Ajanta Electronics

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.8.00 Crs. of Ajanta Electronics

Particulars

Facilities**	Amount(Rs.Crs)	Tenure	Rating*
Fund Based	8.00	Long Term	BWR B - (Pronounced as BWR Single B minus) (Outlook: Stable)
Total	8.00	(Rupees Eight 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 Ajanta Electronics 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 Ajanta Electronics up to FY16,FY17, FY18, provisional financial statements of FY19 and projected financial statements FY20,publicly available information and information / clarifications provided by the entity’s management. The rating draws strength from the vast business experience of the proprietor, established track of operations. 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

Strengths

Promoter’s experience: Promoter’s experience in the retail trade of consumer durables is of over two decades.

Weakness

The below-average financial risk profile: ISCR & DSRC has deteriorated in FY18 and stands at 1.36x & 1.14x in FY18 compared to 1.71x & 1.60x in FY17.

High gearing ratio: The Total debt\TWN for FY18 is very high and stands at 7.72 times.

High conversion cycle: High conversion cycle of 143 days in FY18 due to the high inventory holding period.

Low entry barrier: Consumer Electronics industry characterized by intense competition from large organized players
and online e retailers.

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).

LIQUIDITY POSITION

1. The company has no liquid investments and cash balances in FY18 is Rs. 0.10crs.
2. The company is availing long term facility of cash credit. The CC Utilization stands at 100%.
3. Conversion Cycle is at 143 days in FY18, due to advance receipt and credit period received from suppliers.
4. There is a LTB of 10.07 cr, for which to utilisation sum m ary has been provided to us.
5. The company has a DSCR of 1.14X & ISCR of 1.36X in FY18
6. Current ratio of the com pany stands at 1.25x in FY18
7. There are no subsidiary.

Liquidity profile of the com pany is m oderate with nature of the business line being the underlying factor. Im balance in the payables and receivables will change the profile outlook.

PROFILE

Ajanta Electronics was established in the year 1995 by Mr. Amar Singh Chouhan as a sole proprietary concern. They deal in full range of home appliances products of brands like Sony, Samsung, LG & Daikin. The showroom building is located in the Jammu city comprising of 4 floor. Each floor is dedicated to the individual brands. The total floor area of the showroom building is of 7500 sq. ft. Ajanta Electronic employs a total of 5 permanent staff. They have tie ups with various consumer finance companies and commercial banks like Bajaj Finserv, HDFC bank, Indusland bank to provide easy credits to their customers.

KEY FINANCIAL INDICATORS

Key Parameters	Units	FY 17-18	FY 16-17
Operating Revenue	Rs.Crs	22.19	21.79
EBITDA	Rs.Crs	1.32	0.81
PAT	Rs.Crs	0.27	0.27
Tangible Net Worth	Rs.Crs	1.31	0.78
Total Debt/Tangible Net Worth	Times	7.72	8.14
Current Ratio	Times	1.25	1.19

RATING HISTORY (INCLUDING WITHDRAWAL AND SUSPENSION)

S.No	Current Rating (2019)				Rating History
	Facilities	Tenure	Amount (Rs.Crs)	Rating	2018	2017	2016
1	Fund Based	Long Term	8.00	BWR B- (Pronounced as BWR Single B minus) (Outlook: Stable)	NA	NA	NA
Total			08.00	(Rupees Eight 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
Chaitanya.T chaitanya.t@brickworkratings.com	Liena Thakur Assistant Vice President - Corporate Communications M : +91 84339 94686 liena.t@brickworkratings.com
V.K.Kukreja Associate Director-Ratings kukreja.vk@brickworkratings.com
1-860-425-2742

SL.No.	Name of the Bank	Long Term(Rs.Crs)		Short Term(Rs.Crs)	Total(Rs.Crs)
		CC	TL
1	Jammu & Kashmir Bank	8			8
	TOTAL (Rupees Eight Crores Only)	8	0	0	8