Ambrish Tractors

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.11.00 Crs. of Ambrish Tractors

Particulars

Facility**	Amount (Rs.Crs)	Tenure	Rating*
Fund Based
Cash Credit - Sanctioned	09.00	Long Term	BWR B + (Stable)
Sub Total	09.00
Non-Fund Based
Bank Guarantee - Sanctioned	02.00	Short Term	BWR A4
Sub Total	02.00
Grand Total	11.00	(Rupees Eleven 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

The rating assignment reflects a moderate top line and moderate profitability over the years.

The outlook is Stable as the firm has been able to achieve a moderate top line and bottom line in FY19.

The rating continues to factor in the partner’s experience in the trading industry, moderate revenue, and moderate profit margin.  However, the rating is constrained by low ISCR & DSCR, low liquidity position, High gearing, and competitive trading industry.

KEY RATING DRIVERS

Credit Strengths:

• Partner’s Experience:

  The experience of the partners is more than two decades in the trading industry.

• Moderate Scale of Operations:

  Moderate Revenue reflected by sales of Rs.37.53Crs in FY19 VS Rs.47.21 Crs in FY18 and PAT of Rs.0.56Crs in FY19 VS Rs.0.91Crs in FY18. The company has achieved half-yearly sales of Rs. 17.61 Crs H1FY20.

• Moderate Profit Margins:

  Moderate Operating profit margin level to 4.95% in FY19 from 5.06 % in FY18 and Moderate & marginally reduced PAT margin to 1.49% in FY19 from 1.93% in FY18.

Credit Risks:

• Low Debt protection metrics:

  Low & marginally reduced ISCR to 0.96x in FY19 VS 1.24x in FY18, Moderate & marginally decreased DSCR to 1.29x FY19 VS FY18 1.45x.

• Liquidity Position:

  Low and reduced Liquidity Position with C.R. 1.12x in FY19 VS 1.16x in FY18.

• High gearing ratio:

  High gearing ratio reflected by TD/TNW at 6.35x in FY19 as against 8.44x in FY18.

• Low Partner’s Capital & high working capital:

  Low Partner’s Capital and Working capital requirement are high since the nature of business.

• Competitive Trading Industry:

  Presence of the competitive and fragmented trading industry.

ANALYTICAL APPROACH AND APPLICABLE RATING CRITERIA

BWR has factored in the standalone business parameters and financial risk profile of the firm to arrive at the rating. Reference may be made to the Rating Criteria hyperlinked detailed below (hyperlinks provided at the end of this rationale). 

RATING SENSITIVITIES

Going forward, the ability of the entity to accelerate its scale of operations, increase its profit margins, compliance of bank's sanction terms, efficiently manage its working capital and cash flows for timely servicing of interest/debt obligations and strengthening of overall financial risk profile shall be the key rating sensitivities over short to medium term.

Positive: The rating outlook may be revised to positive or rating may be upgraded if the firm is able to increase its growth and profit margins.  Any additional infusion of the partner’s capital would help to improve its capital structure of the firm.

Negative: The rating outlook may be revised to negative or rating may be downgraded if the firm achieves lower revenue and profit margins than projected. 

LIQUIDITY POSITION

The cash and cash equivalents of Ambrish Tractors stood at Rs 0.29 Cr in FY19. The current ratio of the firm stands at 1.12 x in FY19. The average utilisation of working capital remained high at a 99% level. The funding support from the partner’s by way of unsecured loan and ploughing back of profits has supported liquidity and such funding support will be available whenever required. 

PROFILE

Ambrish Tractors (AT) was established in 2002 It is a partnership firm. It is located at Jalna, Maharashtra. Mr. Ambrish Lahoti is the managing partner of the firm. Mrs. Preeti Lahoti is another partner of the firm. It is engaged in tractor trading under the retail segment.

KEY FINANCIAL INDICATORS

Key Parameters	Units	FY 18-19 (Audited)	FY 17-18 (Audited)
Operating Revenue	Rs.Crs.	37.53	47.21
EBITDA	Rs.Crs.	1.86	2.39
PAT	Rs.Crs.	0.56	0.91
Tangible Net Worth	Rs.Crs.	2.41	1.95
Total Debt/Tangible Net Worth	Times	6.35	8.44
Current Ratio	Times	1.12	1.16

RATING HISTORY (INCLUDING WITHDRAWAL AND SUSPENSION)

S.No	Current Rating (2020)				Rating History
	Facilities	Tenure	Amount (Rs.Crs)	Rating	2019	2018	2017
Fund Based
1	Cash Credit - Sanctioned	Long Term	09.00	BWR B+ (Stable)	NA	NA	NA
Non-Fund Based
2	Bank Guarantee - Sanctioned	Short Term	02.00	BWR A4	NA	NA	NA
Total			11.00	(Rupees Eleven 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
• Short Term Debt

For More Information Contact:

Analytical Contacts	Investor Contacts
Ushadevi V Dogra Ratings Analyst D : +91 22 6745 6650 B : +91 22 2831 1426, +91 22 2831 1439 ushadevi.d@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	Cash Credit - Sanctioned	9.00	_	9.00
2	Bank Guarantee - Sanctioned	_	2.00	2.00
Total				11.00
TOTAL (Rupees Eleven Crores Only)