A. B. Enterprise

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs. 6.00 Crs. of A. B. Enterprise

Particulars

Facilities**	Amount(Rs.Crs.)	Tenure	Rating#
Fund Based	6.00	Long Term	BWR BB + /Stable Assignment
Grand Total	6.00	(Rupees Six Crores Only)

#Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank Loan facilities,consolidation or instruments are provided in Annexure
Note: This rating pertains to an existing assignment received prior to 6 October 2022. RATING ACTION / OUTLOOK

BWR believes that A.B. Enterprise 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.

BWR has essentially relied upon the audited financial statements of A.B. Enterprise of FY18-19, FY 19-20,FY20-21, Management certified Provisional financial statement for FY21-22 and projected financial statements of FY22-23,FY23-24, publicly available information and information / clarifications provided by the entity’s management. The rating draws strength from the vast business experience of the partner/s, Adequate Debt Protection Metrics and consistent growth in business. However, the rating is constrained by the Manpower Skill set challenges, Partnership nature of constitution of the firm and usually high competition from other established players in the market.

Going forward, the ability of the entity to achieve projected revenue & profitability margins and manage liquidity would be key rating sensitivities

KEY RATING DRIVERS

Credit Strengths:

Extensive experience of the partners :
The decade long experience of the partners, their strong understanding of the market dynamics and healthy relationships with reputed customers should continue to support the business.
Adequate Debt Protection Matrics :
Debt protection metrics were adequate, indicated by net cash accrual to total debt and interest coverage ratios of 0.69 times and 6.08 times estimated for fiscal 2021. ISCR for FY 21 is 6.08x. DSCR for FY 21 is 6.45x. TNW for FY 21 is 2.06x.
Consistent Growth in Business :
There is constant growth in the business of the firm. Sales for FY 21 is Rs. 88.84 Crs is increased from Rs. 68.13 Crs of FY 20. It is expected Rs. 118.72 Crs for FY 22 (Provisional). Operating Margin for FY 21 is 2.57% is increased from 2.47% of FY 20. It is expected at 2.77% for FY 22 (Provisional).

Credit Risks:

Exposure to intense competition :
Due to presence of many small and large players in the industry. The company faces stiff competition hence, restricts the scalability.
Manpower service skill set challenges :
The firm is manpower services provider. The firm may face the challenges with respect to shortage in required skill set of skilled and also in unskilled staff. Also , the firm may face challenges in terms of contractual and fixed tenure staff services.
Exposed to Risk Associated with partnership nature of Constitution :
The firm being a Partnership nature, exposed to risk of Capital Withdrawal by partners and may affect the capital structure and Networth of the firm.

ANALYTICAL APPROACH - Standalone

For arriving at its rating, BWR has applied its rating methodology as detailed in the Rating Criteria detailed below (hyperlinks provided at the end of this rationale).

RATING SENSITIVITIES

Positive:

The rating may be positively revised if the firm enhances its scale of operations substantially while having timely receipts of its dues and improving its profit margins to improve its cash accruals, thereby the liquidity.

Negative:

The rating would be adversely affected if the revenues and profit margins declines and also if there is any deterioration in the financial risk profile, and any other factors

LIQUIDITY INDICATORS - Adequate

Liquidity is Adequate as the average utilization of Overdraft is 34.02%. The current ratio is moderate at 1.11x times in FY 21 as against 1.12 times in FY 20 and it is expected to 1.07x in FY 22. Cash and Bank Balance increased slightly to Rs. 1.81 Crores as on 31 March 2021 as against Rs. 0.49 Crores as on 31 March 2020 and it is expected to Rs. 1.37 Crores as on 31 March 2022. ISCR for FY 21 is 6.08x .DSCR for FY 21 is 6.45x. TNW for FY 21 is 2.06 Crs . It is expected at Rs. 3.77 Crs for FY 22.

ABOUT THE ENTITY

Established in July 2009, A.B. Enterprise is a Partnership firm. The firm is involved in the business of Manpower service supplier and contractor. The services include Security Services, Housekeeping Services, other staff services. The business provides services in the state of Gujarat, Rajasthan, Karnataka, Uttar Pradesh, etc.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 21-22 (Provisional)	FY 20-21 (Audited)
Operating Revenue	Rs.Crs.	118.72	88.84
EBITDA	Rs.Crs.	3.29	2.28
PAT	Rs.Crs.	2.71	2.02
Tangible Net Worth	Rs.Crs.	3.77	2.06
Total Debt/TNW	Times	1.12	1.51
Current Ratio	Times	1.07	1.11

NON-COOPERATION WITH PREVIOUS CREDIT RATING AGENCY

RATING HISTORY FOR LAST THREE YEARS (including withdrawal and suspended)

Facilities	Current Rating (2022)			2022 (History)		2021		2020		2019
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	6.00	BWR BB+/Stable (Assignment)	NA	NA	NA	NA	NA	NA	NA	NA
Grand Total		6.00	(Rupees Six Crores Only)

COMPLEXITY LEVELS OF THE INSTRUMENTS - Simple

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

Analytical Contacts
Joshi Vishalkumar Dinkarkumar Ratings Analyst vishalkumar.j@brickworkratings.com	Dileep Narayan Singh Director dileep.s@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

A. B. Enterprise

ANNEXURE-I

Details of Bank Facilities rated by BWR

SL.No.	Name of the Bank/Lender	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)
1	The Mehsana Urban Co-operative Bank	Overdraft - Sanctioned	6.00	_	6.00
Total			6.00	0.00	6.00
TOTAL (Rupees Six Crores Only)

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About Brickwork Ratings

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 12,000 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.

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