Leaap International Private Limited

Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 36.00 Crs. of Leaap International Private Limited.

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (18 Jan 2021)	Present
Fund Based	36.00	36.00	Long Term	BWR BBB-/Stable Reaffirmation	BWR BBB - /Stable Reaffirmation
Grand Total	36.00	36.00	(Rupees Thirty Six Crores Only)

#Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank Loan facilities,consolidation or instruments are provided in Annexure

RATING ACTION / OUTLOOK

The ratings of Leaap International Private Limited (or the Company) continues to benefit from the experience of the management in the same line of business for more than three decades and established operational track record, long standing relationship with reputed clients and moderate financial risk profile. However, the ratings are constrained by thin profitability margin, highly competitive nature of industry and susceptibility to economic downturn. BWR believes that the company's 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:

Locational Advantage :
The company is located in Chennai 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.
Management Experience :
The promotors of the company has more than three decades of experience. The promoter is supported by group of senior executives who head various divisions and have been associated with the company for more than a decade. The company continues to benefit from the management’s understanding of the dynamics of the industry and established relationships with customers.
Revenue from Operations :
The company reported total operating income amounting Rs. 354.22 Cr. and Rs. 477.17 Cr. in FY20 and FY21 respectively, registering an increase of 34% in FY21. As per Provisional Financial statements prepared by auditors of the company for the FY22, the company has achieved a revenue of Rs.604.38, indicating an increase by 27% . Further, the company projects a revenue of Rs.640 Crs. for the FY23 .
Liquidity Position :
Current ratio of the company in FY21 is just adequate at 1.08x
Debt Protection Metrics :
Debt Protection metrics are healthy i.e. ISCR and DSCR at 2.79x and 1.80 in FY21. ISCR and DSCR have improved from 2.35x and 1.73x in FY20. Both the ratios are in the healthy range and we expect that the company will be able to meet their interest and debt obligations in the short and medium term. The company's estimated ISCR and DSCR for the FY22 are 4.06x and 2.37x.

Credit Risks:

High Gearing :
For the FY21 the company reported average capital structure with tangible net worth of Rs.19.77 Cr. and total debt of Rs. 42.91 Cr as per audited financial statements, owing to which gearing is high at 2.17x in FY21. Tangible net worth in FY22 as per Provisional financial statements is increased to Rs. 22.43 Cr. and gearing results at 2.36x because of the increase in debts to Rs.52.93 crores.
Thin profit margins :
Profitability margins are thin. The company reports a decline in operating profit margin from 2.58% (FY20) to 1.99% (FY21) . However , Net profit margins have increased from 0.16% (FY20) to 0.32% (FY21) as per audited statements. There is a further decline in Operating profit margin for the FY22 to 1.78% as per provisional financial statements as against an increase in Net profit margin to 0.45% mainly due to profit on sale of assets (Rs.0.10Crs. for FY21 , Rs.0.25 for FY22)
Hike in operational Cost :
The operating expenses at Rs. 345.09 Crs in FY20, accounts to 97.40% of total income (Rs. 354.22 Cr.) which is almost at the same level in FY21 i.e. 98.00% of total income (Rs. 477.17 Cr.), amounting to Rs.467.66 Crs. Major operating expenses (other than services consumed) be Petrol and fuel charges at 15.17Crs. for FY21 as per ABS 2021 , which is going to increase further due to continuous hike in petrol and fuel prices.
Management risk :
The company continues to benefit from the management’s understanding of the dynamics of the industry since inception for many decades. Hence it needs to initiate steps to broad base for better performance in the future.

ANALYTICAL APPROACH - Standalone

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: BWR may revise the ratings upward, if the company’s scale of operations and profitability improve on a sustained basis.

Negative: BWR may revise the ratings downwards, if there is a deterioration in the company's revenue, profitability and liquidity.

LIQUIDITY INDICATORS - Adequate

The liquidity position of the company in FY21 is adequate, marked by net cash accruals of Rs. 5.89 Cr. against a CPLTD (current portion of long term debt) of Rs.1.22 Cr. The cash accruals are projected to be at Rs.7.76Cr. with a CPLTD of Rs.1.55 Cr. in FY22. As per the Provisional Financial Statements, the company is expected to generate an EBITDA of Rs.10.76 Cr. against interest cost of Rs.2.65 Cr. in FY22, which is estimated to be at Rs.14.50 Cr. and Rs. 5.00Cr. respectively in FY23. Current ratio in FY21 stood at 1.08x which is just adequate. ISCR and DSCR in FY22 is expected to remain at 2.79x and 1.80x respectively. The total cash and bank balance as on 31st Mar'21 stood at Rs. 0.56 Cr. as against Rs. 1.07 Cr. in FY20. Cash and Bank balance as reported in Provisional Financial statements for FY22 stood at Rs.0.78 Crs.

ABOUT THE ENTITY

Leaap International Private Limited (LIPL) incorporated on 15th October 1990 (however commenced operations from 1993) is a Chennai-based company which performs the roles of Customs House Agent, Multi Model transport Operators, Freight Forwarders, Inland Container Depot, Transport & Warehousing. LIPL has long experience in providing comprehensive logistics support to its customers including packing, customs brokerage, insurance, route planning and transportation, drawing up logistics solutions, etc. It also owns an ICD at Guntur Container Terminal, Guntur which became operational in 2011-12. LIPL is promoted by Mr.Subramaniam Krishnamurthy, who holds 99% of the shares. Ms.Shaheeda Murthy is the other director.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 20-21 (Audited)	FY 19-20 (Audited)
Operating Revenue	Rs.Crs.	477.17	354.22
EBITDA	Rs.Crs.	9.52	9.13
PAT	Rs.Crs.	1.55	0.56
Tangible Net Worth	Rs.Crs.	19.77	18.23
Total Debt/Tangible Net Worth	Times	2.17	2.60
Current Ratio	Times	1.08	1.06

KEY COVENANTS OF THE FACILITY RATED

N/A

RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)

Facilities	Current Rating (2022)			2021		2020		2019
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	36.00	BWR BBB-/Stable (Reaffirmation)	18Jan2021	BWR BBB-Stable (Reaffirmation)	NA	NA	16May2019	BWR BBB-Stable (Reaffirmation)
Grand Total		36.00	(Rupees Thirty Six Crores Only)

Rating Advisory, as on 28Mar2022
Press Release, as on 28Mar2022
A rating advisory was issued seeking extension of time for publishing the rationale as there was a delay in procurement of documents from the client.

COMPLEXITY LEVELS OF THE INSTRUMENTS - Simple

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
Dharni Sakthi K N. Ratings Analyst dharnisakthi.kn@brickworkratings.com	Varadarajan R Associate Director - Ratings Board : +91 044 24663326 varadarajan.r@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

Leaap International Private Limited

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	State Bank Of India (SBI)	Cash Credit - Sanctioned	36.00	_	36.00
Total			36.00	0.00	36.00
TOTAL (Rupees Thirty Six Crores Only)

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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 11,400 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.

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