RATING RATIONALE
08 Feb 2021
Acetel Enterprises Pvt. Ltd.
Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.11.20 Crs. of Acetel Enterprises Pvt. Ltd.
Particulars| Facility** | Amount (Rs.Crs) | Tenure | Rating* |
|---|---|---|---|
| Fund Based | |||
|
Cash Credit
Sanctioned
Covid -19 Emergency Line Credit Sanctioned |
08.00
01.20 |
Long Term | BWR B + (Stable) |
| Sub Total | 09.20 | ||
| Non-Fund Based | |||
| Bank Guarantee Sanctioned | 02.00 | Short Term | BWR A4 |
| Sub Total | 02.00 | ||
| Grand Total | 11.20 | (Rupees Eleven Crores and Twenty 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+'' and short term rating at “BWR A4'' with “Stable” outlook for the bank loan facilities of M/s Acetel Enterprises Pvt. Ltd. The rating draws strength from the experienced directors and moderate financial risk profile. However, the rating is constrained on account of competition in the industry and low Margins & coverage ratios.
The rating outlook has been assigned as "Stable" as BWR believes that M/s Acetel Enterprises Pvt. Ltd 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 profits show sustained improvement. The rating outlook may be revised to 'Negative' if the financial risk profile goes down.
KEY RATING DRIVERS
Credit Strengths:
-
Experienced Directors :
The company was promoted by Mr. Harish Dhingra, who has more than 20 years experience in distribution out of which 15 years experience is exclusively in mobile distribution starting from BSNL, Nokia and Samsung in Punjab, along with Mr. Arun Jain with a marketing and finance experience of more than 25 years.
-
Moderate Financial Risk Profile :
Total operating income has increased from Rs.121.93crs in FY19 to Rs.146.09crs in FY20 which indicates a y-o-y increase by 20%. Company has reported TNW of Rs.2.84crs in FY20 which increased from Rs.2.22crs in FY19 (Analyzed TNW increased from Rs.4.72crs in FY19 to Rs.5.34crs in FY20). Debt Equity Ratio is improved from 4.17x in FY19 to 2.60x in FY20. Current ratio increased from 1.44x in FY19 to 1.54x in FY20. TOL/TNW is decreased from 9.00x in FY19 to 4.38x in FY20 improving the gearing of the company.
Credit Risks:
-
Competition in the industry :
Moreover, rising penetration of smart devices across the country, growing demand for technologically advanced mobile accessories, along with increasing R&D investments in wireless connectivity are expected to affect the business of the company. Also, growth in online e-commerce sales and purchases have increased the competition for the company.
-
Low Margins and coverage ratios :
Operating profit margin has decreased from 1.97% in FY19 to 1.57% in FY20 and Net Profit Margin has also decreased from 0.47% in FY19 to 0.34% in FY20 which are at low levels. ISCR has decreased from 1.60x in FY19 to 1.32x in FY20 and DSCR has also decreased from 1.17x in FY19 to 1.14x in FY20.
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 adequate liquidity will remain the key rating sensitivities.
Positive: The rating may be upgraded if the company inter alia, is able to improve its topline and generate profits, or on account of any other favorable factor.
Negative: The rating may be downgraded if inter alia, there is any deterioration in financial risk profile, fails to maintain adequate liquidity or on account of any unforeseen unfavorable events.
LIQUIDITY POSITION
Adequate
The company had cash and cash equivalent balance of Rs.2.31crs in FY20. The company has outstanding Long Term Borrowings of Rs.2.50crs in FY20 which includes unsecured loans from directors. There is no outstanding secured loans in the name of the company as on FY20. Cash Flow Statement for FY20 was not available. Average utilization of CC limit is around 73.20% for the last six months i.e. from Aug 2020 to Jan 2021. Current ratio stood at 1.54x in FY20. Conversion cycle of 22 days is reported in FY20. The company had ISCR and DSCR of 1.32x and 1.14x in FY20.
Any Group Concerns
Company is not having any group concerns.
PROFILEM/s Acetel Enterprises Pvt. Ltd is a private company incorporated on 14th Aug, 2015 which is situated at Chandigarh. The company was appointed as the Zonal Distributor of M/s Reliance Retail Limited, for distribution of all the products of M/s Reliance Jio Infocomm Limited a subsidiary of M/s Reliance Industries Limited, for Punjab, Chandigarh and Jammu. The company was promoted by Mr. Harish Dhingra, who has more than 20 years experience in distribution out of which 15 years experience is exclusively in mobile distribution starting from BSNL, Nokia and Samsung in Punjab, along with Mr. Arun Jain with a marketing and finance experience of more than 25 years. Company deals with range of Products from Reliance like Featured Jio Phone, Jiofy and Reliance Jio Recharge Plans. Company has 59 Regional Distributors under them across all of Punjab and Chandigarh along with 280 ARDs and MARDs for distribution of "JIO Phone". Company has a work force of more than 30 people working allover Punjab.
KEY FINANCIAL INDICATORS| Key Parameters | Units |
FY 19-20 (Audited) |
FY 18-19 (Audited) |
|---|---|---|---|
| Operating Revenue | Rs.Crs. | 146.09 | 121.93 |
| EBITDA | Rs.Crs. | 2.30 | 2.40 |
| PAT | Rs.Crs. | 0.50 | 0.57 |
| Tangible Net Worth | Rs.Crs. | 2.84 | 2.22 |
| Total Debt/Tangible Net Worth | Times | 2.60 | 4.17 |
| Current Ratio | Times | 1.54 | 1.44 |
N.A
NON-COOPERATION WITH PREVIOUS RATING AGENCY ,IF ANY
| CRA Name | Date | Amount | Rating |
|---|---|---|---|
| CRISIL | 28 Mar 2018 | 15.00 | CRISIL BB-/Stable (Issuer Not Cooperating) |
| CRISIL | 14 Sep 2020 | 15.00 | CRISIL B+/Stable (Issuer Not Cooperating) |
| S.No | Current Rating (2021) | Rating History | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Facilities | Tenure | Amount (Rs.Crs) | Rating | 2020 | 2019 | 2018 | ||||
| Fund Based | ||||||||||
| 1 | Cash Credit - SanctionedCovid -19 Emergency Line Credit - Sanctioned | Long Term | 08.0001.20 | BWR B+(Stable) | NA | NA | NA | |||
| Non-Fund Based | ||||||||||
| 2 | Bank Guarantee - Sanctioned | Short Term | 02.00 | BWR A4 | NA | NA | NA | |||
| Total | 11.20 | (Rupees Eleven Crores and Twenty 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 | |
|---|---|
|
Kartik Ruia Rating Analyst kartik.r@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 | Bank GuaranteeSanctioned | _ | 2.00 | 2.00 |
| 2 | Cash CreditSanctioned | 8.00 | _ | 8.00 |
| 3 | Covid -19 Emergency Line CreditSanctioned | 1.20 | _ | 1.20 |
| Total | 9.20 | 2.00 | 11.20 | |
| TOTAL (Rupees Eleven Crores and Twenty 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 |
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