Akhil Ship Breakers Pvt. Ltd.

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.30.00 Crs. of Akhil Ship Breakers Pvt. Ltd.

Particulars

Facilities**	Amount(Rs.Crs)	Tenure	Rating*
Fund Based	(2.00)	Long Term	BWR B+ (Pronounced as BWR Single B Plus)
Non-Fund Based	30.00	Short Term	BWR A4 (Pronounced as BWR A Four)
Total	30.00	(Rupees Thirty Crores Only)

*Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank facilities are provided in Annexure-I
Note: Fund based limits includes the Cash Credit limit of Rs. 2 Crores, which is a sub limit of Non fund based facility. RATING ACTION / OUTLOOK :

BWR believes the Akhil Ship Breakers Pvt. 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 Akhil Ship Breakers Pvt. Ltd. up to FY16,FY17,FY18 and provisional financial statements for  FY19, publicly available information and information / clarifications provided by the entity’s management. The rating draws strength from the vast business experience of the  directors, established track of operations and favorable location. However, the rating is constrained by the low scale of operations, moderate financial risk profile and Cyclicality in the ship-breaking industry.

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

Strengths

• Credit Strengths:

  Experienced Promoters : The Company's Promoters have more than two decades experience in the industry and their long established presence helps them take timely decisions on the purchase of ships after evaluation of market conditions.

• Favorable Location : The Company is Located in Alang – Sosiya Ship Breaking yard. Alang has majority of share in India’s Ship Breaking Market.

Weakness

• Credit Risks:

  Low Scale of Operation : The revenue  trend has remained  fluctuating and  the scale of operation is low in the past . The Company has achieved a total operating income of Rs. 17.23 Crores in FY18 against a TOI of Rs. 26.56 Crores in FY17. As per management certified provisional financials as  on 31st March, 2019, the Company has reported a sales of Rs. 22.71 Crores. 

• Moderate financial debt metrics : Ship  purchases  are entirely  backed by LCs.  Thus, the Company’s high dependence on LC - backed  purchasing  increased the TOL/TNW  from 1.71 time for FY17 to 4.01 times for FY18. Gearing position is moderate with Debt/TNW at 0.62 x due to absense of any major long term liabilities.  Tangible net worth is low at Rs. 3.95 Crs in FY18.

• Cyclicality in the ship-breaking industry, and fluctuations in steel scrap prices and forex rates will continue to constrain the firm's credit risk profile. Stringent environmental regulations may adversely impact the ship-breaking industry, thereby weakening revenue growth.

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 is comfortable indicated by current ratio at 1.17x in FY18 and receivable of 15 days in FY18. 

PROFILE

Akhil Ship Breakers Pvt. Ltd. was incorporated in 1999 for carrying out an activity of ship breaking at Alang-Sosiya, Bhavnagar, Gujarat. The company is being managed by Mr. Anil Jain and Mr. Manish Jain.

KEY FINANCIAL INDICATORS

Key Parameters	Units	FY 17-18	FY 16-17
Operating Revenue	Rs.Crs	26.16	0.68
EBITDA	Rs.Crs	0.24	0.01
PAT	Rs.Crs	0.09	0.08
Tangible Net Worth	Rs.Crs	3.95	3.72
Total Debt/Tangible Net Worth	Times	0.62	1.32
Current Ratio	Times	1.17	4.91

RATING HISTORY (INCLUDING WITHDRAWAL AND SUSPENSION)

S.No	Current Rating (2019)				Rating History
	Facilities	Amount(Rs.Crs)	Tenure	Rating	2018	2017	2016
1	Fund Based	(2.00)	Long Term	BWR B+ (Pronounced as BWR Single B Plus)	NA	NA	NA
2	Non-Fund Based	30.00	Short Term	BWR A4 (Pronounced as BWR A Four)	NA	NA	NA
Total			30.00	(Rupees Thirty Crores 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
Kunjal Dabhi Ratings Analyst B : +91 79 66174046 / 47 kunjal.r@brickworkratings.com	Liena Thakur Assistant Vice President - Corporate Communications M : +91 84339 94686 liena.t@brickworkratings.com
Jayraj Bhatt Director - Ratings B : +91 79 66174046 / 47 jayraj.b@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	PNB			30	30
	TOTAL (Rupees Thirty Crores Only)	0	0	30	30

Note: Fund based limits includes the Cash Credit limit of Rs. 2 Crores, which is a sub limit of Non fund based facility.