Rodas Impex (P.) Ltd.

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.20.28 Crs. of Rodas Impex (P.) Ltd.

Particulars

Facilities**	Amount(Rs.Crs)	Tenure	Rating*
Fund Based	18.78	Long Term	BWR BB (Pronounced as BWR Double B ) (Outlook: Stable)
Non-Fund Based	1.50	Short Term	BWR A4 (Pronounced as BWR A Four )
Total	20.28	(Rupees Twenty Crores and Twenty Eight lakhs Only)

*Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank facilities are provided in Annexure-I RATING ACTION / OUTLOOK : Stable

BWR believes the Rodas Impex (P.) Ltd. business risk profile will be maintained over the medium term. the 'Stable' outlook 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 revisd to 'Negative' if the revenues go down and profit margins show lower than expected figures

KEY RATING DRIVERS

BWR has essentially relied upon the audited financial statements of Rodas Impex (P.) Ltd. up to FY16,FY17,FY18, Provisional FY19 and projected financial statements up to FY21, publicly available information and information / clarifications provided by the entity’s management.

The rating, favorably takes into account experienced and qualified promoters with long track record of operations of the company in the textile industry, location advantage by virtue of being situated in textile cluster of Bhilwara. The rating, further, derives strength from continuous growth in the total operating income (TOI) during last three financial years.

The ratings are however constrained on account of its modest scale of operations with financial risk profile marked by thin profitability margins, leveraged capital structure and stressed liquidity position. The rating is, further, constrained on account of vulnerability of margins to fluctuation in raw material prices and foreign exchange rate in a highly fragmented and competitive textile industry.

Going forward, the ability of the entity to achieve projected revenue & profitability margins along with increasing its collections efficiency, effectively managing its forex risks and manage liquidity would be key rating sensitivities

Strengths

• Locational Advantage

  The company is located at Bhilwara which is one of the largest textile clusters in India. RIPL’s presence in the textile manufacturing region results in benefit derived from cheap and easy availability of raw material, processing of grey fabrics at cheaper cost and low transportation and storage cost.

• Improving Financial Risk Profile

  :The Net worth of the company is increasing Y-O-Y due to retention of profits and infusion of funds by the directors. Currently the TNW stands at Rs 6.99cr in FY18.The DSCR and ISCR of the company stand at 1.19 and 1.56 respectively in FY18 indicating company’s adequacy to meet its debt obligations

• Experienced & Qualified Promoters With A Long Track Record In Textile Industry

  Mr Vinod Chamodi and Mr Jugal Kishore Chamodi, Directors, have diploma in Textile and look after overall functions of the company. Both have more than two decades of experience in the textile industry. Being present in the industry since long period, the management of the companyhas established marketing network for its products.

• Revenue from Operations

  Total Operating Income (TOI) of the company has witnessed a continuous growth marked by Compounded Annual Growth Rate (CAGR) of 18.52% during last three financial years ended FY18. During FY18, TOI of the company has increased by 15.15% over FY17 mainly due to increase in the sales of finished fabrics by 14.32%, sale of woven and non-woven products by 5 times and job work income by 36.53% over FY17 and registered TOI of Rs.66.66 crore in FY18. 

• Customer Concentration

  :The company has well diversified customers, since top 3 customers contribute only 1.44 % of sales.

Weakness

• Competition in the Industry :

  The prices of yarn and granules are in fluctuating trend and hence, the profitability of the company is vulnerable to any adverse movement in the raw material prices. Furthermore, the company also generates sales from export market and it does not have any hedging policy in place.RIPL has presence in the textile industry which is highly fragmented and competitive with presence of numerous independent small scale enterprises owing to low entry barriers leading to high level of competition

ANALYTICAL APPROACH AND APPLICABLE RATING CRITERIA

For ariving 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).

LIQUIDITY POSITION

The company has no liquid investments and cash balances in FY18 is Rs. 0.18crs.The company is availing long term facility of cash credit of Rs 16.50cr & term loan of 2.28cr. The CC Utilization stands around 100%. There are Long Term Borrowings in tune of Rs 2.50cr, however, the company has not provided us with cash flows for the same.The company has a DSCR of 1.19X & ISCR of 1.56X in FY18. Current ratio of the company stands at 1.28X in FY18. There are no subsidiary. Liquidity profile of the company is moderate with nature of the business line being the underlying factor. Imbalance in the payables and receivables will change the profile outlook.

PROFILE

Bhilwara-based (Rajasthan) RIPL was incorporated in August 2001 by Mr Jugal Kishore Chamodi and Mr Vinod Chamodi along with other family members. RIPL is engaged in the business of manufacturing of grey fabrics as well as trading of grey and finished fabrics. The company markets its products all over India as well as exports mainly to United Arab Emirates. During FY16, the company undertook a project for product diversification for manufacturing of non-woven medical disposable products and medical garments. The company markets its products under the brand name of “Rodas Suiting”. Manufacturing of PV, PC, Cotton fabrics for all purpose, Medical Disposable products of non-woven fabrics and garments used in hospitals, corporates, security companies garments, Police deptt, garments and type of uniforms

KEY FINANCIAL INDICATORS

Key Parameters	Units	FY 17-18	FY 16-17
Operating Revenue	Rs.Crs	66.66	57.45
EBITDA	Rs.Crs	3.05	2.83
PAT	Rs.Crs	0.46	0.39
Tangible Net Worth	Rs.Crs	6.99	6.59
Total Debt/Tangible Net Worth	Times	2.50	2.39
Current Ratio	Times	1.28	1.27

RATING HISTORY (INCLUDING WITHDRAWAL AND SUSPENSION)

S.No	Current Rating (2019)				Rating History
	Facilities	Tenure	Amount (Rs.Crs)	Rating	2018	2017	2016
1	Fund Based	Long Term	18.78	BWR BB (Pronounced as BWR Double B ) (Outlook: Stable)	NA	NA	NA
2	Non-Fund Based	Short Term	1.50	BWR A4 (Pronounced as BWR A Four )	NA	NA	NA
Total			20.28	(Rupees Twenty Crores and Twenty Eight lakhs Only)

COMPLEXITY LEVELS OF THE INSTRUMENTS

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 :

• General Criteria
• Approach to Financial Ratios
• Manufacturing Companies
• Short Term Debt

For More Information Contact:

Analytical Contacts	Investor Contacts
Siddhi Kadakia siddhi.k@brickworkratings.com	Liena Thakur Assistant Vice President - Corporate Communications M : +91 84339 94686 liena.t@brickworkratings.com
V.K.Kukreja Associate Director-Ratings kukreja.vk@brickworkratings.com
1-860-425-2742

SL.No.	Name of the Bank	Long Term(Rs.Crs)		Short Term(Rs.Crs)	Total(Rs.Crs)
		CC	TL
1	State Bank of India	16.5	2.28	1.5	20.28
	TOTAL (Rupees Twenty Crores and Twenty Eight lakhs Only)	16.5	2.28	1.5	20.28