RATING RATIONALE
04Jul2022

Youngman Woollen Mills Pvt. Ltd.

Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs.63.00Crs. of Youngman Woollen Mills Pvt. Ltd.

Particulars
Facilities** Amount (Rs.Crs.) Tenure Rating#
Previous Present Previous
(08 Jun 2021)
Present
Fund Based 37.00 52.00 Long Term BWR BBB- /Stable
Assignment
BWR BBB - /Stable
Reaffirmation
26.00 8.00 Short Term BWR A3
Assignment
BWR A3
Reaffirmation
Non Fund Based 0.00 3.00 Short Term
BWR A3
Reaffirmation
Grand Total 63.00 63.00 (Rupees Sixty Three 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


RATING ACTION / OUTLOOK

Brickwork Ratings (BWR) reaffirms the ratings for the bank loan facilities of Rs.63.00 Crs of Youngman Woollen Mills Pvt Ltd (YWMPL or the company). This reaffirmation factors in the company’s long track record of operations, experienced promoters and satisfactory financial risk profile in FY21 and FY22 (provisional), along with the established distribution network across India. 

The ratings are, however, constrained by the moderate profitability margins, fragmented nature of the industry, seasonal nature of the product and working-capital-intensive nature of the business. 

The outlook remains Stable as YWMPL reported a subdued performance in FY21 and FY22 (provisional). BWR believes that the company's business and financial risk profile is likely to be maintained over the medium term. The Stable outlook indicates a low likelihood of a rating change over the medium term. The outlook may be revised to Positive in case revenue and profitability show a sustained and significant improvement, leading to an improved solvency and liquidity profile. The rating outlook may be revised to Negative in case there is a significant moderation in the operating income and profitability margins, aggressive debt-funded capex plans or a significant deterioration in the company’s overall liquidity profile.

 

KEY RATING DRIVERS

Credit Strengths:


Credit Risks:

ANALYTICAL APPROACH - Standalone

BWR has applied its rating methodology on a standalone basis, as detailed in the Rating Criteria (hyperlinks provided at the end of this rationale). BWR has principally relied on the standalone audited financial results of Youngman Woollen Mills Pvt Ltd upto 31 March 2021, FY22 provisional financials, projected financials for FY23 and FY24, and publicly available information/ clarifications provided by the company’s management.

RATING SENSITIVITIES

Upward: BWR may revise the ratings upwards upon significant and sustained improvement in the total operating income and overall profitability, leading to a significant improvement in the solvency and liquidity profile. 

Negative: BWR may revise the rating downwards in case there is substantial decline in revenues and profitability from current level. The rating may also be adversely affected in the case of a sustainable deterioration in the gearing and coverage ratios.

 

LIQUIDITY INDICATORS - Adequate

The company has a moderate to adequate liquidity profile, as marked by its moderate current ratio of 1.45x as on 31 March  2021 and 1.36x as on 31 March 2022 (provisional). The company generated cash accruals of Rs.8.95cr in FY21 against a debt obligation of Rs.3.20cr. For FY22 (provisional), the company achieved cash accruals of Rs.8.03cr and is expected to generate cash accrual of Rs.8.68cr in FY23, against which the company has a principal debt repayment of Rs.3.85cr in FY23. The average utilisation of the working capital limit vs. the company’s drawing power remained high at ~98% for the 12-month period ended May 2022. During such period, the company has also availed adhoc limits from lenders to meet its working capital requirements. The company has a working-capital-intensive nature of business, due to which the operating cycle of the company was elongated y-o-y to 123 days in FY22 (provisional) from 107 days in FY21 and from 82 days in FY20, leading to a high inventory holding period of 133 days in FY22 (PY 104 days). Thus, the credit risk profile of the company remains sensitive to the management of its working capital while maintaining adequate liquidity.

ABOUT THE ENTITY

Incorporated in 1981, Youngman Woollen Mills Private Limited (YWMPL) manufactures polyester blankets, mink blankets and Hi-pile fabrics. Youngman Group has three manufacturing plants across Himachal Pradesh and Ludhiana, spread over 30 acres of land with a capacity of 60 lakh pieces of blankets and 45 lakh kg of fabric. YWMPL is promoted by the Jagota family, having more than five decades of experience in the same line of business. The group mainly caters to the domestic market through a wide network of agents across India. YWMPL is also engaged in exports, which accounts for 5-10% of the total revenue. Youngman Synthetics (YS), another group company in Una, Himachal Pradesh, is into the same line of business and has common management and strong business and financial linkages with YWMPL as it supplies the majority of its production to YWMPL.

KEY FINANCIAL INDICATORS (Standalone)
Key Parameters Units FY 20-21
(Audited)
FY 19-20
(Audited)
Operating Revenue Rs.Crs. 191.81 226.35
EBITDA Rs.Crs. 13.83 14.31
PAT Rs.Crs. 4.66 4.21
Tangible Net Worth Rs.Crs. 45.13 40.47
Total Debt/TNW Times 1.13 1.23
Current Ratio Times 1.45 1.30
KEY COVENANTS OF THE FACILITY RATED

NA


NON-COOPERATION WITH PREVIOUS CREDIT RATING AGENCY

Issuer not cooperating by CRISIL vide press release dated January 30, 2022 due to non-availability of information.

ANY OTHER INFORMATION

NA

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 52.00
BWR BBB-/Stable
(Reaffirmation)
NA
NA
08Jun2021
BWR BBB- Stable
(Assignment)
NA
NA
NA
NA
Fund Based ST 8.00
BWR A3
(Reaffirmation)
NA
NA
08Jun2021
BWR A3
(Assignment)
NA
NA
NA
NA
Non Fund Based ST 3.00
BWR A3
(Assignment)
NA
NA
NA
NA
NA
NA
NA
NA
Grand Total 63.00 (Rupees Sixty Three 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

Akanksha

Senior Ratings Analyst akanksha@brickworkratings.com

Tanu Sharma

Director - Ratings tanusharma@brickworkratings.com
1-860-425-2742 | media@brickworkratings.com
Youngman Woollen Mills Pvt. 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 HDFC Bank Working Capital Term LoanSanctioned _ _ 0.00
2 HDFC Bank Cash CreditSanctioned 20.00 _ 20.00
3 HDFC Bank GECLOut-standing 3.48 _ 3.48
4 ICICI Bank Cash CreditSanctioned 16.00 _ 16.00
5 Others Cash CreditProposed 6.25 _ 6.25
6 Others BG/LC/ILCProposed _ 3.00 3.00
7 Standard Chartered Bank Term LoanOut-standing 2.87 _ 2.87
8 Standard Chartered Bank GECLOut-standing 3.40 _ 3.40
9 Standard Chartered Bank Bill Discounted (BD)Sanctioned _ _ 0.00
10 Standard Chartered Bank OverdraftSanctioned _ 8.00 8.00
Total 52.00 11.00 63.00
TOTAL (Rupees Sixty Three Crores Only)
Print and Digital Media

The Rating Rationale is sent to you for the sole purpose of dissemination through your print, digital or electronic media. While it may be used by you acknowledging credit to BWR, please do not change the wordings in the rationale to avoid conveying a meaning different from what was intended by BWR. BWR alone has the sole right of sharing (both direct and indirect) its rationales for consideration or otherwise through any print or electronic or digital media.

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 11,541 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.

Disclaimer

Brickwork Ratings India Pvt. Ltd. (BWR), a Securities and Exchange Board of India [SEBI] registered Credit Rating Agency and accredited by the Reserve Bank of India [RBI], offers credit ratings of Bank Loan facilities, 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. [ hereafter referred to as "Instruments"]. BWR also rates NGOs, Educational Institutions, Hospitals, Real Estate Developers, Urban Local Bodies and Municipal Corporations.

BWR wishes to inform all persons who may come across Rating Rationales and Rating Reports provided by BWR that the ratings assigned by BWR are based on information obtained from the issuer of the instrument and other reliable sources, which in BWR" s best judgment are considered reliable. The Rating Rationale / Rating Report & other rating communications are intended for the jurisdiction of India only. The reports should not be the sole or primary basis for any investment decision within the meaning of any law or regulation (including the laws and regulations applicable in Europe and also the USA).

BWR also wishes to inform that access or use of the said documents does not create a client relationship between the user and BWR.

The ratings assigned by BWR are only an expression of BWR" s opinion on the entity / instrument and should not in any manner be construed as being a recommendation to either, purchase, hold or sell the instrument.

BWR also wishes to abundantly clarify that these ratings are not to be considered as an investment advice in any jurisdiction nor are they to be used as a basis for or as an alternative to independent financial advice and judgment obtained from the user" s financial advisors. BWR shall not be liable to any losses incurred by the users of these Rating Rationales, Rating Reports or its contents. BWR reserves the right to vary, modify, suspend or withdraw the ratings at any time without assigning reasons for the same.

BWR" s ratings reflect BWR" s opinion on the day the ratings are published and are not reflective of factual circumstances that may have arisen on a later date. BWR is not obliged to update its opinion based on any public notification, in any form or format although BWR may disseminate its opinion and analysis when deemed fit.

Neither BWR nor its affiliates, third party providers, as well as the directors, officers, shareholders, employees or agents (collectively, "BWR Party") guarantee the accuracy, completeness or adequacy of the Ratings, and no BWR Party shall have any liability for any errors, omissions, or interruptions therein, regardless of the cause, or for the results obtained from the use of any part of the Rating Rationales or Rating Reports. Each BWR Party disclaims all express or implied warranties, including, but not limited to, any warranties of merchantability, suitability or fitness for a particular purpose or use. In no event shall any BWR Party be liable to any one for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of any part of the Rating Rationales and/or Rating Reports even if advised of the possibility of such damages. However, BWR or its associates may have other commercial transactions with the company/entity. BWR and its affiliates do not act as a fiduciary.

BWR keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of the respective activity. As a result, certain business units of BWR may have information that is not available to other BWR business units. BWR has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with each analytical process.

BWR clarifies that it may have been paid a fee by the issuers or underwriters of the instruments, facilities, securities etc., or from obligors. BWR" s public ratings and analysis are made available on its web site, www.brickworkratings.com. More detailed information may be provided for a fee. BWR" s rating criteria are also generally made available without charge on BWR" s website.

This disclaimer forms an integral part of the Ratings Rationales / Rating Reports or other press releases, advisories, communications issued by BWR and circulation of the ratings without this disclaimer is prohibited.

BWR is bound by the Code of Conduct for Credit Rating Agencies issued by the Securities and Exchange Board of India and is governed by the applicable regulations issued by the Securities and Exchange Board of India as amended from time to time.