Arrow Powertech Pvt. Ltd.

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.9.00 Crs. of Arrow Powertech Pvt. Ltd.

Particulars

Facility**	Amount (Rs.Crs)	Tenure	Rating*
Fund Based
Cash Credit - Sanctioned Bills Purchase (BP) - Sanctioned	02.00 00.50	Long Term	BWR BB - (Stable)
Sub Total	02.50
Non-Fund Based
Bank Guarantee - Sanctioned Inland Letter of Credit (ILC) - Sanctioned	01.50 05.00	Short Term	BWR A4 +
Sub Total	06.50
Grand Total	09.00	(Rupees Nine 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 that Arrow Powertech 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

Credit Risks:

• Modest scale of operations and low profitability: Revenue was modest at Rs 22.24 crore in 2018. Although revenue has declined to Rs 13.84 crores in provisional FY19,The net operating margins are low at 1.5% in FY18 due to limited bargaining power with customers.

• Low debt servicing capacity and working capital intensive operations: The company has low interest servicing capacity (below 1) in FY 18. The company has an intensive working capital requirement on account of prolonged conversion cycle of 147 days in FY18.

• Intense competition from large players: The company faces stiff competition from numerous organized and unorganized players. The market share of unorganized players is decreasing; since the customers are getting more brand agnostic.

Credit Strength :

• Extensive industry experience of the promoters: The promoters have over three decades of experience in the power electronics industry. Their experience and association with customers has helped to establish a presence in the industry.

• Comfortable gearing, despite low networth: The gearing is low at 0.39 time as on March 31, 2018. However, the networth stands low at 4.61 crores in FY18.

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).

RATING SENSITIVITIES

Going forward, the ability of the firm to improve its scale of operations by improving its profitability margins and improve its interest coverage capacity would remain the key rating sensitivities.

Positive: The rating outlook may be revised to 'Positive' in case the revenues and profit show sustained improvement backed by healthy capital structure.

Negative: The rating outlook may be revised to 'Negative' in case revenues of the firm substantially deteriorates from current level. Rating may also be adversely affected in case of deterioration in gearing and coverage ratios.

LIQUIDITY POSITION

Liquidity position of APPL remained moderate as marked by current ratio of 1.23 times as on FY18 and 1.52 times as on FY 19. The company has an intensive working capital requirement on account of prolonged conversion cycle of around 147 days in FY18.

PROFILE

Arrow Powertech Pvt Ltd was incorporated in 2010, promoted by Mr Hetuk Desai, Mr Yogesh Thakkar, Mr Ridhish Patel, and Mrs Darshana Desai. The company manufactures batteries, un-interruptible power supply (UPS) units, solar products, and other related items. Its facility is at Vadodara, Gujarat.

KEY FINANCIAL INDICATORS

Key Parameters	Units	FY 17-18	FY 16-17
Operating Revenue	Rs.Crs.	22.30	19.23
EBITDA	Rs.Crs.	-0.15	-0.17
PAT	Rs.Crs.	0.33	0.48
Tangible Net Worth	Rs.Crs.	4.61	4.28
Total Debt/Tangible Net Worth	Times	0.41	0.24
Current Ratio	Times	1.23	1.11

KEY COVENANTS OF THE INSTRUMENT/FACILITY RATED

N.A

NON-COOPERATION WITH PREVIOUS RATING AGENCY ,IF ANY

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 - Sanctioned Bills Purchase (BP) - Sanctioned	Long Term	2.00 0.50	BWR BB- (Pronounced as BWR Double B minus) (Outlook: Stable)	NA	NA	NA
Non-Fund Based
2	Bank Guarantee - Sanctioned Inland Letter of Credit (ILC) - Sanctioned	Short Term	1.50 5.00	BWR A4+ (Pronounced as BWR A Four plus)	NA	NA	NA
Total			09.00	(Rupees Nine 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
• Manufacturing Companies

For More Information Contact:

Analytical Contacts	Investor Contacts
Aakansha Trivedi Ratings Analyst B : +91 79 66174046 / 47 aakansha.t@brickworkratings.com	Liena Thakur Assistant Vice President - Corporate Communications M : +91 84339 94686 liena.t@brickworkratings.com
Noman Agashiwala Associate Director-Ratings D : +91 22 6745 6630 B : +91 22 2831 1426, +91 22 2831 1439 noman.a@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 - Sanctioned	2.00	_	2.00
2	Bills Purchase (BP) - Sanctioned	0.50	_	0.50
3	Bank Guarantee - Sanctioned	_	1.50	1.50
4	Inland Letter of Credit (ILC) - Sanctioned	_	5.00	5.00
Total				9.00
TOTAL (Rupees Nine Crores Only)