RATING RATIONALE
04 Jul 2022

Ajay Knitwears & Fabrics Pvt. Ltd.

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.19.05 Crs. of Ajay Knitwears & Fabrics Pvt. Ltd.

Particulars
Facility** 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)
*Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank facilities are provided in Annexure-I
RATING ACTION / OUTLOOK : Stable

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:


Credit Risks:

ANALYTICAL APPROACH AND APPLICABLE RATING CRITERIA

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).

PROFILE

Ajay 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 INDICATORS
Key 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

RATING HISTORY (INCLUDING WITHDRAWAL AND SUSPENSION)
S.No Current Rating (2022) Rating History
Facilities Tenure Amount (Rs.Crs) Rating 2021 2020 2019
Fund Based
1
Term Loan - Out-standing
Cash Credit - Sanctioned
Emergency Credit Line Guarantee Scheme (ECLGS) - Out-standing
Emergency Credit Line Guarantee Scheme (ECLGS) - Out-standing
Long Term
00.03
15.75
01.86
01.41
BWR BB-
(Stable)
NA NA NA
Total 19.05 (Rupees Nineteen Crores and Five lakhs Only)
COMPLEXITY LEVELS OF THE INSTRUMENTS

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
Ajay Knitwears & Fabrics 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 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)
ANNEXURE-II
INSTRUMENT DETAILS

InstrumentIssue DateAmount (Rs.Crs)Coupon RateMaturity DateISIN Particulars
NANANANANANA

ANNEXURE-III
List of entities consolidated

Name of Entity% OwnershipExtent of consolidationRationale for consolidation
NANANANA

Additional information is available at www.brickworkratings.com The ratings above were solicited by,or on behalf of , the issuer, and therefore, Brickwork Ratings has been compensated for the provision of the ratings.
Ratings are not a recommendation or suggestion ,directly or indirectly, to you or any other person, to buy sell, make or hold on any investement,loan or security or to undertake any investement strategy with respect to any investment,loan or security or any issuer.
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.