RATING RATIONALE
18May2022

Swati Industries

Brickwork Ratings reaffirms the long term and short term ratings for the Bank Loan Facilities of Rs. 43.70 Crs. of Swati Industries

Particulars
Facilities** Amount (Rs.Crs.) Tenure Rating#
Previous Present Previous
(02 May 2022)
Present
Fund Based 15.20 15.20 Long Term BWR BBB-/Stable
Reaffirmation/ISSUER NOT COOPERATING*
BWR BBB - /Stable
Reaffirmation
26.50 26.50 Short Term BWR A3
Reaffirmation/ISSUER NOT COOPERATING*
BWR A3
Reaffirmation
Non Fund Based 2.00 2.00 Short Term BWR A3
Reaffirmation/ISSUER NOT COOPERATING*
BWR A3
Reaffirmation
Grand Total 43.70 43.70 (Rupees Forty Three Crores and Seventy 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 believes that Swati 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. The tangible net worth of the company has slightly improved in FY22(Prov.). The rating outlook may be revised to 'Positive' in case the revenues and profit show sustained improvement. The company continues to derive comfort from the extensive decades of experience of the promoters in the industry which has helped the firm establish relationship. The rating outlook may be revised to 'Negative' if the revenues go down and profit margins show lower than expected figures. The rating is, however, constrained by stiff competition from established players in the market. 

KEY RATING DRIVERS

Credit Strengths:


Credit Risks:

ANALYTICAL APPROACH - Standalone

For arriving at its ratings, BWR has applied its rating methodology as detailed in the Rating Criteria detailed below (hyperlinks provided at the end of this rationale)

RATING SENSITIVITIES

Going forward, the ability of the company to further increase its scale of operations by improving its revenue, profitability margins and financial risk profile, as usual maintaining its debt obligations and efficiently managing its working capital will be the key rating sensitivities.

Positive: The ratings may be upgraded if revenue, profitability, liquidity and overall credit profile show substantial improvement.

Negative: The rating may be downgraded in case there is a significant deterioration in the business and financial risk profile of the company from its current level.

LIQUIDITY INDICATORS - Adequate

The Company has cash & bank balance of Rs. 0.12 Crs in FY21 and Rs. 0.01 Crs. in FY22(Prov.). The projected cash balance is to be at same level of Rs. 0.01 Crs in FY23. The current ratio of the company stood at 1.16 times for FY22(Prov.) and 1.30 times for FY23 (Projected). The firm generated net cash accruals of Rs. 1.66 Crs in FY 22(Prov.) against the CPLTD of Rs. 1.41 Crs. indicating the availability of funds to meet its debt obligations in FY22. The projected net cash accruals is of Rs. 5.90 Crs in FY23 and against CPLTD of Rs. 2.30 Crs. indicating that there will be availability of funds from next year onwards.  Debt Protection Matrix (i.e. ISCR & DSCR) is at 1.52 & 2.09 times for FY22(Prov.) respectively. They are projected to improve at 2 & 2.63 times respectively for FY23. The utilization of the CC limit is 69.93%. Hence, the overall liquidity of the company is adequate.

ABOUT THE ENTITY

Swati Industries was established as a partnership firm in 1991 by Mr. Keshav Garg, Mrs. Nishi Garg and Mr. Vaneet Garg as its partners. It is a family managed business. The firm is involved in manufacturing, forging & fabricating scaffoldings and their accessories such as clamps, cup lock systems, and frame systems for automobile , agriculture and construction industry. It also exports finished products to countries like USA, Dubai, Holland, Korea, Portugal, Egypt and Spain. The firm has four manufacturing units at Ludhiana. The firm is accredited to ISO 9001:2000 certification and follows the latest international standards.

KEY FINANCIAL INDICATORS (Standalone)
Key Parameters Units FY 20-21
(Audited)
FY 19-20
(Audited)
Operating Revenue Rs.Crs. 133.02 171.28
EBITDA Rs.Crs. 5.40 6.24
PAT Rs.Crs. 0.09 1.22
Tangible Net Worth Rs.Crs. 21.60 22.48
Total Debt/Tangible Net Worth Times 2.07 1.62
Current Ratio Times 1.21 1.14
KEY COVENANTS OF THE FACILITY RATED

NA


NON-COOPERATION WITH PREVIOUS CREDIT RATING AGENCY

NA

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 15.20
BWR BBB-/Stable
(Reaffirmation)
02May2022
BWR BBB-Stable
(Reaffirmation/ISSUER NOT COOPERATING*)
03Feb2021
BWR BBB-Stable
(Reaffirmation)
NA
NA
21Nov2019
BWR BBB-Stable
(Upgrade)
Fund Based ST 26.50
BWR A3
(Reaffirmation)
02May2022
BWR A3
(Reaffirmation/ISSUER NOT COOPERATING*)
03Feb2021
BWR A3
(Reaffirmation)
NA
NA
NA
NA
Non Fund Based ST 2.00
BWR A3
(Reaffirmation)
02May2022
BWR A3
(Reaffirmation/ISSUER NOT COOPERATING*)
03Feb2021
BWR A3
(Reaffirmation)
NA
NA
21Nov2019
BWR A3
(Upgrade)
Grand Total 43.70 (Rupees Forty Three Crores and Seventy lakhs Only)
COMPLEXITY LEVELS OF THE INSTRUMENTS - Medium

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

Kartik Arora

Ratings Analyst kartik.a@brickworkratings.com

Hari Kishan Yadav

Associate Director - Ratings hari.ky@brickworkratings.com
1-860-425-2742 | media@brickworkratings.com
Swati Industries
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 & Sind Bank Term Loan _ _ 0.00
2 Punjab & Sind Bank Cash Credit 8.50 _ 8.50
3 Punjab & Sind Bank Inland Letter of Credit (ILC) _ 2.00 2.00
4 Punjab & Sind Bank GECL 6.70 _ 6.70
5 Punjab & Sind Bank PC/PCFC _ 16.50 16.50
6 Punjab & Sind Bank Foreign Documentary Bills Purchase/Foreign Outward Bills Purchase (FDBP/FOBP) _ 7.00 7.00
7 Punjab & Sind Bank Inland Bills Purchased / Discounted _ 3.00 3.00
Total 15.20 28.50 43.70
TOTAL (Rupees Forty Three Crores and Seventy lakhs Only)
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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.

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