RATING RATIONALE
24 Apr 2020
Shiv Narian Periwal & Sons Pvt. Ltd.
Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.9.50 Crs. of Shiv Narian Periwal & Sons Pvt. Ltd.
Particulars| Facility** | Amount (Rs.Crs) | Tenure | Rating* |
|---|---|---|---|
| Fund Based | |||
| Cash Credit Sanctioned | 09.50 | Long Term | BWR B (Stable) |
| Sub Total | 09.50 | ||
| Grand Total | 09.50 | (Rupees Nine Crores and Fifty lakhs Only) | |
**Details of Bank facilities are provided in Annexure-I RATING ACTION / OUTLOOK : Stable
BWR assigns the rating of BWR B with 'Stable' outlook for the long term bank loan facilities of Shiv Narian Periwal & Sons Private Limited (The Company). The ratings take into consideration the Extensive experience of the management. The ratings are however constrained by weak financial profile, declining in revenues, and exposure to agro climatic conditions.
BWR believes that Shiv Narian Periwal & Sons Private Limited 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 revised to 'Negative' if there is no improvement in financial risk profile.
KEY RATING DRIVERS
Credit Strengths:
- Extensive Experience of Promoters and long track record of business :
The promoters of the company has rich experience of more than 20 years in trading business that helps them to maintain a better relationship with their customers and suppliers as well. The company has long track record of business and have dealership of reputed companies like Syngeta India Limited, Bayer Crop Science limited.
Credit Risks:
- Weak Financial Profile :
The company has weak debt service indicators with interest service coverage of 0.84 times and debt service coverage ratio of 0.81 times, High gearing level with TD/TNW of 8.29 times due to low net worth and low profitability margins with net profit margins of 0.11% and operating profitability margins of 2.12% in FY19 (Audited).
- Declining in revenues :
The revenues of the company has declined by almost 20% as compared to previous year. However the company has achieved revenues of Rs 55.00 crores till March 20 but still the revenues on declining side as compare to FY19 (Audited).
- Highly Fragmented industry and Exposure to agro climatic conditions :
The industry is characterized by the presence of many big and small players having national or regional presence. Business has exposure to agro-climatic conditions, changes in fertilizer policy etc which may affect the business prospects.
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 Improve their Revenues and Profitability Margins significantly , along with Improvement in weak financial profile would be key rating sensitives.
Positive: The ratings may be upgraded in the future if the Company is able to significantly Improve their Revenues, and profitability margins.
Negative: The ratings may be downgraded if any further deterioration in the Financial Risk Profile.
LIQUIDITY POSITION
Stretched
1) The firm has associate concerns with the name of Purshottam Periwal & Sons, Sardar Agro Industries, Sardar Chem Fert Industries, Shiv Narain Periwal & Sons, Vijay Trading Company and Periwal Agrico .
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* All transactions related to sales and purchases is done for seeds and pesticides.
2) The firm has cash balances of Rs. 2.43 crs in FY19 (Audited).
3) The firm has utilization of 98% of cash credit limit from Oriental Bank of Commerce.
4) The Firm has Long Term Borrowings comprises of Agriculture loan from HDFC Bank of Rs 0.43 crores and Car loan from Oriental Bank of Commerce of Rs 0.11 crores in FY19 (Audited).
5) The Firm has Interest service coverage ratio of 0.84 times and Debt Service Coverage Ratio of 0.81 times in FY19.
6) The current ratio has been 1.07 as at FY19 (Audited).
7) Conversion Cycle is at 45 days in FY19 (Audited).due to moderate days payables and moderate receivables.
Shiv Narian Periwal & Sons Pvt Ltd was established in 1978. The company is engaged in providing agriculture inputs such as seeds, pesticides and feritilizers. The company has its office located in Abohar Punjab. The company is distributor for many MNC companies such as Syngenta India Limited, Bayer Crop Science Limited, Rallis India Limited, Shriram Chemicals and Fertilizers (a unit of DCM Shriram Limited) and Rasi Seeds Private Limited. The company owns a total of 20 retail stores spread across Punjab, Haryana and Rajasthan.The company is currently managed by Mr Sunil Periwal along with his two brothers.
KEY FINANCIAL INDICATORS| Key Parameters | Units |
FY 18-19 (Audited) |
FY 17-18 (Audited) |
|---|---|---|---|
| Operating Revenue | Rs.Crs. | 58.50 | 75.02 |
| EBITDA | Rs.Crs. | 1.24 | 1.37 |
| PAT | Rs.Crs. | 0.06 | 0.06 |
| Tangible Net Worth | Rs.Crs. | 1.35 | 1.29 |
| Total Debt/Tangible Net Worth | Times | 8.29 | 11.12 |
| Current Ratio | Times | 1.07 | 1.16 |
NON-COOPERATION WITH PREVIOUS RATING AGENCY ,IF ANY
| CRA Name | Date | Amount | Rating |
|---|---|---|---|
| CARE | 20 Mar 2020 | 11.00 | CARE B Stable |
| S.No | Current Rating (2020) | Rating History | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Facilities | Tenure | Amount (Rs.Crs) | Rating | 2019 | 2018 | 2017 | ||||
| Fund Based | ||||||||||
| 1 | Cash Credit - Sanctioned | Long Term | 09.50 | BWR B(Stable) | NA | NA | NA | |||
| Total | 09.50 | (Rupees Nine Crores and Fifty 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.
For More Information Contact:| Analytical Contacts | Investor Contacts |
|---|---|
|
Aman Sharma Ratings Analyst B : +91 172 5032 295 / 6 aman.s@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 | Cash CreditSanctioned | 9.50 | _ | 9.50 |
| Total | 9.50 | |||
| TOTAL (Rupees Nine Crores and Fifty 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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