Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.19.05 Crs. of Ajay Knitwears & Fabrics Pvt. Ltd.
ParticularsFacility** | Amount (Rs.Crs) | Tenure | Rating* |
---|---|---|---|
Fund Based | |||
Term Loan
Out-standing
Cash Credit Sanctioned Emergency Credit Line Guarantee Scheme (ECLGS) Out-standing Emergency Credit Line Guarantee Scheme (ECLGS) Out-standing |
00.03
15.75 01.86 01.41 |
Long Term | BWR BB - (Stable) |
Sub Total | 19.05 | ||
Grand Total | 19.05 | (Rupees Nineteen Crores and Five lakhs Only) |
BWR assigns the long term rating of BWR BB- with 'Stable' outlook for the long term bank loan facilities of Ajay Knitwears & Fabrics Private Limited (The Company). The ratings take into consideration the Extensive experience of the Promoters in garment business and Moderate Financial Risk Profile, The ratings are however constrained by competition in the industry and vulnerability of operating margins to fluctuations in raw material prices.
BWR believes that Ajay Knitwears & Fabrics Pvt. Ltd. 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.
KEY RATING DRIVERS
Credit Strengths:
The promoters of the company has rich experience of more than 30 years in the garment business that helps them to maintain a better relationship with there customers and suppliers as well.
The company has moderate financial risk profile with revenues of Rs 67.24 crores in FY21 (Audited) and it has further improved to Rs 69.75 crores in FY22 (Provisional) Going further the company has achieved revenues of Rs 9.50 crores till May 2022, against the projections of Rs 75.00 crores in FY23 (Projections). The company has moderate net worth of Rs 7.17 crores in FY21 (Audited) that is further improved to Rs 7.67 crores in FY22 (Provisional). The company has moderate gearing level with TD/TNW of 2.67 Times, along with Moderate Debt Service indicators with Interest Service Coverage Ratio of 1.42 Times & Debt Service Coverage Ratio of 1.15 Times in FY21 (Audited). The company has moderate profitability margins with Net Profit Margins of 0.63% and Operating Profit Margins of 4.11% in FY21 (Audited). The company has moderate current ratio of 1.75 Times in FY21 (Audited).
Entry barriers in the industry are low on account of limited capital and technology requirement and also low differentiation in the end product leading to intense competition and limiting the pricing power resulting in low profitability.
Raw material accounts for major portion of the operating cost of the firm. Hence, any sudden change in raw material prices could affect the operating margin of the firm
For arriving at its ratings, BWR has applied its rating methodology as detailed in the Rating Criteria detailed below (hyperlinks provided at the end of this rationale).
RATING SENSITIVITIES
Going forward, the ability of the firm to Improve their revenues along with profitability margins of the company would be key rating sensitives.
Positive: The ratings may be upgraded in the future if the company is able to significantly improve their revenues and profitability margins.
Negative: The ratings may be downgraded if any further deterioration in the Financial Risk Profile of the company.
LIQUIDITY POSITION
Adequate : The company has no associate concerns or subsidiary concerns. The company has cash & bank balances of Rs 0.05 crores in FY21 (Audited) . The trust has average utilisation of 83% of their cash credit limit in last six months. The company has long term borrowings comprises of ECLGS loan of Rs 2.79 crores, & term loan of Rs 0.33 crores from South Indian Bank, Loan against Property of Rs 5.49 crores, from Deutsche Bank , and car loan of Rs 0.02 crores from Kotak Mahindra Prime in FY21 (Audited). The company has cash accruals of Rs 0.63 crores against the CPLTD of Rs 0.50 crores in FY21 (Audited). The company has Interest Service Coverage Ratio of 1.42 Times & Debt Service Coverage Ratio of 1.15 Times in FY21 (Audited). The current ratio has been 1.75 Times in FY21 (Audited). The company has conversion cycle of 134 days in FY21 (Audited).
PROFILEAjay Knitwears & Fabrics Private Limited was established in 1999, the company is engaged in Knitting and garment unit and has its manufacturing unit located at Rahon Road, Ludhiana. The company can boast of its wide product range both in terms of fabrics and garments. The company has different range of garments which include basic polo, round neck t-shirts, Striped Tshirts, Knitted Sportswear, Sweat Shirts etc. The company has capacity utilisation of 100 Tonnes per month for Knitted Fabric, 100 Tonnes per month of Fabric Dyeing, 25 Tonnes per month of Yarn Dyeing and 1,50,000 pieces per month of Garments.
KEY FINANCIAL INDICATORSKey Parameters | Units |
FY 21-22 (Provisional) |
FY 20-21 (Audited) |
---|---|---|---|
Operating Revenue | Rs.Crs. | 69.75 | 67.24 |
EBITDA | Rs.Crs. | 3.22 | 2.76 |
PAT | Rs.Crs. | 0.50 | 0.42 |
Tangible Net Worth | Rs.Crs. | 7.67 | 7.17 |
Total Debt/Tangible Net Worth | Times | 2.86 | 2.67 |
Current Ratio | Times | 1.44 | 1.75 |
S.No | Current Rating (2022) | Rating History | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Facilities | Tenure | Amount (Rs.Crs) | Rating | 2021 | 2020 | 2019 | ||||
Fund Based | ||||||||||
1 | Term Loan - Out-standingCash Credit - SanctionedEmergency Credit Line Guarantee Scheme (ECLGS) - Out-standingEmergency Credit Line Guarantee Scheme (ECLGS) - Out-standing | Long Term | 00.0315.7501.8601.41 | BWR BB-(Stable) | NA | NA | NA | |||
Total | 19.05 | (Rupees Nineteen Crores and Five 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.
For More Information Contact:Analytical Contacts | |
---|---|
Aman sharma Rating Analyst B : +91 172 5032 295 / 6 aman.s@brickworkratings.com |
V.K.Kukreja Associate Director - Ratings B : +91 11 2341 2232 kukreja.vk@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 | South Indian Bank | Term LoanOut-standing | 0.03 | _ | 0.03 |
2 | South Indian Bank | Cash CreditSanctioned | 15.75 | _ | 15.75 |
3 | South Indian Bank | Emergency Credit Line Guarantee Scheme (ECLGS)Out-standing | 1.86 | _ | 1.86 |
4 | South Indian Bank | Emergency Credit Line Guarantee Scheme (ECLGS)Out-standing | 1.41 | _ | 1.41 |
Total | 19.05 | 0.00 | 19.05 | ||
TOTAL (Rupees Nineteen Crores and Five 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 |
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