Umang Oils Pvt. Ltd.

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.9.43 Crs. of Umang Oils Pvt. Ltd.

Particulars

Facility**	Amount (Rs.Crs)	Tenure	Rating*
Fund Based
Cash Credit - Sanctioned	09.43	Long Term	BWR B + (Stable)
Sub Total	09.43
Grand Total	09.43	(Rupees Nine Crores and Forty Three lakhs 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

Brickwork Ratings has assigned the rating of Long term BWR B+ with Stable Outlook to Bank loan facilities of Umang Oils Pvt. Ltd. Rating draws strength from the long existence of the Company and well-experienced Promoters. However, the rating is constrained by the Higher gearing level and stretched liquidity due to Trade receivables remaining outstanding beyond 6 months.

KEY RATING DRIVERS

Credit Strengths:

• Company Existence and Management Experience :

  The company has an existence of around Thirteen years and Its promoter Mr. Sanjay Kumar is also carrying the Industry experience of more than a decade, which is helping the company with better relationships with customers and suppliers and smooth functioning of the day to day business operations.

Credit Risks:

• Modest scale of operation :

  Gross Sales have declined to Rs. 31.80 Cr. in FY19 from Rs. 41.52 Cr. in FY18 with a low Net profit margin of 0.36% in FY19.

• Higher Gearing level with Average Debt Protection Metrics :

  Umang Oils Pvt. Ltd has a Higher gearing ratio (Total debt/TNW) of 3.43 times with the average level of ISCR 1.47 times in FY19.

• Working Capital intensive nature of operation :

  Conversion cycle of the company has increased to 123 days in FY19 from 88 days in FY18 due to higher Trade receivable amount of Rs 8.20 Cr. (70% of the trade receivables are outstanding beyond 6 months).

ANALYTICAL APPROACH AND APPLICABLE RATING CRITERIA

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).

RATING SENSITIVITIES

Going forward, the ability of the company to substantially increase the scale of the business and managing working capital more efficiently would be key rating sensitivities.

Positive: The Rating outlook may be revised to 'Positive' in case the revenue and profit shows substantial improvement.

Negative: The rating outlook may be revised to 'Negative' if the revenues and profitability margins show a sharp decline.

LIQUIDITY POSITION

Liquidity is Stretched. Though the Current Ratio at 1.35 times is good. The current assets are majorly made of inventories, which is 92 days because of which conversion cycle is high at 123 days. Cash & Cash equivalents stood at Rs. 0.04 cr.in FY19. Net Cash Accruals of Rs. 0.41 cr as of 31 March 2019. The working capital utilization remains around 90% for the period of Apr 2019 to Oct 2019.

PROFILE

Umang Oils Private Limited is incorporated in the year 2006 and it is involved in the Refining and Trading activities of edible oils like Rice bran oil, Soybean oil, and Mustard oil. The Company is promoted by Mr.Sanjay Mansinghka having experience of more than a decade in the business. The Refinery facility of the company is located in Varanasi district of UP.

KEY FINANCIAL INDICATORS

Key Parameters	Units	FY 18-19	FY 17-18
Operating Revenue	Rs.Crs.	31.80	41.52
EBITDA	Rs.Crs.	1.37	1.58
PAT	Rs.Crs.	0.12	0.17
Tangible Net Worth	Rs.Crs.	3.36	3.25
Total Debt/Tangible Net Worth	Times	3.43	3.02
Current Ratio	Times	1.35	1.16

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	Long Term	9.43	BWR B+ (Stable)	NA	NA	NA
Total			09.43	(Rupees Nine Crores and Forty Three 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.

Hyperlink/Reference to applicable Criteria :

• General Criteria
• Approach to Financial Ratios
• Manufacturing Companies
• Trading Entities

For More Information Contact:

Analytical Contacts	Investor Contacts
Shobhit Dwivedi Ratings Analyst B : +91 11 2341 2232 Ext : 109 shobith.d@brickworkratings.com	Liena Thakur Assistant Vice President - Corporate Communications M : +91 84339 94686 liena.t@brickworkratings.com
Satvinder Kumar Gakhar Associate Director - Ratings B : +91 11 2341 2232 satvinder.g@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	9.43	_	9.43
Total				9.43
TOTAL (Rupees Nine Crores and Forty Three lakhs Only)