RATING RATIONALE
08Apr2022

Diamond Industries (SBD)

Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 125.00 Crs. of Diamond Industries (SBD).

Particulars
Facilities** Amount (Rs.Crs.) Tenure Rating#
Previous Present Previous
(18 Jan 2022)
Present
Fund Based (125.00) (25.00) Long Term BWR BB+ /Stable
Reaffirmation/ISSUER NOT COOPERATING*
BWR BB + /Stable
Reaffirmation
(0.00) (10.00)
Non Fund Based 125.00 125.00 Short Term BWR A4+
Reaffirmation/ISSUER NOT COOPERATING*
BWR A4 +
Reaffirmation
Grand Total 125.00 125.00 (Rupees One Hundred Twenty Five Crores 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

Ratings: BWR BB+/Stable/ BWR A4+  (Reaffirmed & removal from INC category)

The rating reaffirmation draws strength from the experienced partners in the ship-breaking industry, the firm's locational advantage and its various certification for green recycling and optimal management of cash flow to serve maturing LC repayment obligations.  However, the rating is constrained by its exposure to risks related to inherent cyclicality, forex rates, volatile steel prices, and to regulatory changes and intense competition. The ratings also continue to remain constrained on account of moderate capital structure and constitution as a partnership firm. 

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

 

KEY RATING DRIVERS

Credit Strengths:


Credit Risks:

RATING SENSITIVITIES

Positive:

Negative:

LIQUIDITY INDICATORS - Adequate

Liquidity is adequate backed by modest cash accrual, a buffer through unutilised bank limit, funding support from the partners, adequate fixed deposits vis-a-vis letter of credit (LC) obligation, and absence of long-term debt. The bank limit-CC is used only to pay custom duties and meet other nominal expenses. The firm purchases ships against LCs and repays LCs through realizations from the sale of steel scrap. It does not have any term debt repayment obligations which provide it with some financial flexibility. Adequate Current Ratio at 1.77 times in FY21.

ABOUT THE ENTITY

Established in 1982, Diamond industries (SBD). ('DI' or 'The firm) has been involved in ship breaking activities at Alang, Gujarat since 1995. Prior to which it had a rolling mill. The Alang ship breaking yard of the firm is holding ClassNK Certificate and  Reena Certificate. Mr. Ajay Kumar Jain and Mr.  Akshay Ajay Jain are the managing partners of the firm and have an experience of around 2 decades in the ship breaking industry. Associate concern, Diamond TMT & Procon Pvt Ltd, established in 2010, is engaged in Manufacturing of TMT Bars with the annual capacity of 1,44,000 MT. (BWR BBB-/Stable/A3 upgraded on 13Oct2021)

KEY FINANCIAL INDICATORS (Standalone)
Key Parameters Units FY 20-21
(Audited)
FY 19-20
(Audited)
Operating Revenue Rs.Crs. 123.34 94.01
EBITDA Rs.Crs. 4.53 2.42
PAT Rs.Crs. 0.92 0.07
Tangible Net Worth Rs.Crs. 8.92 10.41
Total Debt/Tangible Net Worth Times 0.62 4.86
Current Ratio Times 1.77 1.43

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

NA

ANY OTHER INFORMATION

The Company has now started cooperating by providing partial information for the review. BWR would complete the review process and remove the ratings from Issuer Not Cooperating category once the required information for the review is received.

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 0.00
NA
18Jan2022
BWR BB+ Stable
(Reaffirmation/ISSUER NOT COOPERATING*)
NA
NA
09Dec2020
BWR BB+ Stable
(Reaffirmation)
28Jun2019
BWR BB+ Stable
(Assignment)
FB SubLimit LT (25.00)
BWR BB+/Stable
(Reaffirmation)
NA
NA
NA
NA
NA
NA
NA
NA
(10.00)
BWR BB+/Stable
(Reaffirmation)
NA
NA
NA
NA
NA
NA
NA
NA
Non Fund Based ST 125.00
BWR A4+
(Reaffirmation)
18Jan2022
BWR A4+
(Reaffirmation/ISSUER NOT COOPERATING*)
NA
NA
09Dec2020
BWR A4+
(Reaffirmation)
28Jun2019
BWR A4+
(Assignment)
Grand Total 125.00 (Rupees One Hundred Twenty Five Crores 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

Priya Depala

Senior Rating Analyst priya.d@brickworkratings.com

Vidya Shankar

Principal Director - Ratings Board : +91 80 4040 9940 vidyashankar@brickworkratings.com
1-860-425-2742 | media@brickworkratings.com
Diamond Industries (SBD)
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 Letter of CreditSanctioned _ 125.00 125.00
Sub-Limit (Cash Credit -for ship breaking (Sublimit of LC)) Sanctioned (25.00)
Sub-Limit (Cash Credit -for trading (Sublimit of LC)) Sanctioned (10.00)
Total 0.00 125.00 125.00
TOTAL (Rupees One Hundred Twenty Five Crores Only)
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