Brickwork Ratings reaffirms/revises the ratings for the Bank Loan Facilities of Rs. 10.28 Crs. of Kay Kay Scaffolding Pvt Ltd
Particulars| Facilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||
|---|---|---|---|---|---|
| Previous | Present | Previous (30 Jun 2020) |
Present | ||
| Fund Based | 3.51 | 4.28 | Long Term |
BWR B+/Stable
|
BWR B +
/Stable Reaffirmation |
| 1.00 | 1.00 | Short Term |
BWR A4
|
BWR A4
Reaffirmation |
|
| Non Fund Based | 5.00 | 5.00 | Short Term |
BWR A4
|
BWR A4
Reaffirmation |
| Grand Total | 9.51 | 10.28 | (Rupees Ten Crores and Twenty Eight lakhs Only) | ||
BWR has essentially relied on Audited financials upto FY19-20, provisional financial for FY20-21, publicly available information and information & clarifications provided by management. The rating draws comfort from experienced partners with long standing established relationships with clients. However, the rating is constrained by thin profit margins, modest scale of operation and below average financial risk profile. BWR believes that Kay Kay Scaffolding Pvt Ltd (KKSPL) business risk profile will be maintained over the medium term. The 'Stable' outlook indicates a low likelihood of rating change over the medium term
KEY RATING DRIVERSCredit Strengths:
The promoters have more than three decades of experience in the manufacturing of products like scaffolding, column shuttering, span, clamps etc. Reliance, Adani, Welspun are some of the renowned names of KKSPL client base.
The company/Factory is located in Valsad cluster and thus has a competitive advantage in terms of skilled labor, logistics, production knowledge and vendors making the company more efficient and cost effective. The upcoming Mumbai-Ahmedabad bullet train project is started near the company factory outlet.
Credit Risks:
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
Financial risk profile of the company is below average with gearing of 2.63 times and net worth of Rs. 3.58 crs in FY19-20. Modest debt protection metrics with DSCR of 1.43 times and ISCR of 1.21 times in FY19. The revenue for FY19 remained modest at Rs. 36.28 Crs.
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
Positive:
1) Substantial and sustainable growth in revenue with stable profitability and higher net cash accrual.
2) Improvement in financial risk profile and better management of liquidity.
Negative:
1) Fall in revenue and deterioration in profit margins with decline in cash accruals.
2) Stretch in the working capital cycle requirements
Net cash accrual to total debt remained low at 7% in Fy19-20. To comfort the liquidity position timely infusing of Covid loan of outstanding amount Rs 82.99 Lakhs has been taken from bank. Current ratio 0.98 times in FY19-20.
ABOUT THE ENTITYKay Kay Scaffolding Pvt Ltd (KKSPL) was incorporated in 2004 as a private limited company by Mr. Kinnar Bhandutia, Mr. Biren Champaneri, Mr. Kantilal Champaneri and Ms. Kirti Kinnar Bhandutia. The Company is engaged in manufacturing of scaffold products, shuttering material and crash barrier. The Company has a manufacturing facility at Valsad, Gujarat with an installed capacity of 8000 Metric Tons Per Annum.
Initially Mr. Kinnar Bhandutia and Mr. Kantilal (relative of director) had started a partnership firm named Kay Kay equipments in 1984 which was subsequently closed down in 2004.
| Standalone Financial Indicators (in ₹ crore) | Units | FY 19-20 (A) | FY 18-19 (A) | |
|---|---|---|---|---|
| Operating Revenue | Rs.Crs. | 31.07 | 24.69 | |
| EBITDA | Rs.Crs. | 1.75 | 1.67 | |
| PAT | Rs.Crs. | 0.38 | 0.08 | |
| Tangible Net Worth | Rs.Crs. | 3.58 | 3.20 | |
| Total Debt/Tangible Net Worth | Times | 2.63 | 2.72 | |
| Current Ratio | Times | 0.98 | 0.98 | |
|
* A:Audited UA:Unaudited P:Provisional PROJ:Projected
|
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|
Note: These are latest available financial results. All ratios as per BWR's calculations; Amount in ₹ crore
|
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NA
NA
RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)| Facilities | Current Rating (2021) | 2020 | 2019 | 2018 | |||||
|---|---|---|---|---|---|---|---|---|---|
| Type | Tenure | Amount (Rs.Crs.) |
Rating | Date | Rating | Date | Rating | Date | Rating |
| Fund Based | LT | 4.28 |
BWR B+/Stable
(Reaffirmation) |
30Jun2020 |
BWR B+Stable
() |
08Mar2019 |
BWR B+Stable
() |
23Apr2018 |
BWR B+Stable
() |
| Fund Based | ST | 1.00 |
BWR A4
(Reaffirmation) |
30Jun2020 |
BWR A4
() |
08Mar2019 |
BWR A4
() |
23Apr2018 |
BWR A4
() |
| Non Fund Based | LT | NA |
NA
|
30Jun2020 |
BWR B+Stable
() |
08Mar2019 |
BWR B+Stable
() |
23Apr2018 |
BWR B+Stable
() |
| Non Fund Based | ST | 5.00 |
BWR A4
(Reaffirmation) |
30Jun2020 |
BWR A4
() |
08Mar2019 |
BWR A4
() |
23Apr2018 |
BWR A4
() |
| Grand Total | 10.28 | (Rupees Ten Crores and Twenty 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 | |
|---|---|
|
Tripti Sharma Ratings Analyst tripti.s@brickworkratings.com |
Dileep Narayan Singh Director dileep.s@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 | Bank of Baroda | Cash CreditSanctioned | 3.36 | _ | 3.36 | |
| 2 | Bank of Baroda | Term LoanOut-standing | 0.92 | _ | 0.92 | |
| 3 | Bank of Baroda | Bill Discounted (BD)Sanctioned | _ | 1.00 | 1.00 | |
| 4 | Bank of Baroda | Letter of CreditSanctioned | _ | 5.00 | 5.00 | |
| Total | 4.28 | 6.00 | 10.28 | |||
| TOTAL (Rupees Ten Crores and Twenty Eight lakhs Only) | ||||||
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