RATING RATIONALE
06Oct2021
Praveedh Decor Pvt. Ltd.
Brickwork Ratings upgrades the long term ratings and reaffirms the short term ratings for the Bank Loan Facilities of Rs. 15.44 Crs. of Praveedh Decor Pvt. Ltd.
Particulars| Facilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||
|---|---|---|---|---|---|
| Previous | Present | Previous (14 Mar 2020) |
Present | ||
| Fund Based | 5.75 | 15.44 | Long Term |
BWR B-(Stable) Issuer Not Cooperating
Downgraded |
BWR BB -
/Stable Upgrade |
| Non Fund Based | 1.00 | 0.00 | Short Term |
BWR A4 Issuer Not Cooperating
Reaffirmed |
BWR A4
Reaffirmation |
| (0.00) | (1.75) | ||||
| (0.00) | (5.00) | ||||
| (0.00) | (3.75) | ||||
| (0.00) | (2.00) | ||||
| (0.00) | (1.75) | ||||
| Grand Total | 6.75 | 15.44 | (Rupees Fifteen Crores and Forty Four lakhs Only) | ||
**Details of Bank Loan facilities,consolidation or instruments are provided in Annexure
RATING ACTION / OUTLOOK
BWR has upgraded the long term rating and reaffirmed the short term rating of the bank facilities sanctioned to Praveedh Decor Pvt Ltd at BWR BB-(Stable) Upgrade/A4 Reaffirmed. The rating upgradation, inter-alia, factors like experience management, moderate gearing ratio, strong debt protection metrics, diversified customer concentration, moderate profitability and expansion plans. However, the rating is constrained by the risk of moderate net worth, along with the impact of the COVID 19 pandemic on the industry.
BWR has essentially relied upon the audited financial statements of Praveedh Decor Pvt Ltd up to FY20, provisional financials of FY21, and projected financial statements of FY22, publicly available information and information/clarifications provided by the entity’s management.
BWR believes that the Praveedh Decor 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
Going forward the ability of the company to improve its risk of moderate net worth, along with the impact of the COVID 19 pandemic would be its key rating sensitivity.
KEY RATING DRIVERSCredit Strengths:
-
Experience Management :
The Company was incorporated in 2006, however the business started in 2012. It is currently managed by Mr. Pankaj Chandak and Mrs Navita Chandak. The company has strong support from management as they bring along a cumulative 23 years of experience in this business. The company is in existence for 9 years and has seen a complete business cycles. The company has extensive experience of promoters along with healthy relationship with customer and supplier which it has built over the years.
-
Moderate Gearing ratio and Strong Debt Protection :
The TD/TNW and TOL/TNW is moderate and stands at 0.46x and 09.7x respectively in FY 21 as compared to 1.41x and 1.45x in FY 20 respectively. The debt protection metrics of the company are strong with ISCR and DSCR at 5.54x and 5.80x repectively in FY 21 indicating that the company is able to service its debt obligations timely.
-
Diversified Customer concentration :
Company has Pan India diversified geographical concentration catering to markets of Delhi, Rajasthan, Gujarat, Maharashtra, Seemandhra, Telangana and Kerala etc.
-
Scale of Operations :
The operating income has marginally declined to Rs 21.34 crs in FY 21 as compared to Rs 25.96 crs in FY 20. However the company has achieved sales for Rs 11.34 Crs from April 2021 to August 2021 and this trend would help them in achieving the sales of Rs 27.60 crs in FY 22 as per projections.
-
Moderate Profitability :
The NPM of the company has been increasing on Y-O-Y basis and is currently standing in 15.21 % in FY 21 as compared to 14.47% in FY 20. The OPM of the company is moderate and stands at 15.24% in FY 21.
-
Expansion Plans :
The company has tied up with a modular furniture manufacturer to help them provide a complete customized furniture solution. This partnership will help the company target projects which require complete ready solution instead of just raw materials. Also the company has developed a truly innovative and unique product for industry - which is the first of its kind in the world and they have applied for a patent for this product. This new product will enable them to enter the retail segment of furniture industry - a completely new segment, which will provide a good thrust to our growth trajectory. They has also purchased new land for setting up of a state of the art facility
-
Moderate Net Worth :
The company has a moderate tangible net worth standing at Rs 9.57 Crs in FY 21. Despite the company being in existence for 9 years. However the Tangible Net Worth is on an increasing trend and has increased to Rs 9.57 crs in FY 21 as compared to Rs 7.48 crs in FY 20
-
Impact of COVID 19 :
Covid 19 has affected the sales in 20-21. Sales in 19-20 was 25.43 crs whereas sales in 20-21 is 21.33 crs. Sales have gone down whereas the cost of the raw material has gone up because of shortage in supply of raw material and increased freight cost.
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 entity to accelerate its scale of operations, increase its profit margins, compliance of bank's sanction terms, efficiently manage its working capital and cash flows for timely servicing of interest/debt obligations and strengthening of overall financial risk profile shall be the key rating sensitivities over short to medium term.
Positive: The rating outlook may be revised to positive or rating may be upgraded if the company is able to increase its growth and profit margins. Any additional infusion of partner’s capital would help to improve its capital structure of the company.
Negative: The rating outlook may be revised to negative or rating may be downgraded if the company achieves lower revenue and profit margins than projected.
LIQUIDITY INDICATORS - Adequate
The cash and cash equivalents of Praveedh Decor Pvt. Ltd. stands at Rs 6.21 crs in FY20. The current ratio of the company stands at 1.94x in FY20.
ABOUT THE ENTITYEstablished in 2006, Praveedh Decor Pvt.Ltd (PDPL) is engaged in manufacturing of wood based furniture panels which mainly includes pre laminated panels used for furniture.PDPL has installed capacity of 6000 boards per month and has well equipped plant located in Vapi. Ms Navita Chandak is the Wholetime Director of the company and Mr. Pankaj Liladhar Chandak is the Managing Director of the company.
Praveedh Décor Pvt Ltd is India’s leading premium quality prelaminated panel manufacturer. Since 2012, they have been leading from the front in the Indian panel manufacturing industry. They feel proud to be recognized their peers, customers and suppliers as the best manufacturer of high gloss scratch proof acrylic panels, PET/PP/PVC laminated panels.
Introduced in 2020, their Zooper Ultramatt laminates has taken the Indian furniture industry by storm. They are also the distributors of Kronodesign products from Kronospan for India.In short – a one stop solution for all your panel needs.
They believe that the difference between an ordinary and extraordinary is that little ‘extra’ because they are passionate about their panels!
Some key milestones in their journey
1st company to introduce flat lamination technology in India
1st company to introduce scratch proof acrylic panels in India
1st company to introduce ABS backer for acrylic panels
60,000 square feet of state of the art flat lamination and lamination facility in India
Pan India sales and distribution network
The company has availed term loan of Rs 5 crs for construction of factory in Vapi. The term loan is not yet disbursed. The company has also tied up with an European company for being the sole distributors of panels. Also the company is planning to buy new machines as part of their expansion.
KEY FINANCIAL INDICATORS (Standalone)| Key Parameters | Units |
FY 19-20 (Audited) |
FY 18-19 (Audited) |
|---|---|---|---|
| Operating Revenue | Rs.Crs. | 25.96 | 19.52 |
| EBITDA | Rs.Crs. | 5.17 | 3.07 |
| PAT | Rs.Crs. | 3.76 | 1.88 |
| Tangible Net Worth | Rs.Crs. | 7.48 | 3.73 |
| Total Debt/Tangible Net Worth | Times | 0.46 | 1.14 |
| Current Ratio | Times | 1.94 | 1.69 |
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 | 15.44 |
BWR BB-/Stable
(Upgrade) |
14Mar2020 |
BWR B-(Stable) Issuer Not Cooperating
(Downgraded ) |
NA |
NA
|
18Dec2018 |
BWR B+(Stable)
(Assigned ) |
| Non Fund Based | ST | NA |
NA
|
14Mar2020 |
BWR A4 Issuer Not Cooperating
(Reaffirmed ) |
NA |
NA
|
18Dec2018 |
BWR A4
(Assigned ) |
| NFB SubLimit | ST | (1.75) |
BWR A4
(Reaffirmation) |
NA |
NA
|
NA |
NA
|
NA |
NA
|
| (5.00) |
BWR A4
(Reaffirmation) |
NA |
NA
|
NA |
NA
|
NA |
NA
|
||
| (3.75) |
BWR A4
(Reaffirmation) |
NA |
NA
|
NA |
NA
|
NA |
NA
|
||
| (2.00) |
BWR A4
(Reaffirmation) |
NA |
NA
|
NA |
NA
|
NA |
NA
|
||
| (1.75) |
BWR A4
(Reaffirmation) |
NA |
NA
|
NA |
NA
|
NA |
NA
|
||
| Grand Total | 15.44 | (Rupees Fifteen Crores and Forty Four 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 Criteria| Analytical Contacts | |
|---|---|
|
Mrigank Tripathi Ratings Analyst mrigank.t@brickworkratings.com |
Sushil Kumar Chitkara Director - Ratings Board : +91 22 2831 1426, +91 22 2831 1439 sushilkumar.c@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 | Kotak Mahindra Bank | Cash CreditSanctioned | 6.75 | _ | 6.75 | |
| Sub-Limit (Bank Guarantee) Sanctioned | (2.00) | |||||
| Sub-Limit (Counter Bank Guarantee) Sanctioned | (1.75) | |||||
| Sub-Limit (Letter of Credit ) Sanctioned | (1.75) | |||||
| Sub-Limit (Letter of Credit ) Sanctioned | (5.00) | |||||
| Sub-Limit (SBLC) Sanctioned | (3.75) | |||||
| 2 | Kotak Mahindra Bank | Bill Discounted (BD)Sanctioned | 3.00 | _ | 3.00 | |
| 3 | Kotak Mahindra Bank | Term LoanSanctioned | 5.00 | _ | 5.00 | |
| 4 | Kotak Mahindra Bank | Term LoanSanctioned | 0.36 | _ | 0.36 | |
| 5 | Kotak Mahindra Bank | Working Capital Term LoanSanctioned | 0.33 | _ | 0.33 | |
| 6 | Kotak Mahindra Bank | Letter of CreditSanctioned | _ | _ | 0.00 | |
| Total | 15.44 | 0.00 | 15.44 | |||
| TOTAL (Rupees Fifteen Crores and Forty Four lakhs Only) | ||||||
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