Brickwork Ratings reaffirms/revises the ratings for the Bank Loan Facilities of Rs.14.13 Crs. of Apoorva IT Solutions Pvt. Ltd.
Particulars| Facilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||||
|---|---|---|---|---|---|---|---|
| Previous | Present | Previous(04 Nov 2019) | Present | ||||
| Fund Based | |||||||
| Cash Credit Sanctioned | 05.50 | 05.50 | Long Term | BWR BB+ /Stable Reaffirmation | BWR BB + /Stable Reaffirmation | ||
| Working Capital Term Loan Sanctioned | 00.00 | 01.08 | |||||
| Covid -19 Emergency Line Credit Sanctioned | 00.00 | 00.55 | |||||
| Sub Total | 5.50 | 7.13 | |||||
| Non-Fund Based | |||||||
| Bank Guarantee Sanctioned | 03.50 | 03.50 | Short Term | BWR A4+ Reaffirmation |
BWR A4 +
Reaffirmation |
||
| Letter of Credit Sanctioned | 03.50 | 03.50 | |||||
| Sub Total | 7.00 | 7.00 | |||||
| Grand Total | 12.50 | 14.13 | (Rupees Forteen Crores and Thirteen lakhs Only) | ||||
BWR reaffirms the ratings of Apoorva IT Solutions Pvt. Ltd. (AITSPL or the company) for enhanced bank loan facilities of Rs 14.13 Crs. to BWR BB+(Stable)/A4+ based on the extensive experience of the management, capital structure, profit margins and reputed clientele base. However, the rating is constrained by the low DSCR and stretched working capital cycle.
BWR has essentially relied upon the audited financial statements of Apoorva IT Solutions Pvt. Ltd. up to FY19, provisionals financial statements of FY20, projected financial statements for FY21 and FY22, publicly available information and information/clarifications provided by the entity’s management.
The Stable outlook indicates the low likelihood of a rating change over the medium term. BWR believes that the firm's business risk profile would remain unchanged over the medium term.
KEY RATING DRIVERSCredit Strengths:
The company is managed by K. Muralidhar Reddy and K. Rekha who have over two decades of experience in the industry. The directors are well supported by the core technical team.
The financial risk profile of the company is marked with a modest net worth of Rs.7.64 Cr. in FY20(Provisional). The capital structure is moderately leveraged with gearing at 1.39x in FY20 (Provisional). Coverage ratios with ISRC are adequate at 1.35x in FY20(Provisional).
The firm is associated with reputed clients like Research Centre Imarat (A defence Org.), Defence Research & Development Laboratory, Defence Electronics, Research Laboratory (DLRL), Bharat Dynamics Ltd., Advance Systems Laboratory, ANURAG, PGAD, ADA, Electronics Corporation of India Ltd (PSU), Bharat Electronics Ltd. (BEL), National Remote Sensing Centre, Hindustan Aeronautics Ltd., National Thermal Power Corporation, South Central Railways etc.
Credit Risks:
The scale of operations has remained modest over the last three financial years. The Total operating income increased marginally Rs 37.76 Cr in FY20(Provisional) Vs Rs 37.39 Cr in FY19. The firm clocked a sale of Rs 23.46 Cr from April to December 2020.
The profit margins are thin. The NPM has increased marginally to 1.50% and OPM to 4.64% in FY20 Vs FY19. The DSCR in FY20(Provisional) is adequate at 1.10x and projected to decline at 0.91x in FY21 on account of high debt obligations.
In FY20 the Receivables and inventory days at 207 days indicated stretched working capital cycle.
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
Positive: The ratings may be upgraded with significant improvement in scale of operations, tangible net worth, improvement in the capital structure and working capital cycle.
Negative: The ratings may be downgraded in case revenues of the company and profit substantially plunge from the current levels and gearing and debt service metrics deteriorate.
LIQUIDITY INDICATORS - Stretched
The liquidity is stretched as the cash credit facility utilization is approximately 97.00% for the period July to December 2020. The current investment is NIL and cash equivalents stood at Rs 0.29 Crs.The net cash accruals in FY20 (Provisionals) at Rs 0.65 Cr Vs the debt obligations of Rs 0.68 Cr in FY21. The current ratio as of 31st March 2020 is 1.43x.
ABOUT THE ENTITY| Key Parameters | Units |
FY 18-19 (Audited) |
FY 17-18 (Audited) |
|---|---|---|---|
| Operating Revenue | Rs.Crs. | 37.39 | 32.11 |
| EBITDA | Rs.Crs. | 1.52 | 1.36 |
| PAT | Rs.Crs. | 0.47 | 0.37 |
| Tangible Net Worth | Rs.Crs. | 7.06 | 6.59 |
| Total Debt/Tangible Net Worth | Times | 0.84 | 1.20 |
| Current Ratio | Times | 1.38 | 1.45 |
| Facilities | Current Rating (2021) | Rating History (2020) | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Type | Tenure | Amount | Rating | NA | |||||||
| Fund Based | |||||||||||
| Cash Credit - SanctionedWorking Capital Term Loan - SanctionedCovid -19 Emergency Line Credit - Sanctioned | Long Term | 05.5001.0800.55 | BWR BB+/Stable | NA | |||||||
| Non-Fund Based | |||||||||||
| Bank Guarantee - SanctionedLetter of Credit - Sanctioned | Short Term | 03.5003.50 | BWR A4+ | NA | |||||||
| Grand Total | 14.13 | (Rupees Forteen Crores and Thirteen lakhs Only) | |||||||||
| Facilities | Current Rating (2021) | Rating History (2019) | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Type | Tenure | Amount | Rating | 04Nov2019 | |||||||
| Fund Based | |||||||||||
| Cash Credit - SanctionedWorking Capital Term Loan - SanctionedCovid -19 Emergency Line Credit - Sanctioned | Long Term | 05.5001.0800.55 | BWR BB+/Stable | BWR BB+/Stable | |||||||
| Non-Fund Based | |||||||||||
| Bank Guarantee - SanctionedLetter of Credit - Sanctioned | Short Term | 03.5003.50 | BWR A4+ | BWR A4+ | |||||||
| Grand Total | 14.13 | (Rupees Forteen Crores and Thirteen lakhs Only) | |||||||||
| Facilities | Current Rating (2021) | Rating History (2018) | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Type | Tenure | Amount | Rating | 19Sep2018 | |||||||
| Fund Based | |||||||||||
| Cash Credit - SanctionedWorking Capital Term Loan - SanctionedCovid -19 Emergency Line Credit - Sanctioned | Long Term | 05.5001.0800.55 | BWR BB+/Stable | BWR BB+/Stable | |||||||
| Non-Fund Based | |||||||||||
| Bank Guarantee - SanctionedLetter of Credit - Sanctioned | Short Term | 03.5003.50 | BWR A4+ | BWR A4 + | |||||||
| Grand Total | 14.13 | (Rupees Forteen 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 | |
|---|---|
|
Nagesh Sudhir Kadu Rating Analyst Board : 202267456 nagesh.k@brickworkratings.com |
Sushil Kumar Chitkara Associate Director - Ratings Board : +91 22 2831 1426, +91 22 2831 1439 sushilkumar.c@brickworkratings.com |
| 1-860-425-2742 | media@brickworkratings.com | |
| SL.No. | Type Of Facilities | Long Term(Rs.Crs.) | Short Term(Rs.Crs.) | Total(Rs.Crs.) | ||
|---|---|---|---|---|---|---|
| 1 | Cash CreditSanctioned | 5.50 | _ | 5.50 | ||
| 2 | Working Capital Term LoanSanctioned | 1.08 | _ | 1.08 | ||
| 3 | Covid -19 Emergency Line CreditSanctioned | 0.55 | _ | 0.55 | ||
| 4 | Bank GuaranteeSanctioned | _ | 3.50 | 3.50 | ||
| 5 | Letter of CreditSanctioned | _ | 3.50 | 3.50 | ||
| Total | 7.13 | 7.00 | 14.13 | |||
| TOTAL (Rupees Forteen Crores and Thirteen lakhs Only) | ||||||
| Instrument | Issue Date | Amount (Rs.Crs) | Coupon Rate (%) | Maturity Date | ISIN Particulars |
|---|---|---|---|---|---|
| NA | NA | NA | NA | NA | NA |
| Name of Entity | % Ownership | Extent of consolidation | Rationale for consolidation |
|---|---|---|---|
| NA | NA | NA | NA |
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