Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs. 6.00 Crs. of A. B. Enterprise
ParticularsFacilities** | Amount(Rs.Crs.) | Tenure | Rating# | |
---|---|---|---|---|
Fund Based | 6.00 | Long Term |
BWR BB +
/Stable Assignment |
|
Grand Total | 6.00 | (Rupees Six Crores Only) |
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
Credit Strengths:
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.
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.
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).
Due to presence of many small and large players in the industry. The company faces stiff competition hence, restricts the scalability.
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.
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.
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 ENTITYEstablished 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 |
NA
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) |
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 CriteriaAnalytical 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 |
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 | OverdraftSanctioned | 6.00 | _ | 6.00 |
Total | 6.00 | 0.00 | 6.00 | ||
TOTAL (Rupees Six Crores Only) |
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