RATING RATIONALE
06 Nov 2019
Ashoka Coldstorage
Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.8.00 Crs. of Ashoka Coldstorage
Particulars| Facility** | Amount (Rs.Crs) | Tenure | Rating* |
|---|---|---|---|
| Fund Based | |||
|
Open Cash Credit / Cash Credit (Hypothecation/Pledge)
Sanctioned
Term Loan Sanctioned |
05.00
03.00 |
Long Term | BWR B (Stable) |
| Sub Total | 08.00 | ||
| Grand Total | 08.00 | (Rupees Eight Crores Only) | |
**Details of Bank facilities are provided in Annexure-I RATING ACTION / OUTLOOK : Stable
BWR believes that Ashoka Coldstorage 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 Ashoka Coldstorage of FY17,FY18,FY19 and projected financial statements of FY20,FY21, publicly available information and information / clarifications provided by the entity’s management. The rating draws strength from the vast business experience of the partner/s, 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.
Credit Strengths:
- Locational Advantage :
The Firm is located in Jagdalpur cluster and thus has a competitive advantage in terms of skilled labor, logistics, production knowledge and vendors making the company more efficient and cost effective.
- Group Support :
Firm has strong group support with well experienced management.
- Management Experience :
The directors are well experienced.
- Moderate Current Ratio :
The firm's current ratio stands at a relatively moderate level of 2.24X in FY19 vis-a-vis 1.58X in FY18.
-
Low Gearing :
The firm's gearing stands at a relatively low level as indicated by TD/TNW of 0.95X in FY19.
Credit Risks:
- Constitution :
Withdrawal of capital by the Partners for any personal contingency would adversely affect the capital structure of the firm.
Limitations of Partnership constitution in terms of capital and management. - 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.
- Company’s Existence :
The company has pursued its business for only couple of years.
- Low Networth :
The firm has a relatively low net worth at Rs 3.07cr in FY19 which is expected to improve over the years.
-
Debt Protection Metrics :
DSCR and ISCR of the company stand at 1.13 and 0.25 respectively in FY19 indicating company’s inadequacy to meet its debt obligations.
For arriving 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 POSITION: ADEQUATE
The firm has no liquid investments and cash balances in FY19 is Rs. 0.20crs.The firm is availing long term facility of cash credit of Rs 5.00cr & term loan of 3.00cr O/s being Rs 1.22cr. The CC Utilization stands around 57.13%. There are Long Term Borrowings in tune of Rs 1.73cr, however, the firm has not provided us with cash flows for the same. The firm has a DSCR of 1.13X in FY19 . Current ratio of the company firm at 2.24X in FY19. There are no subsidiary.
Liquidity profile of the company is moderate with nature of the business line being the underlying factor. Imbalance in the payables and receivables will change the profile outlook.
PROFILEThe firm is partnership firm established in 2016 by Mr Ashok Gondi, Abhishek Gondi, Rita Gondi & Anshu Gondi. The firm is engaged in frozen food processing business where Individual Quick Freezing (IQF) technology is used for processing of tamarind,tamarind seeds, mahua flower, jaggery, red chilly, amchur, potato, maize, etc.
KEY FINANCIAL INDICATORS| Key Parameters | Units |
FY 18-19 |
FY 17-18 |
|---|---|---|---|
| Operating Revenue | Rs.Crs. | 0.70 | 0.00 |
| EBITDA | Rs.Crs. | 0.17 | -0.12 |
| PAT | Rs.Crs. | 0.10 | -0.33 |
| Tangible Net Worth | Rs.Crs. | 3.07 | 2.14 |
| Total Debt/Tangible Net Worth | Times | 0.95 | 2.12 |
| Current Ratio | Times | 2.24 | 1.58 |
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 | Open Cash Credit / Cash Credit (Hypothecation/Pledge) - SanctionedTerm Loan - Sanctioned | Long Term | 5.003.00 | BWR B(Pronounced as BWR Single B )(Outlook: Stable) | NA | NA | NA | |||
| Total | 08.00 | (Rupees Eight Crores Only) | ||||||||
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 : For More Information Contact:| Analytical Contacts | Investor Contacts |
|---|---|
|
Siddhi Kadakia Ratings Analyst D : +91 22 6745 6648 B : +91 22 2831 1426, +91 22 2831 1439 siddhi.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. | Type Of Facilities | Long Term(Rs.Crs.) | Short Term(Rs.Crs.) | Total(Rs.Crs.) |
|---|---|---|---|---|
| 1 | Open Cash Credit / Cash Credit (Hypothecation/Pledge)Sanctioned | 5.00 | _ | 5.00 |
| 2 | Term LoanSanctioned | 3.00 | _ | 3.00 |
| Total | 8.00 | |||
| TOTAL (Rupees Eight Crores Only) | ||||
| Instrument | Issue Date | Amount (Rs.Crs) | Coupon Rate | Maturity Date | ISIN Particulars |
|---|---|---|---|---|---|
| NA | NA | NA | NA | NA | NA |
| Name of Entity | % Ownership | Extent of consolidation | Rationale for consolidation |
|---|---|---|---|
| NA | NA | NA | NA |
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