Brickwork Ratings revises the ratings for the Bank Loan Facilities of Rs.11.50 Crs. of Akshoy Creation
ParticularsFacilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||||
---|---|---|---|---|---|---|---|
Previous | Present | Previous(01 Dec 2020) | Present | ||||
Fund Based | |||||||
Cash Credit Sanctioned | 09.28 | 11.50 | Long Term | BWR B + /Stable Issuer Not Cooperating Downgrade | BWR BB - /Stable Upgrade | ||
Cash Credit Proposed | 02.72 | 00.00 | |||||
Sub Total | 12.00 | 11.50 | |||||
Grand Total | 12.00 | 11.50 | (Rupees Eleven Crores and Fifty lakhs Only) |
BWR has essentially relied upon the audited financial statements of Akshoy Creation of FY18, FY19, FY20 and projected financial statements of FY21,FY22, publicly available information and information / clarifications provided by the entity’s management and its bankers.
The upgrade of the ratings factors in the longstanding presence of the firm in the market, experience of the partners in the business and geographical advantage. The rating however, is constrained by small scale of operations, vulnerability of profitability margins and partnership nature of business.
The Stable outlook reflects the fact that the firm’s performance is likely to be maintained over the medium term, and BWR’s belief that the firm will continue to benefit from its management's extensive experience.
KEY RATING DRIVERSCredit Strengths:
M/s Akshoy Creation is a well established and reputed brand in Kolkata. It derives its goodwill from the legacy of over 100 years in the business of trading in Sarees. The longstanding presence of the firm has enabled them to build strong relationships with their customers and suppliers.
Mr. Shyamal Basak has more than fifty years of experience in this business. The experience of the partners and their in-depth understanding of business dynamics will continue to support the business risk profile of the company.
The Firm is located in Kolkata cluster and thus has a competitive advantage in terms of client base, experienced manpower well versed in trading and distribution activities and possessing good local knowledge about vendors.
Credit Risks:
Despite the firm's long standing presence in the industry, the scalability of the firm has remained modest but has been improving, marked by operating income of Rs. 30.69 crore in FY 20 as against Rs. 26.37 crore in FY 19 and Rs. 15.44 crs in FY 18. This has been exacerbated by the impact of the pandemic during the first half of FY21, the consequences of which will be visible in their total revenue for the full year FY21.
The firm reported low net profits mainly because of the inherent nature of the trading industry. The company reported improvement in operating profit margin in FY20. However, due to higher interest and finance charges, net profit margins remained low.
Constitution as a partnership entity has the inherent risk of a possible withdrawal of the capital by the partners which can adversely affect its capital structure of the entity.
BWR has adopted a Standalone approach while arriving at its rating and applied its rating methodology as detailed in the Rating Criteria (hyperlinks provided at the end of this rationale).
RATING SENSITIVITIES
Positive: Sustained improvement in scale of operations and sustenance of operating margins and improvement in liquidity position may favour a rating upgrade.
Negative: Decline in revenues and/or profitability leading to decline in net cash accruals on a continuous basis and delays in debt servicing may result in a rating downgrade.
LIQUIDITY INDICATORS - Adequate
The liquidity position of the firm is Adequate. Net Cash Accruals of the firm stood at Rs. 0.76 crs as on 31 March 2020. Average utilisation of cash credit limit stood at ~89% in the past six months ended December 2020. Cash & Bank balance stood at Rs. 0.58 crs as on 31 March 2020. ISCR of the firm remained comfortable at 1.36 times. Current ratio stood at 1.26 times in FY 20 as against 1.38 times in FY 19. The company availed two Covid Emergency Loans of Rs. 2.11 crs and Rs. 1.15 crs.
ABOUT THE ENTITYM/s Akshoy Creation was established in 2004. The business started by Mr. Akshoy Basak around 100 years ago, is now being managed by the third and fourth generation i.e, Mr. Shyamal Basak and Mr. Samrat Basak as partners of the partnership firm. The firm is engaged in the wholesale and retail trading of Sarees and other dress materials. It operates three retail and one wholesale outlets in Kolkata. All the four outlets are in the name of the Akshoy Creation.
KEY FINANCIAL INDICATORS (Standalone)Key Parameters | Units |
FY 19-20 (Audited) |
FY 18-19 (Audited) |
---|---|---|---|
Operating Revenue | Rs.Crs. | 30.69 | 26.37 |
EBITDA | Rs.Crs. | 3.63 | 1.91 |
PAT | Rs.Crs. | 0.46 | 0.46 |
Tangible Net Worth | Rs.Crs. | 5.46 | 3.83 |
Total Debt/Tangible Net Worth | Times | 4.71 | 6.27 |
Current Ratio | Times | 1.26 | 1.38 |
Facilities | Current Rating (2021) | Rating History (2020) | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Type | Tenure | Amount | Rating | 01Dec2020 | |||||||
Fund Based | |||||||||||
Cash Credit - SanctionedCash Credit - Proposed | Long Term | 11.5000.00 | BWR BB-/Stable | BWR B +/Stable Issuer Not Cooperating | |||||||
Grand Total | 11.50 | (Rupees Eleven Crores and Fifty lakhs Only) |
Facilities | Current Rating (2021) | Rating History (2019) | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Type | Tenure | Amount | Rating | 09Aug2019 | 14Aug2019 | ||||||
Fund Based | |||||||||||
Cash Credit - SanctionedCash Credit - Proposed | Long Term | 11.5000.00 | BWR BB-/Stable | BWR BB -/Stable | BWR BB -/Stable | ||||||
Grand Total | 11.50 | (Rupees Eleven Crores and Fifty lakhs Only) |
Facilities | Current Rating (2021) | Rating History (2018) | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Type | Tenure | Amount | Rating | NA | |||||||
Fund Based | |||||||||||
Cash Credit - SanctionedCash Credit - Proposed | Long Term | 11.5000.00 | BWR BB-/Stable | NA | |||||||
Grand Total | 11.50 | (Rupees Eleven Crores and Fifty 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 CriteriaAnalytical Contacts | |
---|---|
Sikha Agarwal Ratings Analyst sikha.a@brickworkratings.com |
Anuradha Gupta Director - Ratings anuradha.g@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 | Cash CreditSanctioned | 11.50 | _ | 11.50 | ||
2 | Cash CreditProposed | _ | _ | 0.00 | ||
Total | 11.50 | 0.00 | 11.50 | |||
TOTAL (Rupees Eleven Crores and Fifty 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 |
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 RatingsBrickwork 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.
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.