A-Class Marbles (India) Pvt. Ltd.

Brickwork Ratings upgrades the ratings for the enhanced Bank Loan Facilities of Rs.62.08 Crs. of A-Class Marble India Pvt. Ltd.

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (18 Apr 2022)	Present
Fund Based	22.17	46.08	Long Term	BWR BB /Stable Downgrade/ISSUER NOT COOPERATING*	BWR BB + /Stable Upgrade
Fund Based	2.00	2.00	Short Term	BWR A4 Downgrade/ISSUER NOT COOPERATING*	BWR A4 + Upgrade
Non Fund Based	11.00	14.00	Short Term	BWR A4 Downgrade/ISSUER NOT COOPERATING*	BWR A4 + Upgrade
Grand Total	35.17	62.08	(Rupees Sixty Two Crores and 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 upgrades the ratings for the enhanced bank loan facilities of A-Class Marble India Private Limited to BWR BB+ Stable/BWR A4+.The upgrade in ratings factors in experience of the promoters, improvement in scale of operations in FY22 (provisional) along with moderate financial risk profile. However, the rating is constrained by working capital intensive operations, intense competition and raw material price/ exchange fluctuation risk.

The ratings were earlier migrated to Issuer Non Cooperating category in the month of April 2022 as the company's proposal for enhancement in bank facilities with SBI bank and proposal for taking additional funding from Kotak Mahindra bank was under process due to which there was delay in providing information from issuer side.

BWR believes that the business risk profile of “A-Class Marble India Private Limited” will be maintained over the medium term. The Stable outlook indicates a low likelihood of rating change over the medium term. The Stable outlook reflects BWR’s expectation that the company will have a stable revenue outlook due to growing end use of its products as well as proximity to end user industry. The Rating outlook may be revised to “Positive” in case the company sustained the growth in its revenues and shown improvement in its profitability margins leading to an improvement in its coverage indicators, and improvement in the working capital cycle. The outlook may be revised to Negative if cash accruals are lower than expected or if any unanticipated large capital expenditure or any stretch in the working capital cycle weakens the liquidity.

KEY RATING DRIVERS

Credit Strengths:

Experienced Promoters :
The business is run by Mr. Rai Chand Bhandari along with his sons, Mr Rajesh and Mr. Ramesh. The promoters are having around three decades of experience in the industry resulting in strengthening long term relationships with customers and suppliers. The company also benefits from its presence in Kishangarh, Rajasthan, which is a marble belt and has customers and service providers in the vicinity.
Improvement in scale of operations and profitability margins :
The operating profit margins (OPM) and net profit margins (NPM) of the company has improved to 12.25% (PY 8.99%) and 2.52% (PY 1.52%) respectively in FY21. However owing to higher operating expenses, the EBIDTA margins of the company has declined to 6.57% with moderate PAT margins at 2.63% in FY22 (provisional). The company expects to sustain these margins in coming years because their products find end use in sectors like steel and road construction which will grow in future.
Moderate Financial Risk Profile :
Financial risk profile is marked by moderate networth, moderate capital structure and adequate debt protection metrics. Networth remains moderate at Rs. 37.36Cr as on March 31, 2021 and is improved to Rs. 43.98Cr in FY22 (provisional). Capital structure is marked by gearing and TOL/TNW of 2.23times and 4.30times respectively as on March 31, 2021. Debt protection metrics remain adequate with interest coverage of 1.83times for FY21 and same has improved to 3.61x for FY22 (provisional).

Credit Risks:

Working capital intensive operations :
The operations of the company remains working capital intensive as indicated by an elongated operating cycle of 283 days as on March 31, 2021. The same is largely due to high inventory days of 412 days as on March 31, 2021 on the back of nationwide lockdown and nature of business which resulted in hold of inventory. However the operating cycle has shortened to 180 days in FY22 (provisional) on the back of improvement in debtors’ realization period from 87 days in FY21 to 48 days in FY22 (provisional). Due to liberal credit extended by the suppliers (216 days in FY21 and 142 days in FY22 (provisional), the working capital cycle has improved.
Intense Competition :
The company operates in a highly fragmented industry with limited entry barriers wherein the presence of a large number of players in the unorganised sector limits the bargaining power plus there is the threat of substitutes in the business.
Raw material price/ exchange fluctuation risk :
As the raw material is imported from abroad, these are susceptible to price fluctuation risk as well as foreign currency fluctuation risk. Any adverse movement in foreign currency rates and raw material prices could impact profit margins negatively

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). BWR has principally relied upon the standalone audited financial results of A-Class Marbles (India) Pvt Ltd upto 31st March 2021, FY22 provisional financials, projected financials for FY23 and FY24 and publicly available information/ clarifications provided by the company’s management.

RATING SENSITIVITIES

Going forward the company’s ability to sustain the growth in its scale of operations, improve profitability margins and maintain comfortable capital structure remain key rating sensitivities.

Positive: The ratings may be upgraded in case of substantial improvement in revenue and profitability along with improvement in working capital cycle and sound credit metrics.

Negative: The rating may be downgraded in case there is a significant deterioration in the business revenue, profitability, coverage ratios or financial risk profile of the company.

LIQUIDITY INDICATORS - Adequate

The company has adequate liquidity position as depicted by moderate current ratio of 1.28x as on March 31,2021 which has marginally improved to 1.46x as on March 31, 2022 (provisional). The company has generated cash accrual of Rs.8.19cr in FY22 against which company has CPLTD of Rs.5.04cr in FY22 (provisional). The company has sufficient internal accruals to meet its debt obligation in the medium term as company is expected to generate cash accrual of Rs.7.78cr in FY23 and Rs.9.46cr in FY24 against debt obligation for approx Rs.4-5cr in FY23 and FY24. The company is having cash credit limit of Rs.25cr which got enhanced from Rs.15cr having moderate utilization level at 75% over the past 6 months ended April 2022. The operating cycle of the company remains stretched at 283days as on March 31, 2021 (PY 173 days) largely due to high stock holding period of 412 days. However the same has shortened to 190 days as on March 31, 2022 (provisional) with inventory period of 274 days.

ABOUT THE ENTITY

A-Class Marble India Private Limited (formerly known as A-Class Marbles (India) Pvt Ltd), was incorporated in July 2005 and promoted by Mr. Rai Chand Bhandari and his sons, Mr Rajesh and Mr. Ramesh. The company is engaged in processing and trading of marbles and slabs. The company has owned showroom in Ahmedabad, Gujarat, warehouse in New Delhi and processing unit at Kishangarh, Rajasthan.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 20-21 (Audited)	FY 19-20 (Audited)
Operating Revenue	Rs.Crs.	118.69	146.52
EBITDA	Rs.Crs.	14.54	13.17
PAT	Rs.Crs.	2.99	2.22
Tangible Net Worth	Rs.Crs.	37.36	34.38
Total Debt/Tangible Net Worth	Times	2.23	2.26
Current Ratio	Times	1.28	1.33

KEY COVENANTS OF THE FACILITY RATED

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

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	46.08	BWR BB+/Stable (Upgrade)	18Apr2022	BWR BB Stable (Downgrade/ISSUER NOT COOPERATING*)	22Jan2021	BWR BB+ Stable (Reaffirmation)	NA	NA	25Oct2019	BWR BB+ Stable (Upgrade)
Fund Based	ST	2.00	BWR A4+ (Upgrade)	18Apr2022	BWR A4 (Downgrade/ISSUER NOT COOPERATING*)	22Jan2021	BWR A4+ (Reaffirmation)	NA	NA	25Oct2019	BWR A4+ (Upgrade)
Non Fund Based	ST	14.00	BWR A4+ (Upgrade)	18Apr2022	BWR A4 (Downgrade/ISSUER NOT COOPERATING*)	22Jan2021	BWR A4+ (Reaffirmation)	NA	NA	25Oct2019	BWR A4+ (Upgrade)
Grand Total		62.08	(Rupees Sixty Two Crores and 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.

Analytical Contacts
Akanksha Senior Ratings Analyst akanksha@brickworkratings.com	Tanu Sharma Director - Ratings tanusharma@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

A-Class Marbles (India) Pvt. Ltd.

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	Kotak Mahindra Bank	Cash Credit - Sanctioned	5.00	_	5.00
2	Kotak Mahindra Bank	Term Loan - Sanctioned	5.00	_	5.00
3	Kotak Mahindra Bank	Working Capital Term Loan - Sanctioned	4.31	_	4.31
4	State Bank Of India (SBI)	Cash Credit - Sanctioned	25.00	_	25.00
5	State Bank Of India (SBI)	Term Loan - Sanctioned	3.32	_	3.32
6	State Bank Of India (SBI)	Standby Line of Credit - Sanctioned	_	2.00	2.00
7	State Bank Of India (SBI)	Letter of Credit - Sanctioned	_	14.00	14.00
8	State Bank Of India (SBI)	GECL - Sanctioned	3.45	_	3.45
Total			46.08	16.00	62.08
TOTAL (Rupees Sixty Two Crores and Eight lakhs Only)

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