Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.10.60 Crs. of Sree Jayamurugan Alloys Pvt. Ltd.
ParticularsFacility** | Amount (Rs.Crs) | Tenure | Rating* |
---|---|---|---|
Fund Based | |||
Term Loan
Sanctioned
OCC/ODBD/WCDL/Bills Sanctioned Sub-Limit (BD) Sanctioned |
01.10
09.50 (02.00) |
Long Term | BWR B (Stable) |
Sub Total | 10.60 | ||
Grand Total | 10.60 | (Rupees Ten Crores and Sixty lakhs Only) |
BWR has essentially relied upon the audited financial statements of FY19,FY20, FY21 statements and projections up to FY22 and FY23 of Sree Jayamurugan Alloys Private Limited, publicly available information and clarifications provided by the company’s management.
The rating has factored the extensive experience of the directors in the industry , geographical outreach with a wide dealer network and modest debt protection metrics and working capital cycle. However, the ratings are constrained by high gearing ratio , low net worth, and weakened profitability and productivity due to the impact of covid-19 and the competition in the industry.
Based on the criteria stated above, Brickwork Ratings has assigned the rating of BWR B for the rated bank loan facilities.
KEY RATING DRIVERS
Credit Strengths:
The company/Firm is located in Salem cluster and thus has a competitive advantage in terms of skilled labor, logistics, production knowledge and vendors making the company more efficient and cost effective.
DSCR and ISCR of the company stand at 1.51 and 3.81 respectively in FY21 indicating company’s adequacy to meet its debt obligations. The company’s Account Payable and Receivable days are 41 days and 26 days in FY21 which are better than the average.
The directors have experience of more than 15 years in the industry, which has given the company the benefit of understanding the dynamics of the market and helped it establish relationships with suppliers and customers.
Credit Risks:
The company's financial risk profile has deteriorated with gearing at 8.03x and TOL/TNW at 5.25x in FY20 and sees improvement to 5.05x and 4.12x respectively in FY21 but still in the higher end of the spectrum.
Entry barriers in the industry are low on account of limited capital and technology requirement and also low differentiation in the end product leading to intense competition and limiting the pricing power and the Covid-19 pandemic leads to potential loss of man power resulting in low profitability and low productivity respectively.
BWR has essentially relied upon the audited financial statements of FY19,FY20, FY21 statements and projections up to FY22 and FY23 of Sree Jayamurugan Alloys Pvt Ltd, publicly available information and clarifications provided by the company’s management.
The rating has factored the Extensive experience of the promoters in the Pumps industry , Established and long standing relationship with reputed clientèle and Geographical outreach with a wide dealer network . However, the ratings are constrained by high gearing ratio , Moderate financial risk profile , Weak debt protection metrics , Working capital intensive operations and impact of COVID-19 and banker's feedback.
Based on the criteria stated above, Brickwork Ratings has downgraded the ratings to BWR D/BWR D for the rated bank loan facilities.
RATING SENSITIVITIES
The ability of the company to improve its scale of operations, increase its profit margins, efficiently manage its working capital and strengthening of overall financial risk profile shall be the key rating sensitivities .
Positive: The ratings may be upgraded in case revenue, profitability, liquidity and net worth of the company show significant improvement.
Negative: The ratings may be downgraded in case there is a significant deterioration in the business and financial risk profile of the company.
The high gearing of 5.05 times and current ration of 0.93 times in FY21 indicates stretched liquidity of the company. Cash and cash equivalents were at around Rs. 4.05 Crs ​ in FY21. The ability of the company to manage its working capital requirement without any strain on borrowings/cash flows is crucial for smooth operations , which is considered as a key rating sensitivity.
PROFILESree Jayamurugan Alloys Private Limited is engaged in casting of angles, channels, etc from scrap metals. The business was commenced in 2010. The manufacturing plant is located at Salem, Tamilnadu. Mr. K Rajendran, the Managing Director, has to his credit 15 years’ experience in business.
KEY FINANCIAL INDICATORSKey Parameters | Units |
FY 20-21 (Audited) |
FY 19-20 (Audited) |
---|---|---|---|
Operating Revenue | Rs.Crs. | 39.27 | 33.43 |
EBITDA | Rs.Crs. | 2.25 | -3.51 |
PAT | Rs.Crs. | 1.71 | 0.60 |
Tangible Net Worth | Rs.Crs. | 3.46 | 1.75 |
Total Debt/Tangible Net Worth | Times | 5.05 | 8.03 |
Current Ratio | Times | 0.93 | 1.10 |
S.No | Current Rating (2022) | Rating History | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Facilities | Tenure | Amount (Rs.Crs) | Rating | 2021 | 2020 | 2019 | ||||
Fund Based | ||||||||||
1 | Term Loan - SanctionedOCC/ODBD/WCDL/Bills - SanctionedSub-Limit (BD) - Sanctioned | Long Term | 01.1009.50(02.00) | BWR B(Stable) | NA | NA | NA | |||
Total | 10.60 | (Rupees Ten Crores and Sixty lakhs Only) |
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 : For More Information Contact:Analytical Contacts | |
---|---|
S. Adithya Lead Analyst adithya.s@brickworkratings.com |
Varadarajan R Associate Director - Ratings B : +91 044 24663326 varadarajan.r@brickworkratings.com |
1-860-425-2742 | media@brickworkratings.com |
SL.No. | Name of the Bank/Lender | Type Of Facilities | Long Term(Rs.Crs.) | Short Term(Rs.Crs.) | Total(Rs.Crs.) |
---|---|---|---|---|---|
1 | Canara Bank | Term LoanSanctioned | 1.10 | _ | 1.10 |
2 | Canara Bank | OCC/ODBD/WCDL/BillsSanctioned | 9.50 | _ | 9.50 |
Sub-Limit (BD) Sanctioned | (2.00) | ||||
Total | 10.60 | 0.00 | 10.60 | ||
TOTAL (Rupees Ten Crores and Sixty lakhs Only) |
Instrument | Issue Date | Amount (Rs.Crs) | Coupon Rate | Maturity Date | ISIN Particulars |
---|---|---|---|---|---|
NA | NA | NA | NA | NA | NA |
Name of Entity | % Ownership | Extent of consolidation | Rationale for consolidation |
---|---|---|---|
NA | NA | NA | NA |
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