Brickwork Ratings reaffirms/assigns the ratings for the Bank Loan Facilities of Rs. 41.69 Crs. of East-West Freight Carriers Ltd
ParticularsFacilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||
---|---|---|---|---|---|
Previous | Present | Previous (24 Dec 2020) |
Present | ||
Fund Based | 36.10 | 39.19 | Long Term |
BWR BBB- /Negative
Reaffirmation |
BWR BBB -
/Negative Reaffirmation |
0.00 | 2.00 | Short Term |
|
BWR A3 +
Assignment |
|
Non Fund Based | 1.00 | 0.50 | Short Term |
BWR A3+
Reaffirmation |
BWR A3 +
Reaffirmation |
(0.00) | (0.50) | ||||
Grand Total | 37.10 | 41.69 | (Rupees Forty One Crores and Sixty Nine lakhs Only) |
BWR has essentially relied upon the audited financials up to FY21, provisional financials of H1FY22, projected financials up to FY24, publicly available information, and information/clarifications provided by the company's management.
The ratings reaffirm/assigns factors of experienced management, moderate capital structure, and adequate liquidity position. However, the ratings are constrained by Y-o-Y declined revenue, a moderate scale of operations and low profitability margins, low debt service coverage metrics, low order book position, and working capital intensive nature of operations.
The ‘Negative’ outlook indicates a low likelihood of rating change over the medium term. BWR expects that East-West Freight Carriers Ltd's business risk profile will be maintained over the medium term. The outlook may be revised to Stable in case of better than expected operating income and improvement in financial risk profile debt-protection indicators.
KEY RATING DRIVERSCredit Strengths:
The company stands to benefit from experienced and qualified management. It has an average 10 Years relationship with its top 5 customers. The Company has a widespread logistical network with 14 Branches spread all over the country as marketing offices and they cater to exports to 176 different countries.
The company has a moderate capital structure marked by the moderate tangible net worth and gearing ratio were around Rs.23.079 Crs and 3.27 times, respectively, as on 31st March 2021 against the Rs.24.09 Crs and 2.97 times, respectively, as on 31st March 2020.
The company revenue was declined to Rs.161.26 Crs in FY21 from Rs.196.57 Crs in FY20 and Rs.236.61 Crs in FY19. The profitability margins were low marked by net profit margin and operating margin were (0.22%) and 5.58% in FY21 against 0.68% and 4.79% in FY20 respectively. On a provisional basis, the company has reported a revenue of around Rs.168.00 Crs for 9MFY22.
The company has low debt service coverage metrics marked by the low-interest service coverage ratio and debt service coverage ratio were around 1.13 times and 0.86 times, respectively, as on 31st March 2021 against the 1.37 times and 1.06 times, respectively, as on 31st March 2020.
Presently, the company has an unexecuted order book position of around Rs.70 Crs as of January ended 2022 and expected to be completed by next 3 - 6 months.
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 - BWR may revise the ratings upward in the case of a substantial improvement in the total operating income, EBITDA margins, net profits, and improved liquidity.
Downward - The ratings may be downgraded if there is a deterioration in the financial risk profile including profit margins, liquidity position, and debt coverage indicators.
LIQUIDITY INDICATORS - Adequate
The liquidity position of the Company is adequate as its current ratio as on March 31, 2021, is moderate at 2.07 times. The average CC utilization for the last 12 months is 80% and Adequate net cash accruals of Rs.4.24 Crs, Rs.5.39 Crs, and 6.70 Crs against the approximate CPLTD would be around Rs. 4.20 Crs, Rs.4.30 Crs, and Rs. 4.40 Crs in FY22, FY23, and FY24 respectively. But, DSCR was low at 0.86 times, as on 31 Mar 2021. During FY21, the company took support from directors as well as cash bank balances were around Rs.8.20 Crs to meet the debt obligations, as on March 31, 2021.
ABOUT THE ENTITYEast-West Freight Carriers Ltd was incorporated in 1976 having a registered office in Mumbai, Maharashtra. It is in the business of providing air and ocean freight transportation, third-party logistics solutions, Non-Vessel Operating Common Carrier (NVOCC) operations, warehousing, custom clearances, and other Value Added Services. The Company is specialized in handling DGR Cargo and it has obtained a license to handle logistics of DGR Cargo under the Danger Goods Regulation Act. The Company has a widespread logistical network with 14 Branches spread all over the country as marketing offices and they cater to exports to 176 different countries.
KEY FINANCIAL INDICATORS (Standalone)Key Parameters | Units |
FY 20-21 (Audited) |
FY 19-20 (Audited) |
---|---|---|---|
Operating Revenue | Rs.Crs. | 161.26 | 196.57 |
EBITDA | Rs.Crs. | 9.00 | 9.42 |
PAT | Rs.Crs. | -0.36 | 1.34 |
Tangible Net Worth | Rs.Crs. | 23.79 | 24.09 |
Total Debt/Tangible Net Worth | Times | 3.27 | 2.97 |
Current Ratio | Times | 2.07 | 1.96 |
Facilities | Current Rating (2022) | 2021 | 2020 | 2019 | |||||
---|---|---|---|---|---|---|---|---|---|
Type | Tenure | Amount (Rs.Crs.) |
Rating | Date | Rating | Date | Rating | Date | Rating |
Fund Based | LT | 39.19 |
BWR BBB-/Negative
(Reaffirmation) |
NA |
NA
|
24Dec2020 |
BWR BBB- Negative
(Reaffirmation) |
03Oct2019 |
BWR BBB-Stable
(Reaffirmation) |
Fund Based | ST | 2.00 |
BWR A3+
(Assignment) |
NA |
NA
|
NA |
NA
|
NA |
NA
|
Non Fund Based | ST | 0.50 |
BWR A3+
(Reaffirmation) |
NA |
NA
|
24Dec2020 |
BWR A3+
(Reaffirmation) |
03Oct2019 |
BWR A3+
(Reaffirmation) |
NFB SubLimit | ST | (0.50) |
BWR A3+
(Reaffirmation) |
NA |
NA
|
NA |
NA
|
NA |
NA
|
Grand Total | 41.69 | (Rupees Forty One Crores and Sixty Nine 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 | Standard Chartered Bank | Bank GuaranteeSanctioned | _ | _ | 0.00 | |
2 | Standard Chartered Bank | OverdraftSanctioned | 4.00 | _ | 4.00 | |
Sub-Limit (Bonds & Guarantees) Sanctioned | (0.50) | |||||
3 | Standard Chartered Bank | Loans against PropertyOut-standing | 9.81 | _ | 9.81 | |
4 | Standard Chartered Bank | Loans against PropertyOut-standing | _ | _ | 0.00 | |
5 | Standard Chartered Bank | Import Invoice FinancingSanctioned | _ | 2.00 | 2.00 | |
6 | State Bank Of India (SBI) | Cash CreditSanctioned | 21.90 | _ | 21.90 | |
7 | State Bank Of India (SBI) | Bank GuaranteeSanctioned | _ | 0.50 | 0.50 | |
8 | State Bank Of India (SBI) | CECLOut-standing | 0.21 | _ | 0.21 | |
9 | State Bank Of India (SBI) | GECLOut-standing | 3.27 | _ | 3.27 | |
Total | 39.19 | 2.50 | 41.69 | |||
TOTAL (Rupees Forty One Crores and Sixty Nine lakhs Only) |
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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.
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