Shree Jee Global Pvt. Ltd.

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.4.42 Crs. of Shree Jee Global Pvt. Ltd.

Particulars

Facility**	Amount (Rs.Crs)	Tenure	Rating*
Fund Based
Cash Credit - Sanctioned Term Loan - Sanctioned	02.50 01.92	Long Term	BWR B (Stable)
Sub Total	04.42
Grand Total	04.42	(Rupees Four Crores and Forty Two 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 M/s Shree Jee Global Pvt Ltd for Bank loan facilities as BWR B (Outlook: Stable). The rating takes into account the promoters experience and operational advantage of location. However the rating is constrained by the small scale of operation and thin profitability margins.

The rating has been assigned a ‘stable’ outlook as the company's performance and business risk profile is likely to be maintained in the medium term.

KEY RATING DRIVERS

Credit Strengths:

• Promoter’s Experience :

  SJGPL’s promoters, Mr. Nitin Goyal and Mr. Puneet goyal, have around 15 years of business experience in the hosiery garment manufacturing. Mr. Nitin Goyal was earlier associated with leading thermal wear brand ‘Neva’, as director of the company. Promoter’s extensive experience has led to understanding of key market dynamics and healthy relationships with customers and suppliers.

• Locational Advantage :

  The production unit of SJGPL is located at Doraha in Ludhiana cluster, which is often referred to as the ‘Manchester of India’, due to its dominance in textile industry. Thus, it has a competitive advantage in terms of availability of skilled labor, production knowledge and vendors making the company more efficient and cost effective.

Credit Risks:

• Small scale of operations :

  The operating income of the company stood at Rs.2.51 Crs in FY19. The management has reported that the company has recorded revenue of Rs. 3.53 Crs in 8 months of the current fiscal.

• Thin profit margins :

  Operating profit margin of the company for FY19 was low at 2.21%, due to which company booked a loss of Rs. 0.19 Crs in FY19. Fluctuation in the prices of raw material may have an adverse impact on profitability over the medium term.

• Highly competitive and fragmented industry :

  The readymade garment industry is intensely competitive, given the low entry barriers on account of limited capital and technology requirement. The company faces stiff competition from other established players in the market, affecting its operating income and profitability margins.

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 scale up its operations, improve overall financial risk profile of the company backed by profitability margins, debt coverage indicators, service debt repayment timely and efficiently manage its working capital would be key rating sensitivities.

Positive: Significant and sustained increase in the scale of operations & profit along with an improvement in the overall credit metrics marked by improved coverage ratios and better liquidity management will be positive for the ratings.

Negative: Deterioration in the liquidity profile and delays in debt repayments will be negative for the ratings.

LIQUIDITY POSITION

Stretched: The company’s liquidity position remains stretched with low cash & bank balance of Rs.0.16 Crores and poor debt protection ratios. DSCR and ISCR are low at 0.41 times and 1.06 times respectively for FY19. The company has reported current ratio at 1.52x in FY19.

PROFILE

Shree Jee Global Private Limited (“SGPL” or “The Company”) was incorporated in 1992 and taken over by current management in 2016. There were no business operations in the company at the time of takeover. SGPL is now engaged in the manufacturing of ready-made hosiery garments like T-shirts, thermal wears and night wears. The company is managed by promoter directors Mr. Nitin Goyal and Mr. Puneet goyal, who have experience of around 15 years in the same line of business. Manufacturing unit of the company is located in Doraha (Punjab) with a covered area of 60000 Sq. Feet.

KEY FINANCIAL INDICATORS

Key Parameters	Units	FY 18-19 (Audited)	FY 17-18 (Audited)
Operating Revenue	Rs.Crs.	2.51	0.43
EBITDA	Rs.Crs.	0.06	0.08
PAT	Rs.Crs.	-0.19	0.02
Tangible Net Worth	Rs.Crs.	1.19	1.38
Total Debt/Tangible Net Worth	Times	2.51	1.36
Current Ratio	Times	1.52	6.01

KEY COVENANTS OF THE INSTRUMENT/FACILITY RATED

NA

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 Term Loan - Sanctioned	Long Term	02.50 01.92	BWR B (Stable)	NA	NA	NA
Total			04.42	(Rupees Four Crores and Forty Two 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

For More Information Contact:

Analytical Contacts	Investor Contacts
Gaurav Jain Ratings Analyst B : +91 11 2341 2232 Ext : 111 gaurav.j@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	2.50	_	2.50
2	Term Loan - Sanctioned	1.92	_	1.92
Total				4.42
TOTAL (Rupees Four Crores and Forty Two lakhs Only)