Brickwork Ratings reaffirms/revises the ratings for the Bank Loan Facilities of Rs.10.21 Crs. of Shree Ambica Agro Industries Private Limited
ParticularsFacilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||||
---|---|---|---|---|---|---|---|
Previous | Present | Previous(13 Aug 2019) | Present | ||||
Fund Based | |||||||
Cash Credit Sanctioned | 09.00 | 09.00 | Long Term | BWR BB - /Stable Reaffirmation | BWR BB - /Stable Reaffirmation | ||
Term Loan Out-standing | 00.41 | 00.21 | |||||
Sub Total | 9.41 | 9.21 | |||||
Non-Fund Based | |||||||
Standby line of Credit (SLC) Sanctioned | 01.00 | 01.00 | Short Term | BWR A4 Reaffirmation |
BWR A4
Reaffirmation |
||
Sub Total | 1.00 | 1.00 | |||||
Grand Total | 10.41 | 10.21 | (Rupees Ten Crores and Twenty One lakhs Only) |
Brickwork Ratings has relied upon Audited financials of the company for FY 19 and FY 20 along with its projected financials of FY 21 and FY 22, information available in public domain as well as feedback from the company and its bankers for arriving at the present rating.
The reaffirmation of the ratings factors in the management experience and long standing market presence, improvement in scale of operations, improvement in capacity utilisation, low customer concentration risk and improvement in financial indicator. The rating is however, constrained by long working & inventory cycle, presence in competitive industry and chance of profit vulnerability due to fluctuations in raw material prices & regulatory changes.
The outlook of the company is maintained at stable as the current financial position of the company is not likely to undergo any major change in the near to medium term. The improvement in PAT, Net-worth, Operating and Net profit margin is likely to be sustained.
KEY RATING DRIVERSCredit Strengths:
One of the directors of the company Mr. Arun Kumar Agarwal,have more than three decades of business experience while the other director Mrs. Nitu Agarwal has more than a decade of business experience in the cotton industry. The company has a long standing presence of more than two decades and has maintained a long term relationship with the customers, resulting in repeat orders.
In FY 20 company has achieved turnover of Rs. 54.68 Crs against Rs. 49.06 Crs in FY 19. Scale of operation has shown a growth of 11.46 % and is expected to be maintained in FY 21 and FY 22 with positive market demand in the textile industry.
Production of the company is dependent on procurement of Kapas. Shortage in availability of the raw material in the nearby locations, has resulted in decreased capacity utilization during FY19. However, capacity utilization remained low at 34% in FY18, and has further reduced to 28% in FY19 has improved to 30% in FY 20. In FY 21, the capacity utilisation is expected to improve further.
The clientele base of the company includes cotton mills located in different parts of India with no significant customer concentration risk.
The company has net-worth of Rs. 14.88 Crs in FY 20 against Rs. 14.01 Crs in FY 19, gearing ratio at 1.39 times in FY 20 against 1.58 times in FY 19 and current ratio of 1.46 times in FY 20. ISCR at 2.45 times, DSCR at 1.72 times in FY 20.
Credit Risks:
Conversion cycle is higher as shown by a cycle of 205 days in FY 20, however it improved from 229 days in FY 19 and inventory days also improved to 209 days in FY 20 against 224 days in FY 19. Apart from maintaining the inventory levels timely realization of receivables shall assist in reducing the working capital stress.
India is a cotton growing country with major states having a favourable climate for cultivation, which attracts market players to enter into the textile industry. Further, the cotton ginning and crushing industry is highly competitive and fragmented because of the presence of numerous small to mid-sized players.
The profit margins are exposed to fluctuations in raw cotton prices, which depend on various factors such as seasonality, climatic conditions, global demand and supply situation, and export policy. The company also remains exposed to regulatory risks with regard to the MSP set by the Government.
BWR has adopted a standalone approach while arriving at its rating and applied its rating methodology as detailed in the rating criteria(hyperlinks provided at the end of this rationale)
RATING SENSITIVITIES
Positive: The rating may be upgraded in case of sustained increase in sales of operations and improvement in margins and debt protection metrics of the company.
Negative: Any delays in servicing of debt obligations, deterioration in liquidity and debt protection metrics, and consistent decline in sales volume and margins, may lead to negative rating action.
LIQUIDITY INDICATORS - Adequate
The liquidity position of the company is adequate. Average utilisation of cash credit limits is about 60.00% in the last ten months (April 2020 - January 2020). The ISCR and DSCR stood at 2.45 times and 1.72 times respectively in FY 20, and the current ratio stood at 1.46 times in FY 20. The company has a gearing ratio of 1.39 times and total outside liabilities to net-worth of 1.63 times. Company has not availed moratorium facility under COVID from bank. The company has net cash accruals for Rs. 1.37 Crs in FY 20 and will be in a position to service its debt obligations from its cash accruals, going forward. However, cash & cash equivalent is very low at Rs. 0.09 Crs in FY 20.
ABOUT THE ENTITYShree Ambica Agro Industries Pvt Ltd(SAAIPL) was incorporated on 26 December 2005, with its registered office at Bolangir, Odisha. The company was initially established as a proprietorship concern in 1998 under the name of "Shree Ambica Agro Industries". The Company is engaged in cotton ginning and pressing. It procures its raw material i.e. raw cotton (Kapas), from local farmers and through ginning and pressing process, produces cotton bales and cotton seeds. The production facility of the company is situated at Balangir, Odisha, with an installed capacity of 27300 MTPA (Metric ton per annum). The directors of the company are Mr. Arun Kumar Agarwal and Mrs. Nitu Agarwal.
KEY FINANCIAL INDICATORS (Standalone)Key Parameters | Units |
FY 20-21 (Projected) |
FY 19-20 (Audited) |
---|---|---|---|
Operating Revenue | Rs.Crs. | 53.99 | 54.68 |
EBITDA | Rs.Crs. | 3.76 | 2.68 |
PAT | Rs.Crs. | 1.09 | 0.88 |
Tangible Net Worth | Rs.Crs. | 15.75 | 14.88 |
Total Debt/Tangible Net Worth | Times | 1.52 | 1.39 |
Current Ratio | Times | 1.66 | 1.46 |
Key Parameters | Units |
|
|
---|---|---|---|
Operating Revenue | Rs.Crs. | Not Available | Not Available |
EBITDA | Rs.Crs. | Not Available | Not Available |
PAT | Rs.Crs. | Not Available | Not Available |
Tangible Net Worth | Rs.Crs. | Not Available | Not Available |
Total Debt/Tangible Net Worth | Times | Not Available | Not Available |
Current Ratio | Times | Not Available | Not Available |
Facilities | Current Rating (2021) | Rating History (2020) | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Type | Tenure | Amount | Rating | NA | |||||||
Fund Based | |||||||||||
Cash Credit - SanctionedTerm Loan - Out-standing | Long Term | 09.0000.21 | BWR BB-/Stable | NA | |||||||
Non-Fund Based | |||||||||||
Standby line of Credit (SLC) - Sanctioned | Short Term | 01.00 | BWR A4 | NA | |||||||
Grand Total | 10.21 | (Rupees Ten Crores and Twenty One lakhs Only) |
Facilities | Current Rating (2021) | Rating History (2019) | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Type | Tenure | Amount | Rating | 13Aug2019 | |||||||
Fund Based | |||||||||||
Cash Credit - SanctionedTerm Loan - Out-standing | Long Term | 09.0000.21 | BWR BB-/Stable | BWR BB -/Stable | |||||||
Non-Fund Based | |||||||||||
Standby line of Credit (SLC) - Sanctioned | Short Term | 01.00 | BWR A4 | BWR A4 | |||||||
Grand Total | 10.21 | (Rupees Ten Crores and Twenty One lakhs Only) |
Facilities | Current Rating (2021) | Rating History (2018) | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Type | Tenure | Amount | Rating | 23May2018 | |||||||
Fund Based | |||||||||||
Cash Credit - SanctionedTerm Loan - Out-standing | Long Term | 09.0000.21 | BWR BB-/Stable | BWR BB/Stable | |||||||
Non-Fund Based | |||||||||||
Standby line of Credit (SLC) - Sanctioned | Short Term | 01.00 | BWR A4 | BWR A4 | |||||||
Grand Total | 10.21 | (Rupees Ten Crores and Twenty One 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.
Analytical Contacts | |
---|---|
Protusha Bera Rating Analyst Board : +91 80 4040 9940 protusha.b@brickworkratings.com |
Anuradha Gupta Director - Ratings anuradha.g@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 | 9.00 | _ | 9.00 | ||
2 | Term LoanOut-standing | 0.21 | _ | 0.21 | ||
3 | Standby line of Credit (SLC)Sanctioned | _ | 1.00 | 1.00 | ||
Total | 9.21 | 1.00 | 10.21 | |||
TOTAL (Rupees Ten Crores and Twenty One 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 |
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 RatingsBrickwork 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 11,400 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.