Lars Enviro Pvt. Ltd.

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.15.94 Crs. of Lars Enviro Pvt. Ltd.

Particulars

Facility**	Amount (Rs.Crs)	Tenure	Rating*
Fund Based
Working Capital Term Loan - Sanctioned Cash Credit - Sanctioned	00.44 05.00	Long Term	BWR BB + (Stable)
Sub Total	05.44
Non-Fund Based
Bank Guarantee - Sanctioned ILC/FLC - Sanctioned	08.00 02.50	Short Term	BWR A4
Sub Total	10.50
Grand Total	15.94	(Rupees Fifteen Crores and Ninety Four 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

Brickwork Ratings assigns the long term rating of BWR BB+ / Stable and short term rating of BWR A4 for Bank Loan Facilities amounting to Rs. 15.94 Crs of Lars Enviro Pvt Ltd. BWR believes that Lars Enviro business risk profile will be maintained over the medium term. The rating outlook may be revised to 'Positive' in case revenues and profit show sustained improvement and timely servicing of debt obligations. The rating outlook may be revised to 'Negative' if the revenues go down and profit margins show lower than expected figures.

KEY RATING DRIVERS

Credit Strengths:

• Moderate scale of operations. :

  TOI stood at 37.48 Crs in FY21 VS 44.03 Crs in FY20. TOI was at 47.28 Crs in FY20. The decline in the revenue of FY20 & FY21 was due to outbreak of Covid 19. Client had reported profit of Rs. 0.44 Crs in FY20 and reported loss of Rs. -1.29 Crs in FY21. Client has provided with the FY22 provisional numbers. Client has already touched revenue of 40crs + uptill mid september which denotes that the revenue of the company has improved and there can be improvement in profits.

• New and Experienced Management :

  The company is acquired by Cleanedge Water India Pvt Ltd, which is the subsidiary of Cleanedge Water Pte Ltd which is based in singapore. The promoters and the directors have rich experience and are a part of advisory board. The new management team has taken over and they are also experienced personnels.

• Good Order Book Position :

  Company has a order book of Rs. 99 Crs of which the company has completed the work for around Rs. 47 Crs the company is expecting the remaining work to be completed by end of FY23, going by the FY23 projected number revenue of Rs. 100 Crs seems to be achievable.

• Moderate Financial Risk Profile :

  OPM has declined to -0.67 % in FY21 VS 3.60 % in FY20 & 4.64 % in FY19 now it has picked up to 5.79 % in FY22. It is further projected to increase at 5.91 % in FY23.OPM has declined in FY21 because of huge expenses due to covid.The entity incurred loss of & NPM was -3.43 % in FY21 VS 0.99% in FY20 & 1.39% in FY19 it has picked up to 3.76% in FY22 and projected to further increase at 3.13% in FY23. Current Ratio is at a moderate level of 1.82x in FY21 VS 1.96x in FY20 & 1.93x in FY19. It is at 1.86x in FY22 and projected a bit declined but still at a moderate level of 1.63x in FY23. TNW is at 13.32 Crs as per FY22 (Prov.) VS 11.32 Crs in FY21 VS 12.60 Crs in FY20. TNW is further projected to improve at 23.50 Crs in FY23 (Proj.). TNW is improved because of ploughing back of profits into the business, Client has inducted capital of 7.10 Crs for FY23

• Moderate Coverage Ratios :

  ISCR is NEGATIVE due negative OPBDIT & was at -0.28x in FY21 VS 1.97x in FY20 & 2.28x in FY19, it has improved at 3.92x in FY22 and further projected to improve at 4.75x in FY23. DSCR is NEGATIVE at -0.17x in FY21 VS 1.91x in FY20 & 2.09x in FY19. It has improved at 3.24x in FY22 and projected to improve further at 3.59x in FY23.

Credit Risks:

• Competitive industry with presence of unorganized players :

  The client operates in a very competitive industry with the presence of small unorganized players and with cheap substitutes products, this leads to intense competition and which may lead to loss in revenue.

• Exposed to foreign exchange fluctuations :

  The client exports its products to foreign countries and the payments are made in the respective currencies. This exposes the company to foreign exchange fluctuation risk.

• Achievability of sales to be stabilized:

          Sales remain stagnant for last 3 years and picked up in FY22, Similarly OPM was negative in FY21 and has turned positive in FY22. The projected topline of 100.45 Crs for FY23                    is expected to achieve, but the results are yet to stabilize under the new management.

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 company to increase its scale of operations while sustaining or improving its profitability will be the key ratingsensitivities.

Positive: The outlook may be revised to Positive if the company records significantly better-than-expected growth in revenues along withimprovement in profitability levels and efficient working capital management, resulting in better debt coverage metrics.

Negative: The outlook may be revised to Negative if the company reports significantly lower than expected performance, resulting in lower thanestimated coverage indicators and a weaker liquidity position.

LIQUIDITY POSITION

Liquidity Profile - Adequate

Net cash accruals of Rs. 2.60 Crs in FY22 are sufficient enough to repay back the debt obligation of 0.29 Crs in FY22 similarly the net cashaccuals of 3.64 Crs is sufficient enough to repay back the debt obligation of 0.34 Crs in FY23. The average CC utilization stands at 28 to32% . Cash and bank balance as on 31st March 2022(Prov.) is at 8.52 Crs and reworked DSCR is at 2.88x in FY22 and 4.70x in FY23 whichis at a moderate level.

PROFILE

Lars Enviro Private Limited was incorporated in 1997 and is based out of Nagpur (Maharashtra). The company is engaged in offering environmental engineering services which involves providing solution for waste water treatment, raw water treatment, sewage treatment, solid waste management etc. Apart from this the Company is also engaged in providing consultancy services after installation of projects.

KEY FINANCIAL INDICATORS

Key Parameters	Units	FY 20-21 (Audited)	FY 19-20 (Audited)
Operating Revenue	Rs.Crs.	37.48	44.03
EBITDA	Rs.Crs.	-0.25	1.58
PAT	Rs.Crs.	-1.29	0.44
Tangible Net Worth	Rs.Crs.	11.32	12.60
Total Debt/Tangible Net Worth	Times	0.44	0.32
Current Ratio	Times	1.82	1.96

KEY COVENANTS OF THE INSTRUMENT/FACILITY RATED

NA

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	Working Capital Term Loan - Sanctioned Cash Credit - Sanctioned	Long Term	00.44 05.00	BWR BB+ (Stable)	NA	NA	NA
Non-Fund Based
2	Bank Guarantee - Sanctioned ILC/FLC - Sanctioned	Short Term	08.00 02.50	BWR A4	NA	NA	NA
Total			15.94	(Rupees Fifteen Crores and Ninety Four 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
Jigar Manik Gogri Lead Analyst jigarmanik.g@brickworkratings.com	Sushil Kumar Chitkara Director - Ratings B : +91 22 2831 1426, +91 22 2831 1439 sushilkumar.c@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	IDBI Bank	Working Capital Term Loan - Sanctioned	0.44	_	0.44
2	IDBI Bank	Cash Credit - Sanctioned	5.00	_	5.00
3	IDBI Bank	Bank Guarantee - Sanctioned	_	8.00	8.00
4	IDBI Bank	ILC/FLC - Sanctioned	_	2.50	2.50
Total			5.44	10.50	15.94
TOTAL (Rupees Fifteen Crores and Ninety Four lakhs Only)