Ashish Shivhare

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.5.75 Crs. of Ashish Shivhare

Particulars

Facilities**	Amount(Rs.Crs)	Tenure	Rating*
Fund Based	0.25	Long Term	BWR B (Pronounced as BWR Single B ) (Outlook: Stable)
Non-Fund Based	5.50	Short Term	BWR A4 (Pronounced as BWR A Four )
Total	5.75	(Rupees Five Crores and Seventy Five 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 Ashish Shivhare 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 Ashish Shivhare up to FY16,FY17,FY18 and projected financial statements up to FY19,FY20, publicly available information and information / clarifications provided by the entity’s management. The rating draws strength from the vast business experience of the partners / directors, established track of operations and above average financial risk profile. However, the rating is constrained by the scale of operations, constitution of the firm and high competition from other established players in the market.

Going forward, the ability of the entity to achieve projected revenue & profitability margins and manage liquidity would be key rating sensitivities

Strengths

• Extensive experience: M/S Ashish Shivhare is a sole proprietor which commenced in 2013. With 18 years of business experience, relationships with clients and suppliers support business risk profile.

• High Entry Barriers: High taxation and heavy regulation make the industry dynamics complex. The procedure for obtaining & renewing a liquor license is highly regulated and is a time-consuming process. The complicated procedure with the high costs forms a barrier for new entrants hereby, giving a competitive advantage to the existing players

• Moderate Scale of Operations: The firm has witnessed an increasing trend in operations indicated by Revenue or Total Operating (TOI) which stood at ₹48.77 CRS as at FY18, increasing from ₹25.19 Cr in FY17

• Liquidity Profile: The liquidity profile is above average with the current ratio of 3.74x in FY18 as compared to 1.34x in FY17

• Moderate coverage ratios:​Moderate coverage ratios with ISCR & DSCR standing at 1.18x and 2.45x  respectively in FY18 as compared to 1.57x and 1.44x in FY17

Weakness

• Geographically Concentrated Revenue Profile: The firm has a majority of its operations in Madhya Pradesh; leading to susceptibility in operations from changes in any regulation in the particular state.

• Vulnerability to changes in regulations regarding the liquor industry: The liquor industry is highly regulated and any adverse regulatory changes could affect the performance of the players in the value chain. The industry attracts a complex structure of duties and taxes, which differs from state to state. An unfavorable change in the duty structure would negatively impact demand. 

• Lower Profit margins: The Operating profit margin and Net profit margins are on a decreasing trend in FY18 as compared to FY17.The low net worth is a cause of concern.

• Stretched Gearing: The gearing is stretched with TD/TNW of 3.16x in FY18 as compared to 0.76x in FY17

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

Liquidity profile of the company is marked by the current ratio of 3.74x in FY18. Its cash and cash equivalents are reported at Rs 0.68Crs. Company has negligible current investments.

PROFILE

Established in the year 2013 at Jabalpur(Madhya Pradesh) M/S Ashish Shivhare is a Sole proprietary firm. It is engaged in liquor trading.M/S Ashish Shivhare runs 4 liquor shops in Kanti, 5 shops in Indore one in Jabalpur. The proprietor has over 18 years of rich experience in Liquor trading

KEY FINANCIAL INDICATORS

Key Parameters	Units	FY 17-18	FY 16-17
Operating Revenue	Rs.Crs	48.77	25.19
EBITDA	Rs.Crs	0.42	0.91
PAT	Rs.Crs	0.51	0.29
Tangible Net Worth	Rs.Crs	1.99	1.65
Total Debt/Tangible Net Worth	Times	3.16	0.76
Current Ratio	Times	3.74	1.34

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	0.25	BWR B (Pronounced as BWR Single B ) (Outlook: Stable)	NA	NA	NA
2	Non-Fund Based	Short Term	5.50	BWR A4 (Pronounced as BWR A Four )	NA	NA	NA
Total			05.75	(Rupees Five Crores and Seventy Five 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
• Short Term Debt

For More Information Contact:

Analytical Contacts	Investor Contacts
Nagesh Sudhir Kadu Ratings Analyst B : 202267456 Ext : 619 nagesh.k@brickworkratings.com	Liena Thakur Assistant Vice President - Corporate Communications M : +91 84339 94686 liena.t@brickworkratings.com
Sushil Kumar Chitkara Associate Director - Ratings B : +91 22 2831 1426, +91 22 2831 1439 sushilkumar.c@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	Punjab and Sind Bank	0.25		5.5	5.75
	TOTAL (Rupees Five Crores and Seventy Five lakhs Only)	0.25	0	5.5	5.75