RATING RATIONALE
29 Jun 2022

Stambh Industries

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.25.46 Crs. of Stambh Industries

Particulars
Facility** 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)
*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

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:


Credit Risks:

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

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. 

PROFILE

Stambh 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 INDICATORS
Key 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

RATING HISTORY (INCLUDING WITHDRAWAL AND SUSPENSION)
S.No Current Rating (2022) Rating History
Facilities Tenure Amount (Rs.Crs) Rating 2021 2020 2019
Fund Based
1
Term Loan - Out-standing
Cash Credit - Sanctioned
Long Term
14.29
11.17
BWR B-
(Stable)
NA NA NA
Total 25.46 (Rupees Twenty Five Crores and Forty Six 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 : 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
Stambh Industries
ANNEXURE-I
Details of Bank Facilities rated by BWR
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)
ANNEXURE-II
INSTRUMENT DETAILS

InstrumentIssue DateAmount (Rs.Crs)Coupon RateMaturity DateISIN Particulars
NANANANANANA

ANNEXURE-III
List of entities consolidated

Name of Entity% OwnershipExtent of consolidationRationale for consolidation
NANANANA

Additional information is available at www.brickworkratings.com The ratings above were solicited by,or on behalf of , the issuer, and therefore, Brickwork Ratings has been compensated for the provision of the ratings.
Ratings are not a recommendation or suggestion ,directly or indirectly, to you or any other person, to buy sell, make or hold on any investement,loan or security or to undertake any investement strategy with respect to any investment,loan or security or any issuer.
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Brickwork Ratings (BWR), a Securities and Exchange Board of India [SEBI] registered Credit Rating Agency and accredited by Reserve Bank of India [RBI], offers credit ratings of Bank Loan, Non- convertible / convertible / partially convertible debentures and other capital market instruments and bonds, Commercial Paper, perpetual bonds, asset-backed and mortgage-backed securities, partial guarantees and other structured / credit enhanced debt instruments, Security Receipts, Securitization Products, Municipal Bonds, etc. BWR has rated over 11,541 medium and large corporates and financial institutions’ instruments. BWR has also rated NGOs, Educational Institutions, Hospitals, Real Estate Developers, Urban Local Bodies and Municipal Corporations. BWR has Canara Bank, a leading public sector bank, as one of the promoters and strategic partner. BWR has its corporate office in Bengaluru and a country-wide presence with its offices in Ahmedabad, Chandigarh, Chennai, Hyderabad, Kolkata, Mumbai and New Delhi along with representatives in 150+ locations.

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