS - Adequate

The Company has a Cash & Bank balance of INR 0.0194 Crs in FY21(Audited) and INR 0.0197 Crs in FY22(Projected).
The current ratio of the company is 1.11x in FY21(Audited) and 1.18 in FY22(Projected).
The firm generated net cash accruals of Rs. 4.5 Crs in FY 21(Audited) against NIL CPLTD in FY21(Audited) and the net cash accruals is projected to be Rs. 5.05 Crs in FY22 and Rs. 5.48 Crs in FY23 against Rs. 3.3 Crs CPLTD in FY22 and Rs. 3.33 CPLTD in FY23, indicating the availability of funds is enough to meet its debt obligations.
ISCR has projected to increase from 3.31X in FY21(Audited) to 3.6X in FY22(Projected).
DSCR has projected decreased marginally from 1.25X in FY21(Audited) to 1.24X in FY22 (Projected)
The average % utilization of the CC limits is approximately 87.60%.
Hence, Overall liquidity is Adequate.

ABOUT THE ENTITY

Aaryan Lamifab Pvt. Ltd. was incorporated on 26 August 2011. The directors of the company are Mr. Amit Bansal, Mr. Ankit Gupta and Mrs. Sweety Bansal. The company's registered office is at D-48, Inderprastha Apartment, Sector- 14, Rohini, Delhi-110085. The plant in Delhi is closed and the plant in Bharadurgarh, Jhajjar district, Haryana is currently operational.
The total capacity of the plant is 84 lakh metres to manufacture laminated Fabrics. The unit operates on a single shift basis for 300 working days scheduled in a year. At present, there is a very large demand in the market for laminated fabrics in footwear Industries.
The main work of the company is the manufacturing of lamination of fabrics with Eva and foams. It is laminated fabrics that are used in the manufacturing of soft leather in briefcases, automobile seating systems, footwears, ladies handbags, furniture, upholstery, purses, etc.
FLOW CHART OF MANUFACTURING LAMINATED FABRICS - Receive Fabrics from Market- Paste Fabrics with EVA and Foams with Adhesive- Pass Fabrics into the hot chamber at a certain temperature- Cut the Fabrics into small rolls- Send the rolls in the market for sale.
Laminating fabrics are similar to laminating printing, glass, and other materials. A premade film is bonded to the fabric via thermal, or adhesive properties. Fibrous materials such as yarns fabrics that are woven and knit or non-woven fabrics can be laminated.
The clothing industry uses laminated fabrics for hats, gloves, rainwear, and in the linings of shoes and garments. Agriculture uses laminated fabrics for bags, shade materials, pond liners and irrigation materials. All these fabrics have one thing in common, they must be waterproof, weather-resistant and sturdy.
The major factors restraining the growth of the laminated fabrics market are also the availability of substitutes and environmental safety concerns.
However, the rising demand for automotive upholstery and home furnishing is driving the demand for coated fabrics market. Some of the other applications are temporary tents, awnings, canopies, seat upholstery, and protective clothing.
The transportation segment is projected to lead the lamination fabrics market, in terms of value, during the forecast period. Laminated fabrics are majorly used for a wide range of automotive applications such as interior, exterior, airbags, seatbelt, and covers.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 20-21 (Audited)	FY 19-20 (Audited)
Operating Revenue	Rs.Crs.	102.09	105.83
EBITDA	Rs.Crs.	6.84	3.67
PAT	Rs.Crs.	1.48	1.08
Tangible Net Worth	Rs.Crs.	8.46	7.24
Total Debt/Tangible Net Worth	Times	3.56	3.96
Current Ratio	Times	1.11	1.14

KEY COVENANTS OF THE FACILITY RATED

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

Aaryan lamifab Pvt. Ltd. has a rating record with CRISIL on 22nd December 2020 for Rs. 25 Crs. rated as CRISIL BB- under Issuer Not Cooperating Segment.

ANY OTHER INFORMATION

Degree of Competition - The key players in the laminated fabrics market include Continental AG (Germany), Spradling International Inc. (US), Seaman Corporation (US), Saint-Gobain SA (France), Trelleborg AB (Sweden), Sioen Industries NV (Belgium), Serge Ferrari Group (France), Low & Bonar Plc (UK), and OMNOVO Solutions Inc. (US) who have a large market share. They are capturing the markets of China and India due to rapid urbanization. However, the competition is intense due to a large number of organized and unorganized players in the market. The growth factors are also constrained due to the availability of substitutes in the market.

RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)

Facilities	Current Rating (2022)			2021		2020		2019
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	8.04	BWR BB/Stable (Reaffirmation)	11Jan2021	BWR BBStable (Assignment)	NA	NA	NA	NA
Grand Total		8.04	(Rupees Eight Crores and Four 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
Yashika Goyal Ratings Analyst yashika.g@brickworkratings.com	Hari Kishan Yadav Associate Director - Ratings hari.ky@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

Aaryan Lamifab 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 National Bank	Working Capital Term Loan - Sanctioned	0.89	_	0.89
2	Punjab National Bank	Covid -19 Emergency Line Credit - Sanctioned	0.65	_	0.65
3	Punjab National Bank	Cash Credit - Sanctioned	6.50	_	6.50
Total			8.04	0.00	8.04
TOTAL (Rupees Eight Crores and Four lakhs Only)

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