Anand Publication

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.8.44 Crs. of Anand Publication

Particulars

Facility**	Amount (Rs.Crs)	Tenure	Rating*
Fund Based
Cash Credit - Sanctioned Term Loan - Sanctioned	03.00 00.64	Long Term	BWR B (Stable)
Sub Total	03.64
Non-Fund Based
Bank Guarantee - Sanctioned Letter of Credit - Sanctioned	01.30 03.50	Short Term	BWR A4
Sub Total	04.80
Grand Total	08.44	(Rupees Eight Crores and Forty Four lakhs Only)

*Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank facilities are provided in Annexure-I
Note: Letter of Credit has 100% interchangeability from Non Fund based to Fund Based. So total utilizable Cash Credit limit is Rs 6.50 cr. RATING ACTION / OUTLOOK : Stable

BWR has assigned a rating and stable outlook to Anand Publications based on the vast business experience of the partners, increasing scale of operations, average profit margins, and moderate debt service indicators. However, the rating is constrained by the modest financial risk profile, the constitution of the firm, geographical and customer concentration of revenue, stretched liquidity and high competition from other established players in the market. BWR believes that Anand Publications's business risk profile will be maintained over the medium term. BWR has essentially relied upon the audited financial statements of Anand Publication upto FY 19 and projected financial statements of FY20 and FY21, publicly available information and information/clarifications provided by the entity’s management.

KEY RATING DRIVERS

Credit Strengths:

• Management Experience :

  Mr. Jitendra Kothari, an active partner in the firm holds diploma in Printing Technology and possess an industry experience of more than three decades. The firm has a proven track record of operations from the past 16 years and has established long standing relation with its customers.

• Moderate Profit Margins :

  The profit margins viz OPM and NPM are moderate at 5.03% and 1.62% respectively in FY19 which is comfortable, but the same has shown a decreasing trend compared to past years.

• Moderate Debt Service Indicators :

  Coverage ratios stand at a moderate level. DSCR improved to 2.10x in FY 19 v/s 1.58x in FY 18. ISCR being moderate increased to 2.60x in FY 19 as against 2.11x in FY 18 indicating the ability to service debt obligations.

• Increasing Scale of Operations :

  The revenue of the firm has improved significantly ~ 64%, at 37.94 cr in FY 19, as compared to 13.63 cr in FY 18 owing to a first-time project received by the firm for screen printing on educational toys. The firm expects to receive similar projects in the future providing medium-term revenue visibility.

Credit Risks:

• Modest Financial Risk Profile :

  The financial risk profile of the firm is modest marked by low owner’s fund and leveraged capital structure. Net-worth is low, at 2.39 cr in FY 19 v/s 3.11cr in FY 18, and has shown declining trend. The Debt- equity ratio stands aggressive at 3.05x in FY19 v/s 1.25x in FY18 due to increasing CC utilization for meeting working capital requirements and decreasing net worth and TOL/TNW stands at 7.11x in FY 19 as compared to 2.24x in FY18 which is high.

• Geographical and customer Concentration :

  The sales of the firm are geographically constrained. It has operations only in Maharashtra thus restricting the geographical boundaries for revenue. Further the top 5 customers alone constitute 100% sales of the firm.

• Constitution :

  Inherent risk of withdrawal of capital by the partners as it is a Partnership Firm. The firm is exposed to withdrawal of Capital, which would adversely affect the capital structure of the firm.

• Liquidity :

  Liquidity is stretched characterized by fluctuating & low current ratio and its declining trend to 0.97x in FY 19 from 1.23x in FY 18 . The bank limits are utilized to the extent of 74% on average. The working capital cycle remains stretched marked by GCA to sales ratio of 41% and stretched Receivable and payable days owing to credit period allowed to/given by the firm.

• Presence in the competitive and fragmented industry :

  The firm is present in the industry of Printing & Publications which is highly fragmented, facing intense competition from both organized and unorganized players as well, which limits the pricing flexibility.

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

The ability of the firm to improve its scale of operations while maintaining a comfortable risk profile, working capital management, infusion of capital by partners in the firm and achieve the projections would be its key rating sensitivity.

Positive: The ratings may be upgraded in case the revenue, profitability and capital structure of the firm show significant improvement.

Negative: The rating may be downgraded in case there is a significant deterioration in the business revenue and financial risk profile of the company.

LIQUIDITY POSITION

Stretched
The liquidity profile of the firm is stretched by a low and fluctuating current ratio of 0.97x in FY 19 and in 1.23x FY18 and moderately utilized bank limits. The GCA to sales ratio stands at 41%. The total cash and cash equivalents amount to Rs 1.22 cr in F19  as against 0.16cr in FY 18, but are projected to dip to Rs 0.05cr in FY 20. The Net Cash Accruals are 1.20cr as against interest expense of Rs 0.74cr in FY19.

PROFILE

M/S Anand Publications is a Maharashtra based partnership firm established in 2003. The firm is engaged as a printing press and sale of stationery and allied products in the Jalgaon dist, of Maharashtra. The product portfolio of the firm includes printing of Magazines, Textbooks, Answer sheets and PVC printing and also drawing books, Registers, notebooks etc. Currently, Mr. Jitendra Kothari, and Anand Kothari are the working partners in the firm and Mrs Sangita Kothari is the sleeping partner. Mr. Jitendra Kothari holds diploma in Printing Technology from Pune and has an experience of more than 35 years to his credit in the industry. The firm has a capacity of more than 30 lakhs impressions per day. It has been a pioneer in Govt/BSNL Yellow pages in PAN India from 1993 to 2006. The firm has imported the latest Germany based Machinery with High Speed & having High quality printing.

KEY FINANCIAL INDICATORS

Key Parameters	Units	FY 18-19 (Audited)	FY 17-18 (Audited)
Operating Revenue	Rs.Crs.	37.94	13.63
EBITDA	Rs.Crs.	1.91	1.50
PAT	Rs.Crs.	0.61	0.43
Tangible Net Worth	Rs.Crs.	2.39	3.11
Total Debt/Tangible Net Worth	Times	3.05	1.25
Current Ratio	Times	0.97	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 - Sanctioned Term Loan - Sanctioned	Long Term	3.00 0.64	BWR B (Stable)	NA	NA	NA
Non-Fund Based
2	Bank Guarantee - Sanctioned Letter of Credit - Sanctioned	Short Term	1.30 3.50	BWR A4	NA	NA	NA
Total			08.44	(Rupees Eight Crores and Forty Four 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
• Services Sector

For More Information Contact:

Analytical Contacts	Investor Contacts
Srishti Kaushik Lead Analyst srishti.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	Bank Guarantee - Sanctioned	_	1.30	1.30
2	Letter of Credit - Sanctioned	_	3.50	3.50
3	Cash Credit - Sanctioned	3.00	_	3.00
4	Term Loan - Sanctioned	0.64	_	0.64
Total				8.44
TOTAL (Rupees Eight Crores and Forty Four lakhs Only)

Note: Letter of Credit has 100% interchangeability from Non Fund based to Fund Based. So total utilizable Cash Credit limit is Rs 6.50 cr.