Avdesh Jaiswal & Others

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.9.40 Crs. of Avdesh Jaiswal & Others

Particulars

Facilities**	Amount(Rs.Crs)	Tenure	Rating*
Fund Based	9.40	Long Term	BWR B (Pronounced as BWR Single B ) (Outlook: Stable)
Total	9.40	(Rupees Nine Crores and Forty Lakhs Only)

*Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank facilities are provided in Annexure-I
Note: The firm has an OD Limit of Rs.9.40 Cr. RATING ACTION / OUTLOOK : Stable

BWR believes the Avdesh Jaiswal & Others 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 provisional financial results of Avdesh Jaiswal & Others (AJO) of FY19, projected financials for FY20, publicly available information and information/clarifications provided by the management.

The rating draws strength from the extensive experience of the Partners and the management in the same line of business of trading of Liquor. The rating is further supported by comfortable liquidity i.e. current ratio at 2.19X.

The rating, however, is constrained by inherent risk of capital being withdrawn by the partnership concerns, risks arising out of government regulations, weak profitability margins and debt protection metrics. 

Going forward the firm’s ability to improve profitability will be the key rating sensitivity.

Strengths

• Experienced Partners

  AJO is a partnership firm having 18 Partners out of which 6 Partners are active and looking after day to day operations of the firm whereas the remaining 12 are sleeping partners. The firm is currently managed by two brothers, Mr. Manoj Jaiswal and Mr. Neeraj Jaiswal. The Management has one and a half decade of experience in the same line of business of liquor trading and have other group concerns also in the same field.

• Moderate Liquidity

  Liquidity i.e. Current ratio is at 2.19X in FY19 (Prov.) owing to high trade receivables in FY19 (Prov.). 

Weakness

• Risks arising out of business constitution

  Being constituted as Partnership. AJO is exposed to inherent risk of capital being withdrawn at the time of personal contingencies and legal issues.

• Regulatory Risks

  The firm operates in a highly regulated industry dependent on government regulations. The rating takes into account risk faced by the association for timely renewal of the liquor license. Also, the association faces the risk arising out of changing political scenario in the state

• Weak Profitability Margins 

  Due to the trading nature of operations, the firm has low pricing flexibility which in turn impacts the profitability. Operating Profit Margin and Net Profit Margin at 0.76% and 0.20% respectively in FY19 which are projected to improve marginally at 0.82% and 0.21% in FY20. 

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 Cash and Cash Equivalent amounts to Rs.0.86 Cr. in FY19. Long Term Borrowings include unsecured interest free loans from family amounting Rs.9.50 Cr. Current ratio at 2.19X in FY19 (Prov.) owing to high trade receivables in FY19 (Prov.) Long Conversion Cycle of 636 Days owes to high receivable days and no payable days. The firm has an OD Limit having a utilization of 95-100%. ISCR at 1.47X in FY19 which is considered weak. Partners are also running other firms which are also in trading of trading of liquor. AJO does not have any investments in the said firm. The firm has business dealings with the group concerns.

PROFILE

AJO is a partnership firm having 18 Partners out of which 6 Partners are active and looking after day to day operations of the firm whereas the remaining 12 are sleeping partners. The firm is currently managed by two brothers, Mr. Manoj Jaiswal and Mr. Neeraj Jaiswal. The firm was established on 1st September, 2013 but the partners could not get liquor vending licenses in the initial years. The Management has one and a half decade of experience in the same line of business of liquor trading and have other group concerns also in the same field. Presently the firm has been awarded with 2 whole sale licenses in the name of Mrs. Rekha Jaiswal and Mr. Ajay Jaiswal for sale of county made liquor and country made foreign liquor. The entity is engaged in wholesale trading of Indian Made Foreign Liquor (IMFL), Beer and Country Made Liquor. The partners are also running three other firms which are in retail trading of liquor. The firm has major business dealing with one of the sister concern's OP Associates.

KEY FINANCIAL INDICATORS

Key Parameters	Units	FY 18-19 (Prov.)	FY 19-20 (Proj.)
Operating Revenue	Rs.Crs	103.60	173.55
EBITDA	Rs.Crs	0.78	1.42
PAT	Rs.Crs	0.21	0.37
Tangible Net Worth (Analysed)	Rs.Crs	6.77	6.15
Total Debt/Tangible Net Worth (Analysed)	Times	2.09	2.22
Current Ratio	Times	2.19	2.07

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	9.40	BWR B (Pronounced as BWR Single B ) (Outlook: Stable)	NA	NA	NA
Total			09.40	(Rupees Nine Crores and Forty 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.

For More Information Contact:

Analytical Contacts	Investor Contacts
Aayush Verma Ratings Analyst B : +91 11 2341 2232 aayush.v@brickworkratings.com	Liena Thakur Assistant Vice President - Corporate Communications M : +91 84339 94686 liena.t@brickworkratings.com
V.K.Kukreja Associate Director - Ratings B : +91 11 2341 2232 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	BOB	9.4			9.4
	TOTAL (Rupees Nine Crores and Four lakhs Only)	9.4	0	0	9.4

Note: The firm has an OD Limit of Rs.9.40 Cr.