Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.15.00 Crs. of Ajinkya Chemtech Pvt. Ltd.
Particulars| Facility** | Amount (Rs.Crs) | Tenure | Rating* |
|---|---|---|---|
| Fund Based | |||
|
Cash Credit
Sanctioned
Cash Credit Proposed |
11.00
04.00 |
Long Term | BWR BB + (Stable) |
| Sub Total | 15.00 | ||
| Grand Total | 15.00 | (Rupees Fifteen Crores Only) | |
BWR has assigned the long term rating of BWR BB+ with a Stable outlook to bank loan facilities of Ajinkya Chemtech Pvt. Ltd.BWR believes that the firm's 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 Ajinkya Chemtech Pvt. Ltd. of FY18, FY19, provisional financial statement of FY20, projected financial statements of FY21, FY22, publicly available information, and information/clarifications provided by the entity’s management. The rating draws strength from the vast business experience of the directors, established track of operations and coverage ratios, However, the rating is constrained by low profit margins,agro-climatic and regulatory risks.
Credit Strengths:
ACPL was incorporated in 1994 and promoted by Mr. Harshanan V Patil (BE Mech).The promoter of the company has an experience of more than two decades.The management is supported by marketing team through which the products are marketed to various parts of India.
The scale of operations is moderated with the total operating income at Rs 51.80 Cr in FY20(Provisional) as compared to Rs 51.06 Cr in FY19. The firm clocked sale of Rs 29.32 Cr from April to Sep 2020 against the projected sales of Rs 60.00 Cr in FY21.
Coverage ratios with DSCR and ISCR are adequate at 1.94x and 1.91x in FY20(Provisional). Profitability in FY20 has improved compared to FY19 as reported through OPM of 3.06% and NPM of 1.45%. The current ratio is reported at 1.57x, marginally improved.
Financial risk profile of the company is marked with a modest net worth of Rs 5.08cr in FY20(Provisional), resulting in moderate gearing of 1.47x. The promoters have infused unsecured loans of Rs 3.90 in FY21 resulting in TD/TNW(A) of 1.46x in FY21 and is expected to improve further. As per the declaration submitted by ACPL, the directors would infuse capital of Rs 2.00 Cr by March 2021 which would further improve the financial risk profile.
Credit Risks:
The demand for the company’s products is generated in the agriculture sector which itself is vulnerable to various agro-climatic factors like intensity and timeliness of Monsoon, government MSP changes, timely availability of agriculture credit, timely access to markets, etc. Besides these, the fertilizer industry has been highly regulated in India with the regulations spanning from production capacity to prices at which the industry can sell fertilizers in the market.
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 its scale of operations, overall financial risk profile,infusion of capital by directors of Rs 2.00 Cr by March 2021 will be the key sensitivities.
Positive: The ratings may be upgraded with improvement in scale of operations, capital structure, profit margins, and tangible net worth.
Negative: The ratings may be downgraded in case revenues of the company and profit substantially plunge from the current levels and gearing and debt service metrics deteriorate.
LIQUIDITY POSITION
Adequate
The liquidity remains Adequate as the net cash accruals FY19 and FY20 are Rs 0.53 Cr and Rs 0.77 Vs NIL the debt obligations. The cash credit facility utilization for the last six months is 72.49%. The cash and cash equivalents as of 31st March 2020 are Rs 0.07Cr and the Current investment are NIL. The current ratio is at 1.57x in FY20.
PROFILEIncorporated in 1994, ACPL is a Pune-based (Maharashtra) company promoted by Mr. Harshanan V Patil and Mrs. Manjusha Patil. The company is engaged in manufacturing of organic farming input solutions like Bactericide, Nematicides, Miticides, Plant Growth Regulators, Organic Fertilizers like Granules & Seaweed Extract, Micronutrients & Water-Soluble Fertilizers.
KEY FINANCIAL INDICATORS| Key Parameters | Units |
FY 18-19 (Audited) |
FY 17-18 (Audited) |
|---|---|---|---|
| Operating Revenue | Rs.Crs. | 51.06 | 43.06 |
| EBITDA | Rs.Crs. | 1.47 | 1.05 |
| PAT | Rs.Crs. | 0.50 | 0.38 |
| Tangible Net Worth | Rs.Crs. | 3.83 | 3.08 |
| Total Debt/Tangible Net Worth | Times | 1.96 | 2.40 |
| Current Ratio | Times | 1.32 | 1.28 |
| S.No | Current Rating (2020) | Rating History | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Facilities | Tenure | Amount (Rs.Crs) | Rating | 2019 | 2018 | 2017 | ||||
| Fund Based | ||||||||||
| 1 | Cash Credit - SanctionedCash Credit - Proposed | Long Term | 11.0004.00 | BWR BB+(Stable) | NA | NA | NA | |||
| Total | 15.00 | (Rupees Fifteen Crores 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 | |
|---|---|
|
Nagesh Sudhir Kadu Ratings Analyst B : 202267456 Ext : 619 nagesh.k@brickworkratings.com |
Sushil Kumar Chitkara Associate Director - Ratings B : +91 22 2831 1426, +91 22 2831 1439 sushilkumar.c@brickworkratings.com |
| 1-860-425-2742 | media@brickworkratings.com | |
| SL.No. | Type Of Facilities | Long Term(Rs.Crs.) | Short Term(Rs.Crs.) | Total(Rs.Crs.) |
|---|---|---|---|---|
| 1 | Cash CreditSanctioned | 11.00 | _ | 11.00 |
| 2 | Cash CreditProposed | 4.00 | _ | 4.00 |
| Total | 15.00 | |||
| TOTAL (Rupees Fifteen Crores 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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