Agarwal Ice & Cold Storage

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.5.76 Crs. of Agarwal Ice & Cold Storage

Particulars

Facility**	Amount (Rs.Crs)	Tenure	Rating*
Fund Based
Cash Credit - Sanctioned Term Loan - Sanctioned	05.25 00.51	Long Term	BWR B (Stable)
Sub Total	05.76
Grand Total	05.76	(Rupees Five Crores and Seventy 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
Note: * Vehicle Loan is not rated by us. RATING ACTION / OUTLOOK : Stable

Brickwork Ratings has assigned the rating of BWR B(Stable) to bank loans of Agarwal Ice & Cold Storage. The rating takes into account extensive experience of promoters and location advantage. However the rating is constrained by below average debt protection metrics, stiff competition and inherent risk associated with adverse climatic conditions.

KEY RATING DRIVERS

Credit Strengths:

• Extensive experience of the promoters :

  All the partners are quiet experienced in the industry.The firm is promoted by Mr. Vijay Kumar Agarwal,Ms. Charu Agarwal. Both are having experience of almost two decades in the cold storage industry and their longstanding association with farmers and traders have helped the company to ensure optimum utilisation of storage capacity.

• Location Advantage :

  Firm is based in potato producing belt region of Agra,U.P which helps in achieving optimum capacity utilisation.

Credit Risks:

• Inherent Risk Associated with adverse Climatic Conditions :

  The firm is engaged in providing storage of agri based products thus exposed to risk associated with the fluctuation in production levels, uncertain weather conditions and limited shelf life.

• Stiff Competition :

  The food processing and storage industry is facing intense competition due to a large number of small players and a few big players.

• Below Average Debt Protection Metrics :

  Debt Protection metrics remained average i.e. ISCR & DSCR stood at 1.15x & 0.92x in FY19 against 1.23x & 1.05x in FY18.

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 firm to improve its scale of operations, improve its profitability margins, the debt servicing capability & liquidity would be key rating sensitivities.

Positive : The outlook may be revised to positive if the firm is able to achieve significant growth in revenue and profitability backed by a favourable industry scenario.

Negative : The outlook may be revised to negative if revenue and profit margins declines from the current level, and if there is an overall deterioration in the financial risk profile of the entity. Any additional borrowing by the firm may lead to further deterioration in the financial risk profile such as debt protection metrics and profit margins.

LIQUIDITY POSITION

Cash and cash equivalents is Rs. 0.03 Cr for FY 19. The Current ratio of the company is moderate at 3.87 times and gearing ratio  of the firm is adequate at 1.01 times for FY 19. The debt protection metrics are average at ISCR at 1.15x and DSCR at 0.92x for FY 19. Average credit utilization for last 5 months  is  61%. Therefore, the overall liquidity position is stretched.

PROFILE

M/S Agarwal Ice & Cold Storage is a Partnership Firm established in 1995.The Partners of the firm are Vijay Kumar Agarwal,Charu Agarwal and Shivang Agarwal.The firm is engaged in renting of its cold storage unit for potatoes to the local farmers in Agra, Uttar Pradesh having storage capacity of 731592 quintals.The firm is also engaged in providing advances to the farmers for purchase of crops,raw materials & fertilizers.

KEY FINANCIAL INDICATORS

Key Parameters	Units	FY 18-19 (Audited)	FY 17-18 (Audited)
Operating Revenue	Rs.Crs.	1.70	1.75
EBITDA	Rs.Crs.	1.25	1.16
PAT	Rs.Crs.	0.00	0.12
Tangible Net Worth	Rs.Crs.	5.67	5.91
Total Debt/Tangible Net Worth	Times	1.01	1.03
Current Ratio	Times	3.87	2.68

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	05.25 00.51	BWR B (Stable)	NA	NA	NA
Total			05.76	(Rupees Five Crores and Seventy 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.

For More Information Contact:

Analytical Contacts	Investor Contacts
Fatima Khan Lead Analyst fatima.k@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	5.25	_	5.25
2	Term Loan - Sanctioned	0.51	_	0.51
Total				5.76
TOTAL (Rupees Five Crores and Seventy Six lakhs Only)

Note: * Vehicle Loan is not rated by us.