Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 31.13 Crs. of Andromeda Packaging Pvt. Ltd.
Particulars| Facilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||
|---|---|---|---|---|---|
| Previous | Present | Previous (17 Aug 2021) |
Present | ||
| Fund Based | 29.65 | 31.13 | Long Term |
BWR BB /Stable
Upgrade |
BWR BB
/Stable Reaffirmation |
| Grand Total | 29.65 | 31.13 | (Rupees Thirty One Crores and Thirteen lakhs Only) | ||
Brickwork Ratings (BWR) has Reaffirmed the long term rating to "BWR BB" with a "Stable" outlook for the bank loan facilities amounting of Rs. 31.13 Crores of Andromeda Packaging Pvt. Ltd. The rating draws strength from the vast experience of the promoters in the industry, average financial risk profile and increase in revenue. However, the rating is constrained by volatility in the raw material price and competition in the industry.
The ‘Stable’ outlook indicates a low likelihood of rating change over the medium term. BWR expects that the business risk profile of Andromeda Packaging Pvt. Ltd. will be maintained over the medium term. The rating outlook may be revised to 'Positive' in case the company improves its scale of operations, profit margins and liquidity position. The rating outlook may be revised to 'Negative' if there is any deterioration in the financial risk profile of the company.
KEY RATING DRIVERSCredit Strengths:
The promoters of the company have an average of two decades of experience in this company. This will help the company to maintain a customer base and also attract new customers.
DSCR and ISCR of the company stand at 0.91x and 1.41x respectively. The Current Ratio for FY 21 is 1.39x. The Networth of the company is moderate at Rs. 6.94 Crs for FY 21.
The company's pricing ability is limited as the corrugated box manufacturing industry is highly fragmented with stiff competitive pressures from numerous organized as well as unorganized players.
The firm is susceptible to the volatility in the price of Kraft Paper, which is the major raw material used for the production of corrugated boxes which could effect the profitability of the firm. Also there is increase in the Kraft Paper in recent years.
For arriving at its rating, 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 improve its scale of operation, to increase its revenue and profitability margin, to maintain its financial risk profile and to improve its liquidity position will be the key rating sensitivities.
Positive: The ratings may be upgraded if revenue, profitability and overall credit profile show substantial improvement.
Negative: The rating may be downgraded if there is a significant deterioration in the business and financial risk profile of the company from its current level.
LIQUIDITY INDICATORS - Stretched
Liquidity Indicators - Stretched
Liquidity is stretched as the average utilization of Overdraft is 82.30%. The current ratio is moderate at 1.39 times in FY 21 as against 1.85 times in FY 20 and it is expected to increase marginally to 1.57 times in FY 22. Cash and Bank Balance decreased slightly to Rs. 0.08 Crores as on 31 March 2021 as against Rs. 0.11 Crores as on 31 March 2020 and it is expected to increase slightly to Rs. 0.09 Crores as on 31 March 2022. The Net Cash Accurals / Total Debt is maintained at 0.03 times in FY 21. Days Receivables has increased marginally to a reasonable 61 days in FY 21 from 49 days in FY 20, and in FY 22 there is further increase in days receivable to 70 days.
ABOUT THE ENTITYM/s. Andromeda Packaging Private Limited incorporated in 1994 and has been in operation for 27 years with Mr Suresh Kumar Lath and his son Mr Nikhil Lath at the helm of affairs. The unit is into manufacturing of corrugated packaging solution targeted to various industries which include automobile industry, healthcare industry, food industry etc. The main raw material which is used for the manufacture of corrugated boxes is Kraft Paper which is completely environment friendly.
KEY FINANCIAL INDICATORS (Standalone)| Key Parameters | Units |
FY 20-21 (Audited) |
FY 19-20 (Audited) |
|---|---|---|---|
| Operating Revenue | Rs.Crs. | 63.54 | 49.00 |
| EBITDA | Rs.Crs. | 2.39 | 2.42 |
| PAT | Rs.Crs. | 0.44 | 0.36 |
| Tangible Net Worth | Rs.Crs. | 6.94 | 6.49 |
| Total Debt/TNW | Times | 4.60 | 4.07 |
| Current Ratio | Times | 1.39 | 1.85 |
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 | 31.13 |
BWR BB/Stable
(Reaffirmation) |
14Apr2021 |
BWR B+ Stable
(Downgrade/ISSUER NOT COOPERATING*) |
NA |
NA
|
19Dec2019 |
BWR BB- Stable
(Assignment) |
| 0.00 |
NA
|
17Aug2021 |
BWR BB Stable
(Upgrade) |
NA |
NA
|
NA |
NA
|
||
| Grand Total | 31.13 | (Rupees Thirty One Crores and Thirteen 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 Criteria| Analytical Contacts | |
|---|---|
|
Joshi Vishalkumar Dinkarkumar Ratings Analyst vishalkumar.j@brickworkratings.com |
Nagaraj K Associate Director - Ratings Board : +91 80 4040 9940 nagaraj.ks@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 | Karnataka Bank Ltd | Term LoanOut-standing | 3.69 | _ | 3.69 | |
| 2 | Karnataka Bank Ltd | Term LoanOut-standing | 2.05 | _ | 2.05 | |
| 3 | Karnataka Bank Ltd | Term LoanOut-standing | 0.98 | _ | 0.98 | |
| 4 | Karnataka Bank Ltd | Term LoanOut-standing | 3.00 | _ | 3.00 | |
| 5 | Karnataka Bank Ltd | Term LoanOut-standing | 1.50 | _ | 1.50 | |
| 6 | Karnataka Bank Ltd | OverdraftSanctioned | 16.00 | _ | 16.00 | |
| 7 | Karnataka Bank Ltd | GECLOut-standing | 2.20 | _ | 2.20 | |
| 8 | Karnataka Bank Ltd | GECLOut-standing | 1.71 | _ | 1.71 | |
| Total | 31.13 | 0.00 | 31.13 | |||
| TOTAL (Rupees Thirty One Crores and Thirteen lakhs Only) | ||||||
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