Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 63.87 Crs. of Anjani Synthetics Ltd
ParticularsFacilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||
---|---|---|---|---|---|
Previous | Present | Previous (31 Mar 2021) |
Present | ||
Fund Based | 63.95 | 63.87 | Long Term |
BWR BBB /Stable
Reaffirmation |
BWR BBB
/Stable Reaffirmation |
(5.00) | (2.40) | ||||
(40.00) | (40.00) | ||||
Non Fund Based | (1.00) | (1.00) | Short Term |
BWR A3
Reaffirmation |
BWR A3
Reaffirmation |
(0.24) | (0.11) | ||||
Grand Total | 63.95 | 63.87 | (Rupees Sixty Three Crores and Eighty Seven lakhs Only) |
BWR has considered the standalone financials of the Company and essentially relied upon the audited financial statements up to FY21, Unaudited provisional financials as of 31st December 2021, projected financials up to FY23 and publicly available information and clarifications provided by the entity’s management.
The rating reaffirmation draws strength from a stable operation, comfortable net worth position and adequate liquidity position. The Company also benefits from the vast business experience of about two decades of the promoters in the line of the textile industry. Revenues are expected to improve during FY22, owing to increase in demands, however the profit margins may remain slightly dipped due to volatility in raw material prices. The company operates in a highly working capital intensive business, which require efficient management of liquidity.
BWR believes that the 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 DRIVERSCredit Strengths:
Established in 1984, ASL's operations are managed by Mr Vasudev Agrawal, who has more than two decades of experience in the textile business. The Company benefits from longstanding existence in the industry and the business supports healthy relationships with customers and suppliers.
ASL's scale of operations remained consistent since last couple of fiscals, however muted demand in the textile industry owing to spread of covid-19 pandemic, the revenue deteriorated by 18% during FY21. The company achieve the revenue of Rs. 268.38 Crs in FY21 against Rs. 326.28 Crs in FY20. Though the scale of operation improved during the last fiscal, and achieved revenue of Rs. 196.54 Crs as per provisional financials of 31st December 2021. The company expects to reach operation at pre-covid levels in FY22. ASL's gearing ratio increased marginally yet remained low at 0.84x in FY20 and 0.96x in FY21. Tangible net worth is comfortable at Rs. 67.82 Crs as on 31st March 2021 due to retained profits of past years. Debt protection metrics are adequate with ISCR at 2.40x and DSCR at 2.10x in FY21. BWR expects that the improvement in revenues in FY22 and the same momentum is expected to continue in the current fiscal as well.
The manufacturing facility of the company is located at Piplaj, Ahmedabad, Gujarat. Gujarat produces of cotton in a large scale and hence availability of raw material is adequate. There are many players in cotton ginning, spinning and weaving in the surrounding locality. ASL benefits location advantage in terms of lower expenditure and easy availability of raw materials
ASL operates in working capital-intensive business, reflected in conversion cycle over 100 days in FY21, driven by large inventory and domestic receivables to support growing scale of operation. Receivable days elongated from 108 to 150 days in FY20 to FY21 respectively. BWR believes operations will remain working capital intensive over the medium term.
ASL’s margins are affected by the raw material price fluctuation, which affects sales realizations. Any adverse movement in the price of key raw materials such as cotton could have an adverse impact on the company’s margins. Operating profit margins dipped from 5.15% to 4.82% in FY20 and FY21 respectively and further reported to 4.51% in 9MFY22. Besides, owing to stiff competition in the textile industry, it may not be able to pass on the price hike to its customers.
BWR has considered the standalone financials of the Company and relied on rating criteria mentioned in the hyperlinks.
RATING SENSITIVITIES
Positive: Substantial and sustained growth in operating income, profitability and consequent increase in debt protection metrics and cash accrual.
Negative: Deterioration in operating margin, stretched working capital cycle driven by a pile-up of inventory or elongated receivables impacting the liquidity.
LIQUIDITY INDICATORS - Adequate
Liquidity remains adequate on account of moderate expected accruals of around Rs. 6-7 Crs against the same minimal repayment obligations. The bank limit utilization 68.92% for past three months ended 31st March 2021, healthy current ratio of 1.40x and support from promoters in form of unsecured loan of Rs. 3.14 Crs in FY21. However, the the receivable cycle elongated from 108 to 150 days in the past two fiscals due to outbreak of covid pandemic. Nonetheless, it is expected to have adequate liquidity supported by net cash accruals, GECL limits and unutilized bank lines to support its incremental working capital requirements.
ABOUT THE ENTITYIncorporated in 1984, Anjani Synthetics Limited (ASL) is carrying out an activity of grey fabric processing, printing, bleach, dye etc at Ahmedabad, Gujarat. ASL has a total installed capacity for processing 60 million meters of grey fabric per annum. ASL's product range includes all type of Shirting / Suiting, Dress Materials, Bed Sheets etc and certified with ISO 9001:2008.
KEY FINANCIAL INDICATORS (Standalone)Key Parameters | Units |
FY 20-21 (Audited) |
FY 19-20 (Audited) |
---|---|---|---|
Operating Revenue | Rs.Crs. | 268.75 | 326.28 |
EBITDA | Rs.Crs. | 12.95 | 16.81 |
PAT | Rs.Crs. | 2.91 | 3.57 |
Tangible Net Worth | Rs.Crs. | 67.82 | 64.03 |
Total Debt/Tangible Net Worth | Times | 0.96 | 0.84 |
Current Ratio | Times | 1.40 | 1.33 |
Not applicable
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 | 63.87 |
BWR BBB/Stable
(Reaffirmation) |
31Mar2021 |
BWR BBB Stable
(Reaffirmation) |
31Mar2021 |
BWR BBB Stable
(Reaffirmation) |
02Apr2019 |
BWR BBB Stable
(Reaffirmation) |
FB SubLimit | LT | (2.40) |
BWR BBB/Stable
(Reaffirmation) |
NA |
NA
|
NA |
NA
|
NA |
NA
|
(40.00) |
BWR BBB/Stable
(Reaffirmation) |
NA |
NA
|
NA |
NA
|
NA |
NA
|
||
Non Fund Based | ST | 0.00 |
NA
|
NA |
NA
|
NA |
NA
|
02Apr2019 |
BWR A3
(Reaffirmation) |
NFB SubLimit | ST | (1.00) |
BWR A3
(Reaffirmation) |
31Mar2021 |
BWR A3
(Reaffirmation) |
31Mar2021 |
BWR A3
(Reaffirmation) |
NA |
NA
|
NFB SubLimit | ST | (0.11) |
BWR A3
(Reaffirmation) |
NA |
NA
|
NA |
NA
|
NA |
NA
|
Grand Total | 63.87 | (Rupees Sixty Three Crores and Eighty Seven 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 | |
---|---|
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 |
SL.No. | Name of the Bank/Lender | Type Of Facilities | Long Term(Rs.Crs.) | Short Term(Rs.Crs.) | Total(Rs.Crs.) | |
---|---|---|---|---|---|---|
1 | State Bank Of India (SBI) | Cash CreditSanctioned | 50.00 | _ | 50.00 | |
Sub-Limit (Bank Guarantee) Sanctioned | (1.00) | |||||
Sub-Limit (CEL) Sanctioned | (0.11) | |||||
Sub-Limit (EPC/PCFC/FBD/EBR) Sanctioned | (2.40) | |||||
Sub-Limit (Working capital demand loan) Sanctioned | (40.00) | |||||
2 | State Bank Of India (SBI) | Covid -19 Emergency Line CreditOut-standing | 0.28 | _ | 0.28 | |
3 | State Bank Of India (SBI) | GECLOut-standing | 8.70 | _ | 8.70 | |
4 | State Bank Of India (SBI) | GECLSanctioned | 4.89 | _ | 4.89 | |
Total | 63.87 | 0.00 | 63.87 | |||
TOTAL (Rupees Sixty Three Crores and Eighty Seven lakhs Only) |
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