Aman Exports International

Brickwork Ratings upgrades the ratings for the Bank Loan Facilities of Aman Exports International for an enhanced amount of Rs.50.74 Crs.

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (31 Aug 2021)	Present
Fund Based	19.13	20.74	Long Term	BWR BB+/Stable Reaffirmation	BWR BBB - /Stable Upgrade
Fund Based	30.00	30.00	Short Term	BWR A4+ Reaffirmation	BWR A3 Upgrade
Grand Total	49.13	50.74	(Rupees Fifty Crores and Seventy Four 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 has relied upon the Audited financials of the firm for FY 19, FY 20 and FY 21, management certified provisional financials of FY 22 and Projected financials of FY 23 and FY 24, information available in public domain as well as feedback from the firm and its bankers, for arriving at the present rating.

Based on a review, Brickwork Ratings has upgraded the rating of the long-term bank loan facilities of Aman Exports International for Rs.20.74 Crs (enhanced from Rs. 19.13 Crs.) from BWR BB+, Stable to BWR BBB-, Stable, and the rating of their short term bank loan facilities for Rs.30.00 Crs from BWR A4+ to BWR A3 (aggregate rated amount enhanced from Rs.49.13 Crs to Rs.50.74 Crs). The rating upgrade factors in the experienced management and long track record of operations of the firm, its improved financial risk profile including adequate liquidity, as well as diversified customer and supplier base. However the rating is constrained by the firm’s susceptibility to volatility in raw material prices which affects its profitability, its working capital intensive nature of business, Intense competition due to low entry barriers, exposure to government regulations in the home country as well as in other geographies, exposure to forex risk, and the Partnership nature of its constitution.

BWR believes that the business risk profile of Aman Exports International will be maintained over the medium term, and the 'Stable' outlook assigned 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 on a continuous basis.

KEY RATING DRIVERS

Credit Strengths:

Experienced management long track record of operations :
The partners of the firm, Mr. Suresh Kumar Agarwal, Mr. Vikas Agarwal and Mr. Vinay Agarwal have more than two decades of experience in the textile manufacturing business. The firm has established its operations since 1988.
Improved financial risk profile :
The financial risk profile of the firm is marked by improvement in scale of operations, profitability, Total Tangible Networth. The Revenue of the firm has increased to Rs.205.26 Crs in FY 22 provisional compared to Rs.118.69 Crs in FY 21, EBITDA has increased to Rs.17.99 Crs in FY 22 provisional, compared to Rs.11.73 Crs in FY 21. The debt to equity ratio remained at moderate level at 2.38 times as on 31st March, 2022 (Provisional) as compared to 1.49 times as on 31st March, 2021. The interest coverage ratio (ISCR) and debt service coverage ratio (DSCR) of the company are also comfortable at 3.93 times and 2.14 times respectively in FY22 provisional as well as 5.72 times and 3.72 times in FY 21.
Diversified customer and supplier base :
The firm has a diversified customer profile as the firm is catering to various geographies. The firm has also limited customer and supplier concentration risk as the sales and purchases are not concentrated with a few customers/suppliers so as to have an adverse effect on business.

Credit Risks:

Susceptibility of profitability to volatility in raw material prices :
The firm’s profitability is vulnerable to volatility in raw material prices as raw material cost comprises roughly 50-55% of the annual net sales. The Company mainly uses cotton and fabric. The profitability relies on the price of cotton which is affected by agro-climatic conditions, Minimum Support Price (MSP) decided by the Central government and the demand from raw cotton export market.
Working Capital intensive nature of business :
The operations of the firm, which is into textile business, is working capital intensive, where high inventory & receivables are required to be maintained. The same is also reflected in its high conversion cycle of 82 days in FY 22 provisional.
Intense competition due to low entry barriers :
The company is into the textile manufacturing business which is highly fragmented and competitive in nature, due to low entry barriers. Further, trading by all entities in the same products with a low product differentiation results in price driven sales, and intense competition restricts the pricing flexibility of the company in the bulk customer segment.
Exposure to Government Regulations :
The process of fabric manufacturing consists of various steps such as bleaching, dyeing and printing where chemicals are used at various stages, and the waste emanating from them has to be disposed of carefully to prevent harm to the environment. Adherence to statutory requirements and pollution control measures adds to the overall cost of operations. The risk is mitigated to some extent as the firm has a full-fledged Effluent Treatment Plant which is reportedly adequate for the present level of operations.
Exposure to forex risk and regulations in other geographies :
The firm is susceptible to sudden changes to regulations in other countries where they have dealings, and to the risk of forex fluctuations. The company does not have any hedging policy, however they have not made any forex losses during the last few years.
Constitution of the firm :
The firm is exposed to the inherent risks of a partnership concern, including the risk of sudden capital withdrawal by the partners.

ANALYTICAL APPROACH - Standalone

Standalone

RATING SENSITIVITIES

Positive Triggers:

Increase in scale of operations and profits on a sustained basis.
Improvement in EBITDA margin and Net profit Margin on a consistent basis
Increase its Net Worth and the operating efficiency of the firm

Negative Triggers :

Decline in Revenue & deterioration of the financial position of the firm, including deterioration in debt protection metrics and liquidity on a continuous basis.
Delay in payments of its debt obligations.

LIQUIDITY INDICATORS - Adequate

The liquidity of the firm stands adequate as reflected by the comfortable cash credit utilization ~at 85% for the last six months ended May 2022. The firm presently does not have any major debt-led capex plans and long term repayment obligations. Liquidity is further supported by comfortable ISCR & DSCR of 3.93 times and 2.14 times respectively in FY 2022 provisional. Also, the current ratio stood acceptable at 1.27 times in FY 22 provisional (FY21:1.45 times) while cash and Bank Balances stood comfortable at Rs.7.06 Crs in FY 22 provisional. The company has also not availed the Covid 19 Relief moratorium. Projected Net Cash accruals of Rs.9.57 Crs will be adequate to take care of repayment obligations amounting to Rs.0.52 Cr in FY23.

ABOUT THE ENTITY

Aman Exports International (AEI), is a Rajasthan based partnership firm, established in 1988 by Mr. Suresh Agarwal, who was later joined by his two sons- Mr. Vikas Agarwal and Mr. Vinay Agarwal and his wife - Mrs. Chandra Kanta Agarwal. The firm is engaged in the manufacturing of high-end ladies fashion garments. The firm exports garments mainly to the USA and Europe under the buyer’s brand name. The firm also supplies garments to domestic customers as well. The manufacturing Unit is located at Jaipur, Rajasthan.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 20-21 (Audited)	FY 19-20 (Audited)
Operating Revenue	Rs.Crs.	118.69	97.85
EBITDA	Rs.Crs.	11.73	8.86
PAT	Rs.Crs.	7.85	3.34
Tangible Net Worth	Rs.Crs.	28.02	27.45
Total Debt/TNW	Times	1.49	1.45
Current Ratio	Times	1.45	1.16

KEY COVENANTS OF THE FACILITY RATED

Usal Covenant for bank Loan rating

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	20.74	BWR BBB-/Stable (Upgrade)	31Aug2021	BWR BB+Stable (Reaffirmation)	15Jun2020	BWR BB+ Negative (Reaffirmation)	08Feb2019	BWR BB+ Stable (Upgrade)
Fund Based	ST	30.00	BWR A3 (Upgrade)	31Aug2021	BWR A4+ (Reaffirmation)	15Jun2020	BWR A4+ (Reaffirmation)	08Feb2019	BWR A4+ (Reaffirmation)
Grand Total		50.74	(Rupees Fifty Crores and Seventy Four lakhs Only)

COMPLEXITY LEVELS OF THE INSTRUMENTS - NA

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
Saroj Kumar Das Ratings Analyst sarojkumar.d@brickworkratings.com	Anuradha Gupta Director - Ratings anuradha.g@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

Aman Exports International

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	Term Loan - Sanctioned	_	_	0.00
2	Punjab National Bank	Term Loan - Sanctioned	_	_	0.00
3	Punjab National Bank	Packing Credit (PC) - Sanctioned	_	30.00	30.00
4	Punjab National Bank	GECL - Sanctioned	3.37	_	3.37
5	Punjab National Bank	Common Covid Emergency Line of Credit (CCECL) - Sanctioned	2.60	_	2.60
6	Standard Chartered Bank	Common Covid Emergency Line of Credit (CCECL) - Sanctioned	1.00	_	1.00
7	Standard Chartered Bank	CECL - Sanctioned	1.77	_	1.77
8	Standard Chartered Bank	Over Draft - Sanctioned	12.00	_	12.00
Total			20.74	30.00	50.74
TOTAL (Rupees Fifty Crores and Seventy Four lakhs Only)

Print and Digital Media

The Rating Rationale is sent to you for the sole purpose of dissemination through your print, digital or electronic media. While it may be used by you acknowledging credit to BWR, please do not change the wordings in the rationale to avoid conveying a meaning different from what was intended by BWR. BWR alone has the sole right of sharing (both direct and indirect) its rationales for consideration or otherwise through any print or electronic or digital media.

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

Brickwork Ratings India Pvt. Ltd. (BWR), a Securities and Exchange Board of India [SEBI] registered Credit Rating Agency and accredited by the Reserve Bank of India [RBI], offers credit ratings of Bank Loan facilities, 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. [ hereafter referred to as "Instruments"]. BWR also rates NGOs, Educational Institutions, Hospitals, Real Estate Developers, Urban Local Bodies and Municipal Corporations.

BWR wishes to inform all persons who may come across Rating Rationales and Rating Reports provided by BWR that the ratings assigned by BWR are based on information obtained from the issuer of the instrument and other reliable sources, which in BWR's best judgment are considered reliable. The Rating Rationale / Rating Report & other rating communications are intended for the jurisdiction of India only. The reports should not be the sole or primary basis for any investment decision within the meaning of any law or regulation (including the laws and regulations applicable in Europe and also the USA).

BWR also wishes to inform that access or use of the said documents does not create a client relationship between the user and BWR.

The ratings assigned by BWR are only an expression of BWR's opinion on the entity / instrument and should not in any manner be construed as being a recommendation to either, purchase, hold or sell the instrument.

BWR also wishes to abundantly clarify that these ratings are not to be considered as an investment advice in any jurisdiction nor are they to be used as a basis for or as an alternative to independent financial advice and judgment obtained from the user's financial advisors. BWR shall not be liable to any losses incurred by the users of these Rating Rationales, Rating Reports or its contents. BWR reserves the right to vary, modify, suspend or withdraw the ratings at any time without assigning reasons for the same.

BWR's ratings reflect BWR's opinion on the day the ratings are published and are not reflective of factual circumstances that may have arisen on a later date. BWR is not obliged to update its opinion based on any public notification, in any form or format although BWR may disseminate its opinion and analysis when deemed fit.

Neither BWR nor its affiliates, third party providers, as well as the directors, officers, shareholders, employees or agents (collectively, "BWR Party") guarantee the accuracy, completeness or adequacy of the Ratings, and no BWR Party shall have any liability for any errors, omissions, or interruptions therein, regardless of the cause, or for the results obtained from the use of any part of the Rating Rationales or Rating Reports. Each BWR Party disclaims all express or implied warranties, including, but not limited to, any warranties of merchantability, suitability or fitness for a particular purpose or use. In no event shall any BWR Party be liable to any one for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of any part of the Rating Rationales and/or Rating Reports even if advised of the possibility of such damages. However, BWR or its associates may have other commercial transactions with the company/entity. BWR and its affiliates do not act as a fiduciary.

BWR keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of the respective activity. As a result, certain business units of BWR may have information that is not available to other BWR business units. BWR has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with each analytical process.

BWR clarifies that it may have been paid a fee by the issuers or underwriters of the instruments, facilities, securities etc., or from obligors. BWR's public ratings and analysis are made available on its web site, www.brickworkratings.com. More detailed information may be provided for a fee. BWR's rating criteria are also generally made available without charge on BWR's website.

This disclaimer forms an integral part of the Ratings Rationales / Rating Reports or other press releases, advisories, communications issued by BWR and circulation of the ratings without this disclaimer is prohibited.

BWR is bound by the Code of Conduct for Credit Rating Agencies issued by the Securities and Exchange Board of India and is governed by the applicable regulations issued by the Securities and Exchange Board of India as amended from time to time.