Brickwork Ratings revises the ratings for the Bank Loan Facilities of Rs. 9.88 Crs. of Benedetto Kitchens Pvt Ltd
Particulars| Facilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||
|---|---|---|---|---|---|
| Previous | Present | Previous (27 May 2020) |
Present | ||
| Fund Based | 6.12 | 5.63 | Long Term |
BWR C ISSUER NOT COOPERATING
|
BWR B -
/Stable Upgrade |
| Non Fund Based | 4.75 | 4.25 | Short Term |
BWR A4 ISSUER NOT COOPERATING
|
BWR A4
Reaffirmation |
| Grand Total | 10.87 | 9.88 | (Rupees Nine Crores and Eighty Eight lakhs Only) | ||
The rating has factored in the experience of the promoters in the modular kitchen industry, current order book position of the Company and its diversified customer and suppliers profile. The rating has also factored the well established brand name of Benedetto Kitchens in the market. The rating, however, has factored the small scale of operations of the Company, weak financial risk profile, elongated working capital cycle and stretched liquidity.
BWR believe that the Company w8ll maintain a stable outlook owing to the extensive experience of the promoters in the business. The outlook may be revised to 'Positive' if the Company is able to improve on its overall financial risk profile or scale up its operations with improvement in profit margins. The outlook may be revised to 'Negative' if revenue scale of the Company declines further or there is deterioration in the overall gearing of the Company.
KEY RATING DRIVERSCredit Strengths:
The promoters of the Company has around two decades of experience in the industry.
The Company sources its raw materials from various sources such as Mumbai and Bangalore, and its customers are located in Bangalore, Gurgaon and Mohali. It has 4 showrooms for retail sales in Karnataka.
The Company has a current order book position of Rs. 16.53 Cr to be completed by 1st quarter of FY22. As of Jan 2021, it has completed orders worth of Rs. 14.97 Cr, thereby providing moderate revenue visibility.
Credit Risks:
The operating income of the Company has reduced from Rs. 24.44 Cr in FY19 to Rs. 8.04 Cr in FY20 as it has stopped real estate project based sale during FY20 business operations. The Company has reported of achieving a revenue of Rs. 7.48 Cr (realized amount of completed portion of work order) as of Feb 2021.
Small scale of operations of the Company and its tender based nature of operations has restricted the pricing flexibility and thereby the profit margins. Profitability of the Company stood low with an operating profit of Rs. 0.33 Cr and net loss of Rs. 0.87 Cr in FY20.
Net losses during FY20 business operations has resulted in the negative cash accruals to the total debt. Thereby the debt protection metrics stood weak with an ISCR of 0.25 times and DSCFR of 0.24 times in FY20. Also, net worth stood reduced from Rs 5.86 Cr as on 31 March 2019 to Rs. 4.99 Cr as on 31 March 2020. Debt equity stood moderate at 1.42 times in FY20.
High receivable position on a reduced revenue scale has furhter deteriorated the cash conversion cycle of the Company. The cash conversion cycle of around a five months in FY19 has increased to around a year in FY20. The company has reported of recovering 60% of its receivables as of Feb 2021.
Positive: The rating may be positively revised if there is substantial improvement in revenue scale and profit margins of the Company resulting in improvement of its cash accruals and thereby its liquidity.
Negative: The rating would be negatively revised if there is further deterioration in its overall financials risk profile.
LIQUIDITY INDICATORS - Stretched
Working capital utilization is high at 100% at present. With reduced operating revenue and net loss in FY20, the cash accruals of the Company stood negative as of 31 March 2020. Thereby, overall debt protection metrics stood weak. Elongated cash conversion cycle has stressed the working capital requirement of the Company. The Company has availed the moratorium as part of the regulatory package announced by RBI. Current ratio stood healthy at 5.19 times in FY20.
ABOUT THE ENTITYBenedetto Kitchens Pvt Ltd, incorporated in 2009, is engaged in manufacturing and installation of Modular Kitchens, Wardrobes and Living Room Furniture for residential properties. The Company has two segments - Retail (sold directly to end users) and Project Based (sold to real estate contractors/builders). It orders, transports and installs the kitchens in the properties of real estate companies, which are then sold to end consumers. Mr. Ambadas V Kamurthi and Mrs. Geetha Lakshmi A Kamurthi are the directors of the Company. Mr. Ambadas V Kamurthi has been in the industry for 15 years and has extensive prior experience in manufacturing furniture with panel board and sheet metal base technology.
| Standalone Financial Indicators (in ₹ crore) | Units | FY 19-20 (A) | FY 18-19 (A) | |
|---|---|---|---|---|
| Operating Revenue | Rs.Crs. | 8.04 | 24.44 | |
| EBITDA | Rs.Crs. | 0.26 | 2.83 | |
| PAT | Rs.Crs. | -0.87 | 1.03 | |
| Tangible Net Worth | Rs.Crs. | 4.99 | 5.86 | |
| Total Debt/Tangible Net Worth | Times | 1.42 | 1.27 | |
| Current Ratio | Times | 5.19 | 2.35 | |
|
* A:Audited UA:Unaudited P:Provisional PROJ:Projected
|
||||
|
Note: These are latest available financial results. All ratios as per BWR's calculations; Amount in ₹ crore
|
||||
| Facilities | Current Rating (2021) | 2020 | 2019 | 2018 | |||||
|---|---|---|---|---|---|---|---|---|---|
| Type | Tenure | Amount (Rs.Crs.) |
Rating | Date | Rating | Date | Rating | Date | Rating |
| Fund Based | LT | 5.63 |
BWR B-/Stable
|
27May2020 |
BWR C ISSUER NOT COOPERATING
|
NA |
NA
|
30Oct2018 |
BWR B-/Stable
|
| Non Fund Based | ST | 4.25 |
BWR A4
|
27May2020 |
BWR A4 ISSUER NOT COOPERATING
|
NA |
NA
|
30Oct2018 |
BWR A4
|
| Grand Total | 9.88 | (Rupees Nine Crores and Eighty Eight 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.
| Analytical Contacts | |
|---|---|
|
Rajaram Gouda Senior Rating Analyst Board : +91 80 4040 9940 rajaram.g@brickworkratings.com |
Nagaraj K Associate Director - Ratings Board : +91 80 4040 9940 nagaraj.ks@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 | Term LoanOut-standing | 0.13 | _ | 0.13 | ||
| 2 | Overdraft against Book Debts (ODBD)Sanctioned | 5.50 | _ | 5.50 | ||
| 3 | Bank GuaranteeSanctioned | _ | 4.25 | 4.25 | ||
| Total | 5.63 | 4.25 | 9.88 | |||
| TOTAL (Rupees Nine Crores and Eighty Eight lakhs Only) | ||||||
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.