Akshoy Creation

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.12.00 Crs. of Akshoy Creation

Particulars

Facility**	Amount (Rs.Crs)	Tenure	Rating*
Fund Based
Cash Credit	12.00	Long Term	BWR BB - (Stable)
Sub Total	12.00
Grand Total	12.00	(Rupees Twelve Crores 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 Akshoy Creation 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

Strengths

• Goodwill in the market :

  M/s Akshoy Creation is a well established and well known brand in Kolkata. It derives its Goodwill from the legacy of the business of trading in Sarees, which is more than a century old.

• Experience of the Partners in the business and established relationship with the customers and suppliers :

  The partnership firm was set up in the year 2004. However, their business of trading in Sarees is in existence for more than 100 years, started by Mr. Akshoy Basak (grandfather of Mr. Shyamal Basak). Being present in the market since long has enabled them to build strong relationships with their customers and suppliers. Mr. Shyamal Basak has more than fifty years of experience in this business.

• Locational Advantage :

  The Firm is located in Kolkata cluster and thus has a competitive advantage in terms of experienced manpower well versed in trading and distribution. They also have good local knowledge about vendors, which makes the firm more cost effective.

• Profitability :

  Their Net profit margin of 3.03% in FY 18 and more than 2% in the previous two fiscals, is above their peer level margins.

• Debt Protection Metrics :

  Interest Service Coverage Ratio of the Firm at 1.94x in FY18 is indicative of the Firm's adequacy to meet its interest obligations.

Weakness

• Small scale of Operations :

  Although the total operating income remained modest at Rs.9.49 Crores in FY 18, as per 10MFY19, the total operating income has increased to Rs.40.63 Crores on account of the inorganic expansion through merger of M/s Adi Akshoy & Co. with M/s Akshoy Creation.

• Low Net Worth :

  Net worth in FY 18 has increased by ~25% to Rs.4.32 Crores as on 31/3/18.

• Trading nature of business :

  Generally, the trading business has low profits. However, the profitability of the firm stands fairly well as regards the Industry, which though needs to be maintained and improved consistently over the years, considering that competition is high.

• Partnership nature of Constitution :

  Withdrawal of capital by the Partners for any personal contingency would adversely affect the capital structure of the firm.

• Competition in the Industry :

  Entry barriers in the industry are low on account of limited capital and technology requirement and also low differentiation in the end product leading to intense competition and limiting the pricing power resulting in low profitability

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).

PROFILE

M/s Akshoy Creation was established in 2004. The business started by Shri Akshoy Basak around 100 years ago, is now being managed by the third and fourth generation i.e, Mr. Shyamal Basak and Mr. Samrat Basak as partners of the partnership firm. The firm is engaged in the wholesale and retail trading of Sarees and other dress materials. It operates three retail and one wholesale outlet in Kolkata. All the four outlets are in the name of the Akshoy Creation.The partners had two firms in the name of 'Adi Akshoy and Co'. and 'Akshoy Creation', carrying on the same business, which have merged into Akshoy Creation in April 2018.

KEY FINANCIAL INDICATORS

Key Parameters	Units	FY 17-18	FY 16-17
Operating Revenue	Rs.Crs	15.44	16.10
EBITDA	Rs.Crs	1.47	1.43
PAT	Rs.Crs	0.47	0.47
Tangible Net Worth	Rs.Crs	3.45	3.28
Total Debt/Tangible Net Worth	Times	1.66	1.43
Current Ratio	Times	1.32	1.23

RATING HISTORY (INCLUDING WITHDRAWAL AND SUSPENSION)

S.No	Current Rating (2019)				Rating History
	Facilities	Tenure	Amount (Rs.Crs)	Rating	2018	2017	2016
Fund Based
1	Cash Credit	Long Term	12.00	BWR BB- (Pronounced as BWR Double B minus) (Outlook: Stable)	NA	NA	NA
Total			12.00	(Rupees Twelve 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.

Hyperlink/Reference to applicable Criteria :

• General Criteria
• Approach to Financial Ratios
• Trading Entities

For More Information Contact:

Analytical Contacts	Investor Contacts
Hema Sethia Ratings Analyst D : +91 98301 96968 B : +91 80 4040 9940 hema.s@brickworkratings.com	Liena Thakur Assistant Vice President - Corporate Communications M : +91 84339 94686 liena.t@brickworkratings.com
K.Venkateswara Raju Associate Director - SME & Vendor Gradings B : +91 80 4040 9940 kvraju@brickworkratings.com
1-860-425-2742

SL.No.	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)
1	Cash Credit	12.00	_	12.00
Total				12.00
TOTAL (Rupees Twelve Crores Only)