Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.25.46 Crs. of Stambh Industries
ParticularsFacility** | Amount (Rs.Crs) | Tenure | Rating* |
---|---|---|---|
Fund Based | |||
Term Loan
Out-standing
Cash Credit Sanctioned |
14.29
11.17 |
Long Term | BWR B - (Stable) |
Sub Total | 25.46 | ||
Grand Total | 25.46 | (Rupees Twenty Five Crores and Forty Six lakhs Only) |
BWR believes that Stambh Industries 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 the revenues go down and profit margins show lower than expected figures.
KEY RATING DRIVERS
BWR has essentially relied upon the audited financial statements of Stambh Industries of FY19,FY20,FY21, Sales/purchase data for FY21-22 and projected financial statements of FY23, publicly available information and information / clarifications provided by the entity’s management. The rating draws strength from the vast business experience of the partner/s, proximity to location advantage. However, the rating is constrained by the scale of operations, constitution of the firm and high competition from other established players in the market and average financial performance.
Going forward, the ability of the entity to achieve projected revenue & profitability margins and manage liquidity would be key rating sensitivities
Credit Strengths:
Established in 2015, the firm’s operations are managed by Mr Atal Vishwas Chhipa and other partner Virat Vishwas Chhipa, who have experience in the textile/cotton yarn business. The firm benefits from business support healthy relationships with customers and suppliers.
Proximity of the cotton ginning and processing to the cotton growing region provides easy accessibility to cotton and firm benefits from lower logistics costs.
Seasonal nature of availability of raw materials result in working capital intensive operations and industry is susceptible to agro-climatic risks which can affect the production and prices of cotton. Textile Industry’s profit margins are highly correlated with fluctuations in cotton prices and are susceptible to various risks like the need for adherence to quality, seasonality, etc.
Debt protection metrics are weak as ISCR stands at 1.41x and DSCR as 1.23x in FY20-21. The TNW of the company is negative as Rs 3.75 crs in FY21. Company incurred a loss of Rs 6.96 crs in FY20 but able to revive from the same as Rs 0.32 crs is PAT for FY21. The EBITDA of Rs 3.34 crs in FY21 is sufficient against Interest and finance charges of Rs 2.37 crs. Net cash accrual/total debt of 0.04 times is not sufficient. The topline improved in FY21 as Rs 78.71 crs against Rs 54.11 crs in FY20.
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
Positive:
1) Sustained improvement in revenues and operating margin to more than 5%-leading to higher net cash accrual.
2) Improvement in the financial risk profile (gearing below 2 times) with capital infusion or reduced debt due to better working capital cycle.
Negative:
1) A sharp decline in revenue and in the operating margin with withdrawal of the capital would adversely impact its financial risk profile and liquidity position.
2) A substantial increase in working capital requirement, affecting liquidity position.
LIQUIDITY POSITION
The turnover of the entity stood at Rs 78.71 Crs. for FY 2021 as against Rs 54.11 Crs. for FY 2020. The Profit/(Loss) after tax amounted to Rs 0.32 Crs. for FY 2021 as against Rs -6.96 Crs. for FY 2020. As per the sales/purchase data shared by company for FY21-22 the sales achieved for the said period is ~68.91crs.
Liquidity Indicators- Stretched
The company has an stretched liquidity position marked by current ratio of 1.32x in FY 21. The working capital facilities were utilised 95% (tight liquidity) over the last one year. Net cash accrual in FY20 remained negative as Rs 6.16 crs against positive balance of Rs 1.03 crs in FY21. Net cash accrual/total debt is not efficient as Rs 0.04x in FY21. Cash & Bank balance stood at Rs 0.72 crs in FY21.
PROFILEStambh Industries is a partnership firm incorporate on 30 August 2015 located at R.S. No 158/7, Paiki 9-11, At village Sedardi, Kadi Kalyanpura Road. Dist Mehsana Gujarat. Company is into cotton ginning and oil mill having 36 DR's in ginning section and 12 oil extractors oil mill section. Company daily production capacity is around 60 MT of cotton bales, 75 MT of cotton seed oil cake and 10 MT of cotton seed oil. Company is into business since 2016. The promoters are Atal Vishwas Chhipa and Virat Vishwas Chhipa.
KEY FINANCIAL INDICATORSKey Parameters | Units |
FY 20-21 (Audited) |
FY 19-20 (Audited) |
---|---|---|---|
Operating Revenue | Rs.Crs. | 79.65 | 54.78 |
EBITDA | Rs.Crs. | 3.34 | -4.03 |
PAT | Rs.Crs. | 0.32 | -6.96 |
Tangible Net Worth | Rs.Crs. | -3.75 | -0.01 |
Total Debt/Tangible Net Worth | Times | -6.59 | -1864.30 |
Current Ratio | Times | 1.32 | 0.81 |
S.No | Current Rating (2022) | Rating History | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Facilities | Tenure | Amount (Rs.Crs) | Rating | 2021 | 2020 | 2019 | ||||
Fund Based | ||||||||||
1 | Term Loan - Out-standingCash Credit - Sanctioned | Long Term | 14.2911.17 | BWR B-(Stable) | NA | NA | NA | |||
Total | 25.46 | (Rupees Twenty Five Crores and Forty Six 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 | |
---|---|
Tripti Sharma Lead Analyst tripti.s@brickworkratings.com |
Dileep Narayan Singh Director dileep.s@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 | The Mehsana Urban Co-operative Bank | Term LoanOut-standing | 14.29 | _ | 14.29 |
2 | The Mehsana Urban Co-operative Bank | Cash CreditSanctioned | 11.17 | _ | 11.17 |
Total | 25.46 | 0.00 | 25.46 | ||
TOTAL (Rupees Twenty Five Crores and Forty Six 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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