Amar Enterprises

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.6.66 Crs. of Amar Enterprises

Particulars

Facility**	Amount (Rs.Crs)	Tenure	Rating*
Fund Based
Over Draft - Sanctioned Term Loan - Sanctioned Term Loan - Sanctioned	03.50 00.05 00.11	Long Term	BWR B + (Stable)
Sub Total	03.66
Non-Fund Based
Bank Guarantee	03.00	Short Term	BWR A4
Sub Total	03.00
Grand Total	06.66	(Rupees Six Crores and Sixty Six 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: Note: The firm is enjoying a CC/SOD Limit against FDR of Rs.1.46 Crores which is not being currently rated by BWR. Note:The firm has requested for withdrawal of existing credit rating from CARE Ratings through a request letter dated 08th January 2020. RATING ACTION / OUTLOOK : Stable

BWR has assigned the rating of 'BWR B+' with 'Stable' outlook for Long term Fund Based bank loan facilities and Rating of 'BWR A4' for the Short Term Non Fund based faced facilities of Amar Enterprises. The ratings takes into consideration the extensive experience of the promoter spanning for about four decades in the same line of business, moderate profitability margins and Debt Service Coverage Indicators. However, the rating is constrained by the tender based nature of business, low current ratio and high gearing.

BWR believes that the business risk profile of Amar Enterprises 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 along with an improvement in the financial risk profile  of the firm. The rating outlook may be revised to 'Negative' if  there is a deterioration in the financial risk profile of the firm. 

KEY RATING DRIVERS

Credit Strengths:

• Experienced Promoter :

  The proprietor has an experience of about four decades in the industry undertaking road widening, repair and construction works and other allied civil contract works for Government Departments in Jodhpur, Rajasthan.

• Moderate Profitability margins and Debt Service Coverage Indicators:

  The firm had moderate operating profit and net profit margins of 10.67 and 6.04 respectively in FY 19 and its Debt Service Coverage Indicators for FY 19 were at moderate levels indicated by DSCR and ISCR at 1.56 and 2.47 times respectively. 

Credit Risks:.

• Tender Based nature of the business: :

  The firm has to bid for government tenders for getting civil contract work orders. High competition in the industry with many market players bidding for government tenders leads to the risk of a failure to source the business.

• Low current ratio and High Gearing: The current ratio was low at 0.89 times as on March 31, 2019 and the gearing of the firm was also very high at 6.15 times as on March 31, 2019. However, the Total Debt/TNW (Analyzed) was at 2.59 times as on March 31,2019 due to funding support from the friends/family of the promoters. However, the gearing of the firm is expected to improve in the future as the proprietor has introduced fresh capital of Rs,2.00 Crs. on January 1, 2020,

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).considered the standalone approach for the firm. 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 firm's ability to scale up and improve its revenues and profitability margins coupled with a growth in the order book of the firm, and an improvement in the financial risk profile of the firm would be key rating sensitivities.

Positive:

The ratings may be upgraded if the firm is able to achieve higher revenues and profit margins coupled with an improvement in the tangible net worth.

Negative:

The ratings may be downgraded if there is any deterioration in the financial risk profile of the firm. 

LIQUIDITY POSITION

LIQUIDITY POSITION: STRETCHED

1.  The firm had cash and Bank balance of Rs.0.06 Crores as on March 31, 2019.

2. The long term borrowings of the firm as on March 31, 2019 amounted to Rs. 2.61 Cr. out of which long term bank borrowings outstanding as on March 31, 2019 were Rs.0.21 Cr.  and unsecured loans from relatives of the proprietor were Rs. 2.40 Cr. 

3.  The current ratio was weak and stood at 0.89 times as on March 31, 2019. 

4. The average CC utilization of the firm was approximately 75% for the six months ending in November 2019.

5. Coverage Ratios remained moderate with ISCR at 2.47 times and DSCR at 1.56 times for FY 19.

6.  Conversion cycle of the firm was at 60 days for FY 19.  

7.  There are two sister concerns of the firm in which Mr. Manaram Bishnoi and his wife, Mrs. Premlata Bishnoi are partners. As per the management confirmation, following are the business transactions with group firms and details of Group Exposure for FY 19:

(A) As per the management confirmation, Amar Enterprises generated almost Rs.0.60 Cr.of its revenues from one sister concern in FY 19. 

(B) The management also clarified that Amar Enterprises purchased raw materials worth approximately Rs. 0.20 Cr. from its second sister concern during FY 19. 

     Further the management has confirmed that one of its sister concerns is no longer operationally active as its stone crushing and mining unit was sold off in FY 19.

PROFILE

Established in1984 at Jodhpur ,Rajasthan, Amar Enterprises is a civil contractor proprietorship firm which undertakes civil contract works for road widening, bitumen layering of roads and other allied activities in Jodhpur, Rajasthan, road construction works for Public Works Department, District DN.II. Jodhpur, Jodhpur Development Authority, RICCO and other Government Departments in Jodhpur, Rajasthan. Amar Enterprises was established by Mr. Manaram Bishnoi. Mr. Manaram Bishnoi has to his credit 40 years’ experience in this line of activity. The registered office of the firm is located at 41-B. 9th Road, Sardarpura, Jodhpur, Rajasthan.  There are two sister partnership concerns of the firm promoted by Mr. Manaram Bishnoi in which Mr. Manaram Bishnoi and Mrs Premlata Bishnoi, wife of Mr. Manaram Bishnoi are partners. One of the sister concerns of Amar Enterprises is a civil contractor based in Rajasthan that takes up road construction works. It does not carry out the civil contract works on its own as it subcontracts the execution of civil construction orders which it receives from Government Departments in Jodhpur, Rajasthan to Amar Enterprises. As clarified and confirmed by the management, the mining and stone crushing unit of the other sister concern was sold off in FY 19 and it is not active operationally.

KEY FINANCIAL INDICATORS

Key Parameters	Units	FY 18-19 (Audited)	FY 17-18 (Audited)
Operating Revenue	Rs.Crs.	11.35	8.06
EBITDA	Rs.Crs.	1.21	1.19
PAT	Rs.Crs.	0.69	0.52
Tangible Net Worth	Rs.Crs.	1.21	1.08
Total Debt/Tangible Net Worth	Times	6.15	2.97
Current Ratio	Times	0.89	1.65

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	Over Draft - Sanctioned Term Loan - Sanctioned Term Loan - Sanctioned	Long Term	03.50 00.05 00.11	BWR B+ (Stable)	NA	NA	NA
Non-Fund Based
2	Bank Guarantee	Short Term	03.00	BWR A4	NA	NA	NA
Total			06.66	(Rupees Six Crores and Sixty Six 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

For More Information Contact:

Analytical Contacts	Investor Contacts
Jatin Gupta Lead Analyst jatin.g@brickworkratings.com	Liena Thakur Assistant Vice President - Corporate Communications M : +91 84339 94686 liena.t@brickworkratings.com
V.K.Kukreja Associate Director - Ratings B : +91 11 2341 2232 kukreja.vk@brickworkratings.com
1-860-425-2742

SL.No.	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)
1	Over Draft - Sanctioned	3.50	_	3.50
2	Term Loan - Sanctioned	0.05	_	0.05
3	Term Loan - Sanctioned	0.11	_	0.11
4	Bank Guarantee	_	3.00	3.00
Total				6.66
TOTAL (Rupees Six Crores and Sixty Six lakhs Only)

Note: Note: The firm is enjoying a CC/SOD Limit against FDR of Rs.1.46 Crores which is not being currently rated by BWR. Note:The firm has requested for withdrawal of existing credit rating from CARE Ratings through a request letter dated 08th January 2020.