RATING RATIONALE
15Feb2022

WeP Solutions Ltd.

Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 20.83 Crs. of WeP Solutions Ltd.

Particulars
Facilities** Amount (Rs.Crs.) Tenure Rating#
Previous Present Previous
(28 Dec 2020)
Present
Fund Based 24.59 18.33 Long Term BWR BBB- /Stable
Reaffirmation
BWR BBB - /Stable
Reaffirmation
(2.00) (0.00)
(4.00) (4.00)
Non Fund Based 2.50 2.50 Short Term BWR A3
Reaffirmation
BWR A3
Reaffirmation
(3.00) (3.00)
(3.00) (0.00)
(1.00) (0.00)
(3.50) (3.50)
(2.50) (2.50)
Grand Total 27.09 20.83 (Rupees Twenty Crores and Eighty Three lakhs 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


RATING ACTION / OUTLOOK

BWR has essentially relied upon the audited financials up to FY21, provisional financials of 9MFY22, projected financials up to FY23, publicly available information, and information/clarifications provided by the company's management.

The ratings reaffirm factors of experienced management, adequate financial risk profile, healthy customer relationships, company services, and adequate liquidity position. However, the ratings are constrained by Y-oY declined revenue but an improvement on a provisional basis, a moderate scale of operations and low profitability margins, dependence and inability, concentration risk, and working capital intensive nature of operations. 

The ‘Stable’ outlook indicates a low likelihood of rating change over the medium term. BWR expects that Wep Solutions Ltd's business risk profile will be maintained over the medium term. The outlook may be revised to Positive in case of better than expected operating income and improvement in financial risk profile debt-protection indicators. The outlook may be revised to Negative if the operating metrics weaken or if larger than anticipated Capex leads to deterioration in credit metrics and liquidity

KEY RATING DRIVERS

Credit Strengths:


Credit Risks:

ANALYTICAL APPROACH - Consolidated

BWR has applied its rating methodology as detailed at the end of the document. BWR has adopted a consolidated approach for arriving at its ratings. However, BWR has noted the support to the company from the Wep Group and its promoters.
 

RATING SENSITIVITIES

Upward - Sustained improvement in scale of operations with improved profitability margins and capital structure. Specific credit metrics that could lead to an upgrade of the company's rating include (1) Total Debt/Tangible net worth below 1.00 times on a continuous basis, (2) DSCR and ISCR greater than 3.0 times on a continuous basis. 

Downward - Specific credit metrics that could lead to a downgrade if there is any decline in revenue, debt service coverage metrics and further there is a significant deterioration in the credit profile of the company. 
 

LIQUIDITY INDICATORS - Adequate

The liquidity position of the Company is adequate as its current ratio as on March 31, 2021, is moderate at 1.47 times. The average CC utilization for the last 12 months is 25%. Adequate to meet the net cash accruals of Rs.11.32 Crs and Rs.12.89 Crs against the CPLTD of Rs.2.10 Crs, as on 31 Mar 2022 and Rs. 2.80 Crs, as on 31 Mar 2023, respectively.
 

ABOUT THE ENTITY

Wep Solutions Limited (Wep), promoted by Mr. Ram Narayan Agarwal was incorporated in the year 1995 located in Bangalore and listed in BSE. The company is engaged in Managed Printing Solutions (MPS) and Document Services and Manufacturing and Distribution of Computer peripherals (GST Platform Services, Document Management Solutions, Managed Print Services, and POS Solutions). The Company has a pan India presence having 19 offices and support locations. WSL has manufacturing facilities situated in Mysore(Karnataka) and in Baddi (Himachal Pradesh) both facilities are ISO certified. WeP Solutions Ltd. and Ricoh Asia Pacific entered into a distributor agreement for the Indian Market. Ricoh’s headquarter is located in Tokyo. It is empowering digital workplaces using innovative technologies and services enabling individuals to work smarter. For more than 80 years, Ricoh has been driving innovation and is a leading provider of document management solutions, IT services, commercial and industrial printing, digital cameras, and industrial systems. Under the agreement of WeP Solutions Limited and Ricoh Asia Pacific, WeP has rights to sell and service Ricoh’s product portfolio that addresses the digital printing market in India.

WeP Digital Services Limited is 100% Subsidiary and is managed by its separate Board of Directors. Wep Digital Services Limited commenced its operations in May 2017. WeP Digital services with a Mission ‘WeP Digital’ is to empower the business by providing innovative Digital Services to help the customers to operate on a ‘cashless’ and ‘paperless’ basis. These services are being launched for applications in the areas of GST Tax fling, Document management, and Aadhaar Authentication.

KEY FINANCIAL INDICATORS (Consolidated)
Key Parameters Units

Operating Revenue Rs.Crs. 64.49 68.37
EBITDA Rs.Crs. 11.14 12.80
PAT Rs.Crs. -1.11 -2.12
Tangible Net Worth Rs.Crs. 39.88 40.48
Total Debt/Tangible Net Worth Times 0.35 0.32
Current Ratio Times 1.47 1.32

ANY OTHER INFORMATION

The standalone revenue is negligible, hence, BWR has considered the consolidated financials only. 

RATING HISTORY FOR THE PREVIOUS 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 18.33
BWR BBB-/Stable
(Reaffirmation)
NA
NA
NA
NA
28Dec2020
BWR BBB- Stable
(Reaffirmation)
18May2019
BWR BBB- Stable
(Reaffirmation)
FB SubLimit LT (4.00)
BWR BBB-/Stable
(Reaffirmation)
NA
NA
NA
NA
28Dec2020
BWR BBB- Stable
(Reaffirmation)
NA
NA
Non Fund Based ST 2.50
BWR A3
(Reaffirmation)
NA
NA
NA
NA
28Dec2020
BWR A3
(Reaffirmation)
18May2019
BWR A3
(Reaffirmation)
NFB SubLimit ST (3.00)
BWR A3
(Reaffirmation)
NA
NA
NA
NA
28Dec2020
BWR A3
(Reaffirmation)
18May2019
BWR A3
(Reaffirmation)
NFB SubLimit ST (3.50)
BWR A3
(Reaffirmation)
NA
NA
NA
NA
NA
NA
NA
NA
NFB SubLimit ST (2.50)
BWR A3
(Reaffirmation)
NA
NA
NA
NA
NA
NA
NA
NA
Grand Total 20.83 (Rupees Twenty Crores and Eighty Three lakhs Only)
Rating Advisory, as on 25Jan2022
Press Release, as on 25Jan2022
BWR issued an advisory

COMPLEXITY LEVELS OF THE INSTRUMENTS - NA

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

Prashanth Boorala

Ratings Analyst Board : +91 40 2331 0161 / 2331 0071 prashanth.b@brickworkratings.com

Nagaraj K

Associate Director - Ratings Board : +91 80 4040 9940 nagaraj.ks@brickworkratings.com
1-860-425-2742 | media@brickworkratings.com
WeP Solutions Ltd.
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 Axis Bank Ltd. Term LoanOut-standing 3.68 _ 3.68
2 Axis Bank Ltd. Term LoanOut-standing 1.65 _ 1.65
3 Axis Bank Ltd. Cash CreditSanctioned 6.00 _ 6.00
Sub-Limit (Bank Guarantee) Sanctioned (2.50)
Sub-Limit (Letter of Credit) Sanctioned (3.50)
Sub-Limit (Working Capital Demand Loan) Out-standing (4.00)
4 Axis Bank Ltd. Letter of CreditSanctioned _ 2.50 2.50
5 HDFC Bank Cash CreditSanctioned _ _ 0.00
Sub-Limit (Bank Guarantee) Sanctioned (0.00)
Sub-Limit (Letter of Credit) Sanctioned (0.00)
Sub-Limit (Working Capital Demand Loan) Sanctioned (0.00)
6 Union Bank of India Cash CreditSanctioned 7.00 _ 7.00
Sub-Limit (Inland Letter of Credit/Inland Bank Guarantee) Sanctioned (3.00)
Total 18.33 2.50 20.83
TOTAL (Rupees Twenty Crores and Eighty Three lakhs Only)
ANNEXURE-III
List of entities consolidated

Name of Entity% OwnershipExtent of consolidationRationale for consolidation
Wep Digital Services Ltd 100 Full Subsidary

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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 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.

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