RATING RATIONALE
02Apr2022

Uttam Chand Rakesh Kumar

Brickwork Ratings revises the ratings for the Bank Loan Facilities of Rs. 66.38 Crs. of Uttam Chand Rakesh Kumar

Particulars
Facilities** Amount (Rs.Crs.) Tenure Rating#
Previous Present Previous
(05 Jan 2022)
Present
Fund Based 44.60 65.98 Long Term BWR BB /Stable
Downgrade/ISSUER NOT COOPERATING*
BWR BB +
Upgrade
(0.00) (25.00)
(0.00) (5.00)
Non Fund Based 0.40 0.40 Short Term BWR A4
Downgrade/ISSUER NOT COOPERATING*
BWR A4 +
Upgrade
(10.00) (10.00)
Grand Total 45.00 66.38 (Rupees Sixty Six Crores and Thirty Eight 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 essentially relied upon the audited financial statements of Uttam Chand Rakesh Kumar upto FY21, management certified provisional financials of  9MFY22 and projected financial statements of FY23, publicly available information and information/clarifications provided by the entity’s management.

The rating  upgrade is based on established track of operations and stabilization of operation during FY22. However, the rating is constrained by the above-average financial risk profile, risk of withdrawal of capital being a partnership nature of constitution, vulnerable profit margins due to trading nature of business and risk associated with bulk imports from various countries. 

BWR believes the business risk profile will be maintained over the medium term. The 'Stable' outlook indicates a low likelihood of a rating change over the medium term.

KEY RATING DRIVERS

Credit Strengths:


Credit Risks:

ANALYTICAL APPROACH - Standalone

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

RATING SENSITIVITIES

Positive :

Improvement in  operating income and profitability margins, and timely realization of collection.

Timely infusion of funds by promoters, thereby improvement in gearing below 2x.

Negative:

Any incremental increase in debt and deterioration of working capital cycle leading to stressed liquidity position.

LIQUIDITY INDICATORS - Adequate

Liquidity remains adequate in the absence of any major long term liabilities in the near term and financial support by promoters as and when required. The firm’s operates in a working capital intensive operation, which impacted the receivable cycle of the firm during covid pandemic.  The collection cycle elongated from 24 days in FY20 to 67 days in FY21. Further, the firm’s average cash credit limit utilisation stood around 85% for the last six months ended as on 31 January, 2022. However, BWR expects that the liquidity will remain comfortable in near term with availment of  guarantee emergency credit lines. 

ABOUT THE ENTITY

The Delhi-based, UCRK was established in 2008 as a partnership firm by Mr. Rakesh Kumar Bhatia and his son, Mr. Akshay Kumar Bhatia. The firm is engaged in the trading of dry-fruits (mainly almonds and pistachios) and spices (cloves, poppy seeds, cumin seeds). UCRK imports mainly from the U.S., Dubai, Turkey, Australia, Germany and Madagascar.

 

KEY FINANCIAL INDICATORS (Standalone)
Key Parameters Units FY 20-21
(Audited)
FY 19-20
(Audited)
Operating Revenue Rs.Crs. 303.35 644.81
EBITDA Rs.Crs. 4.88 4.89
PAT Rs.Crs. 0.57 0.67
Tangible Net Worth Rs.Crs. 11.58 13.36
Total Debt/Tangible Net Worth Times 6.16 4.41
Current Ratio Times 1.44 1.70

NON-COOPERATION WITH PREVIOUS CREDIT RATING AGENCY

ACUITE and CRISIL Ratings has migrated its ratings of the bank loan facilities of the company to Issuer Not Cooperating* category vide its press release dated 25 June 2021 and 30 November 2020 respectively.

RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)
Facilities Current Rating (2022) 2022 (History) 2021 2020 2019
Type Tenure Amount
(Rs.Crs.)
Rating Date Rating Date Rating Date Rating Date Rating
Fund Based LT 65.98
BWR BB+
(Upgrade)
05Jan2022
BWR BB Stable
(Downgrade/ISSUER NOT COOPERATING*)
NA
NA
19May2020
BWR BB+ Stable
(Assignment)
NA
NA
0.00
NA
NA
NA
NA
NA
05Oct2020
BWR BB+ Stable
(Reaffirmation)
NA
NA
FB SubLimit LT (25.00)
BWR BB+
(Upgrade)
NA
NA
NA
NA
NA
NA
NA
NA
(5.00)
BWR BB+
(Upgrade)
NA
NA
NA
NA
NA
NA
NA
NA
Non Fund Based ST 0.40
BWR A4+
(Upgrade)
05Jan2022
BWR A4
(Downgrade/ISSUER NOT COOPERATING*)
NA
NA
19May2020
BWR A4+
(Assignment)
NA
NA
0.00
NA
NA
NA
NA
NA
05Oct2020
BWR A4+
(Reaffirmation)
NA
NA
NFB SubLimit ST (10.00)
BWR A4+
(Upgrade)
NA
NA
NA
NA
NA
NA
NA
NA
Grand Total 66.38 (Rupees Sixty Six Crores and Thirty Eight 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

Dileep Narayan Singh

Director dileep.s@brickworkratings.com
1-860-425-2742 | media@brickworkratings.com
Uttam Chand Rakesh Kumar
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 HDFC Bank Working Capital Demand LoanSanctioned 25.00 _ 25.00
Sub-Limit (WCDL) (25.00)
Sub-Limit (Working capital loan) (5.00)
2 Kotak Mahindra Bank Dropline ODOut-standing 0.26 _ 0.26
3 Kotak Mahindra Bank Forward ContractSanctioned _ 0.40 0.40
4 Kotak Mahindra Bank Working Capital Term LoanOut-standing 1.30 _ 1.30
5 Kotak Mahindra Bank Cash CreditSanctioned 20.00 _ 20.00
Sub-Limit (Letter of Credit) Sanctioned (10.00)
6 State Bank Of India (SBI) Cash CreditSanctioned 15.00 _ 15.00
7 State Bank Of India (SBI) Cash CreditProposed _ _ 0.00
8 State Bank Of India (SBI) GECLSanctioned 4.42 _ 4.42
Total 65.98 0.40 66.38
TOTAL (Rupees Sixty Six Crores and Thirty Eight lakhs Only)
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