RATING RATIONALE
16 Dec 2020
S R Overseas (Panipat)
Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.5.99 Crs. of S R Overseas (Panipat)
Particulars| Facility** | Amount (Rs.Crs) | Tenure | Rating* |
|---|---|---|---|
| Fund Based | |||
|
Cash Credit
Sanctioned
Term Loan Sanctioned |
04.90
01.09 |
Long Term | BWR B + (Stable) |
| Sub Total | 05.99 | ||
| Grand Total | 05.99 | (Rupees Five Crores and Ninety Nine lakhs Only) | |
**Details of Bank facilities are provided in Annexure-I RATING ACTION / OUTLOOK : Stable
BWR has assigned the long term rating at “BWR B+'' for the bank loan facilities of S R Overseas 'Panipat' (the company). The rating draws strength from experienced promoters and moderate financial risk profile. However, the rating is constrained on account of modest networth and high gearing, high competition in the industry and constitution of a partnership firm.
BWR believes that S R Overseas (Panipat) 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 any deterioration in financial risk profile.
KEY RATING DRIVERS
Credit Strengths:
- Experienced Promoters :
S R Overseas is in existence since 2014 and is managed by well experienced partners Mr. Vijender Singh and Mr. Balraj Singh having 20 years of business experience. Mr. Rahul and Mr. Sumit Dahiya having 15 years of business experience respectively in the blankets industry and are capable of understanding the market region dynamics and maintain strong relations with customers.
- Moderate financial risk profile :
The revenues decreased by 4.24% yoy from Rs.30.18 crs in FY19 to Rs.28.90 crs in FY20. The net sales generated till 21.11.2020 is Rs.16 crs. Moderate debt protection metrics with ISCR increased to 1.82x in FY20 as against 1.66x in FY19 and DSCR increased from 1.11x in FY19 to 1.22x in FY20.
Credit Risks:
- Modest networth and high gearing :
As on March 31 2020, the networth deteriorated to Rs.1.14 crs in FY20 as against Rs.2.26 crs in FY19. The Tangible Net Worth (Analyzed) decreased from Rs.3.37 crs in FY19 to Rs.2.24 crs in FY20. The Total Debt/TNW increased from 3.87x in FY19 to 6.59 in FY20. The Total Debt/TNW (Analyzed) increased from 2.27x in FY19 to 2.87x in FY20. The current ratio decreased from 1.20x in FY19 to 0.98x in FY20.
- High Competition :
The profit margins with net profit margin increased from 0.42% in FY19 to 0.87% in FY20 and operating profit margin decreased from 7.44% in FY19 to 7.09% in FY20. The majority income of the firm is derived from tender based orders and revenue & profitability depends on the successful bidding due to intense competition in the blankets market. The firm has to compete with local & unorganised players.
- Partnership Firm :
S R Overseas (Panipat) comes under constitution of a partnership firm and there is a risk of withdrawal capital during the course of the business.
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 financial risk profile and maintaining top-line & bottom-line will remain the key rating sensitivities.
Positive: The rating may be upgraded if the firm inter alia, is able to improve its top-line and its operating margins, or on account of any other favourable factor.
Negative: The rating may be downgraded if the firm inter alia, there is any deterioration in financial risk profile, fails to maintain adequate liquidity or on account of any unforeseen unfavourable events.
LIQUIDITY POSITION
Adequate
S R Overseas does not have any group companies or sub-group companies. The company has cash & bank balances of Rs 0.13 crores in FY20. The company has an average utilisation of 93.13% of their CC Limit from the last six months. The company has a long term debt of Rs 3.41 crores in FY20 which comprises secured term loan and auto loan of Rs.1.21 crores in FY20 and unsecured loans from family & friends amounting to Rs.2.19 crores in FY20. Cash Flow Statement for FY20 was not available. The company had Interest Service Coverage Ratio of 1.82x and Debt Service Coverage Ratio of 1.22x in FY20. The current ratio has been 0.98x in FY20. The conversion cycle of 37 days is reported in FY20.
PROFILES R Overseas (Panipat), established in 2014 is a Panipat based partnership firm having its registered office at near Harisons Automobiles G.T. Road, Panipat, Haryana. The firm is promoted by partners Mr. Balraj Singh and Mr. Vijender Singh having more than 20 years of business experience in manufacturing of Blankets and Bedsheets. Later in 2016, Mr. Sumit Dahiya and Mr. Rahul joined as the other two partners in the firm having over 15 years of business experience respectively. The firm is engaged in the manufacturing of Polar blankets and 3D Bedsheets with an installed capacity of 3.00 lakh blankets and 5.00 lakh bedsheets per month respectively. The firm procures the raw material from domestic market such as Haryana, Punjab, U.P. and Delhi and sells the product mostly in northern India.
KEY FINANCIAL INDICATORS| Key Parameters | Units |
FY 19-20 (Audited) |
FY 18-19 (Audited) |
|---|---|---|---|
| Operating Revenue | Rs.Crs. | 28.90 | 30.18 |
| EBITDA | Rs.Crs. | 2.05 | 2.25 |
| PAT | Rs.Crs. | 0.25 | 0.13 |
| Tangible Net Worth | Rs.Crs. | 1.14 | 2.26 |
| Total Debt/Tangible Net Worth | Times | 6.59 | 3.87 |
| Current Ratio | Times | 0.98 | 1.20 |
N.A
NON-COOPERATION WITH PREVIOUS RATING AGENCY ,IF ANY
| CRA Name | Date | Amount | Rating |
|---|---|---|---|
| ACUITE | 06 Mar 2020 | 8.76 | ACUITE B+ (Downgraded) Issuer not co-operating |
| S.No | Current Rating (2020) | Rating History | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Facilities | Tenure | Amount (Rs.Crs) | Rating | 2019 | 2018 | 2017 | ||||
| Fund Based | ||||||||||
| 1 | Cash Credit - SanctionedTerm Loan - Sanctioned | Long Term | 04.9001.09 | BWR B+(Stable) | NA | NA | NA | |||
| Total | 05.99 | (Rupees Five Crores and Ninety Nine 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 | |
|---|---|
|
Suresh Sharan Emandi Lead Analyst suresh.e@brickworkratings.com |
V.K.Kukreja Associate Director - Ratings B : +91 11 2341 2232 kukreja.vk@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 | 4.90 | _ | 4.90 |
| 2 | Term LoanSanctioned | 1.09 | _ | 1.09 |
| Total | 5.99 | |||
| TOTAL (Rupees Five Crores and Ninety Nine 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 |
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.
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 11,400 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.
Brickwork Ratings India Pvt. Ltd. (BWR), a Securities and Exchange Board of India [SEBI] registered Credit Rating Agency and accredited by the Reserve Bank of India [RBI], offers credit ratings of Bank Loan facilities, 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. [ hereafter referred to as "Instruments"]. BWR also rates NGOs, Educational Institutions, Hospitals, Real Estate Developers, Urban Local Bodies and Municipal Corporations.
BWR wishes to inform all persons who may come across Rating Rationales and Rating Reports provided by BWR that the ratings assigned by BWR are based on information obtained from the issuer of the instrument and other reliable sources, which in BWR's best judgment are considered reliable. The Rating Rationale / Rating Report & other rating communications are intended for the jurisdiction of India only. The reports should not be the sole or primary basis for any investment decision within the meaning of any law or regulation (including the laws and regulations applicable in Europe and also the USA).
BWR also wishes to inform that access or use of the said documents does not create a client relationship between the user and BWR.
The ratings assigned by BWR are only an expression of BWR's opinion on the entity / instrument and should not in any manner be construed as being a recommendation to either, purchase, hold or sell the instrument.
BWR also wishes to abundantly clarify that these ratings are not to be considered as an investment advice in any jurisdiction nor are they to be used as a basis for or as an alternative to independent financial advice and judgment obtained from the user's financial advisors. BWR shall not be liable to any losses incurred by the users of these Rating Rationales, Rating Reports or its contents. BWR reserves the right to vary, modify, suspend or withdraw the ratings at any time without assigning reasons for the same.
BWR's ratings reflect BWR's opinion on the day the ratings are published and are not reflective of factual circumstances that may have arisen on a later date. BWR is not obliged to update its opinion based on any public notification, in any form or format although BWR may disseminate its opinion and analysis when deemed fit.
Neither BWR nor its affiliates, third party providers, as well as the directors, officers, shareholders, employees or agents (collectively, "BWR Party") guarantee the accuracy, completeness or adequacy of the Ratings, and no BWR Party shall have any liability for any errors, omissions, or interruptions therein, regardless of the cause, or for the results obtained from the use of any part of the Rating Rationales or Rating Reports. Each BWR Party disclaims all express or implied warranties, including, but not limited to, any warranties of merchantability, suitability or fitness for a particular purpose or use. In no event shall any BWR Party be liable to any one for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of any part of the Rating Rationales and/or Rating Reports even if advised of the possibility of such damages. However, BWR or its associates may have other commercial transactions with the company/entity. BWR and its affiliates do not act as a fiduciary.
BWR keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of the respective activity. As a result, certain business units of BWR may have information that is not available to other BWR business units. BWR has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with each analytical process.
BWR clarifies that it may have been paid a fee by the issuers or underwriters of the instruments, facilities, securities etc., or from obligors. BWR's public ratings and analysis are made available on its web site, www.brickworkratings.com. More detailed information may be provided for a fee. BWR's rating criteria are also generally made available without charge on BWR's website.
This disclaimer forms an integral part of the Ratings Rationales / Rating Reports or other press releases, advisories, communications issued by BWR and circulation of the ratings without this disclaimer is prohibited.
BWR is bound by the Code of Conduct for Credit Rating Agencies issued by the Securities and Exchange Board of India and is governed by the applicable regulations issued by the Securities and Exchange Board of India as amended from time to time.