RATING RATIONALE
18May2022

P.A.P. Exports

Brickwork Ratings assigns the long term ratings and reaffirms the short term ratings for the Bank Loan Facilities of Rs. 7.21 Crs. of P.A.P. Exports

Particulars
Facilities** Amount (Rs.Crs.) Tenure Rating#
Previous Present Previous
(15 Feb 2021)
Present
Fund Based 0.00 1.21 Long Term
BWR B /Stable
Assignment
6.00 6.00 Short Term BWR A4
Assignment
BWR A4
Reaffirmation
Grand Total 6.00 7.21 (Rupees Seven Crores and Twenty One 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

Brickwork ratings (BWR) has essentially relied upon the audited financial statements of P.A.P. Exports ( the firm)  of FY19, FY20, FY21, provisional financial statements of FY22 and projected financials for FY23, publicly available information and information / clarifications provided by the firm’s management.

BWR assigns and reaffirms the ratings of  the firm considering the factors experienced management, long track record of the firm, and the locational advantage. However, the ratings are constrained by limitations to the nature of the constitution, deterioration in the receivables position, moderate scale of operations and weak debt protection metrics. 

BWR believes that P.A.P. Exports business risk profile will be maintained over the medium term. The 'Stable' outlook indicates a low likelihood of rating change over the medium term. The rating outlook may be revised to 'Positive' in case the revenues and profit show sustained improvement. The rating outlook may be revised to 'Negative' if the revenues go down and profit margins show lower than expected figures.

KEY RATING DRIVERS

Credit Strengths:


Credit Risks:

ANALYTICAL APPROACH - Standalone

For arriving at its ratings, Brickwork Ratings (BWR) has considered the audited financials of FY19, FY20, FY21, and provisional of FY22 and projected financials of FY23. And information/clarifications provided by the firm’s management. BWR has applied its rating methodology as described in the Rating Criteria detailed below (hyperlinks provided at the end of this rationale).

 

RATING SENSITIVITIES

Going forward, the ability of the entity to achieve projected revenue & profitability margins and manage liquidity would be key rating sensitivities.

Upward: The ratings would be upgraded in case of increased scale of operations, profitability and liquidity profile.

Downward: The ratings would be downgraded if there is deterioration in the gearing levels and debt protection metrics.

LIQUIDITY INDICATORS - Stretched

The liquidity of the firm is stretched. Net Cash Accruals of Rs. 0.59 Cr in FY22 (P) is sufficient to cover the current portion of long term debt of Rs. 0.09 Crs in FY22 (P). The DSCR and ISCR are at 0.97x and 1.38x in FY 21, respectively. It’s further estimated to be 0.94x and 1.59x in FY 22(P), respectively. In FY21 and FY22(P) DSCR is less than 1 indicating the stretched liquidity position. The current ratio has improved to 1.24x in FY21 from 1.07x in FY20.

ABOUT THE ENTITY

P.A.P. Exports was established on 29th June 1992 at Karur, Tamil Nadu. Mr.Arumugam K and Ms.Anitha A are the partners of the firm. The firm manufactures and exports home textile products, including bed sheets, pillow covers, table runners, aprons, oven mitts, etc., mainly to US and Europe. At present, the firm has a manufacturing capacity of 1,00,000 metres of fabric and 50,000 sets of made-ups per month. The firm is ISO 9001:2008 and SA 8000:2014 certified unit.

KEY FINANCIAL INDICATORS (Standalone)
Key Parameters Units FY 20-21
(Audited)
FY 19-20
(Audited)
Operating Revenue Rs.Crs. 10.28 13.79
EBITDA Rs.Crs. 1.28 1.14
PAT Rs.Crs. 0.13 0.13
Tangible Net Worth Rs.Crs. 3.42 3.29
Total Debt/Tangible Net Worth Times 2.39 2.35
Current Ratio Times 1.24 1.07
KEY COVENANTS OF THE FACILITY RATED

NA


NON-COOPERATION WITH PREVIOUS CREDIT RATING AGENCY

NA

ANY OTHER INFORMATION

NA

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 1.21
BWR B/Stable
(Assignment)
NA
NA
NA
NA
NA
NA
Fund Based ST 6.00
BWR A4
(Reaffirmation)
15Feb2021
BWR A4
(Assignment)
NA
NA
NA
NA
Grand Total 7.21 (Rupees Seven Crores and Twenty One lakhs Only)
Rating Advisory, as on 25Mar2022
Press Release, as on 25Mar2022
As more than 12 months have lapsed since the last rating, BWR hereby informs that it has not been possible to review the rating within the stipulated time, mainly due to non-receipt of essential information required for review.

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

Sanjukumar P.

Ratings Analyst sanjukumar.p@brickworkratings.com

Varadarajan R

Associate Director - Ratings Board : +91 044 24663326 varadarajan.r@brickworkratings.com
1-860-425-2742 | media@brickworkratings.com
P.A.P. Exports
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 Karur Vysya Bank Packing Credit (PC) _ 3.00 3.00
2 Karur Vysya Bank Foreign Usance Discount Bill Purchase _ 3.00 3.00
3 Karur Vysya Bank Covid -19 Emergency Line Credit 0.76 _ 0.76
4 Karur Vysya Bank Covid -19 Emergency Line Credit 0.45 _ 0.45
Total 1.21 6.00 7.21
TOTAL (Rupees Seven Crores and Twenty One lakhs Only)
Print and Digital Media

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About Brickwork Ratings

Brickwork 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 11,541 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.

Disclaimer

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