CRISIL has downgraded its ratings on the bank facilities of Atlas Logistics Pvt Ltd (Atlas Logistics) to ‘BB+/Negative/P4+’ from ‘BBB-/Negative/P3’. The downgrade reflects the constrained business performance during 2008-09 (refers to financial year, April 1 to March 31), and in the first half of 2009-10, because of slowdown in off-take following contraction in the export orders of the company’s customers. The downgrade also reflects Atlas Logistics’ stretched liquidity because of delay in payments by debtors.

The ratings reflect Atlas Logistics’ moderate financial risk profile marked by limited financial flexibility, and exposure to risks relating to the fragmented nature of, and intense competition in, the logistics industry. These rating strengths are partially offset by the benefits that Atlas Logistics derives from its promoters’ experience in the logistics industry, and the company’s healthy operational efficiency supported by a diversified geographical presence.

Outlook: Negative
CRISIL believes that Atlas Logistics might experience further liquidity pressures over the near term due to delays in payments by debtors, resulting in increased working capital requirements. The rating could be downgraded if the company’s working capital cycle weakens further, or if the company continues to witness revenue de-growth. Conversely, the outlook may be revised to ‘Stable’ if there is an improvement in the company’s working capital cycle, or if there is a significant strengthening of its capital structure.

About the Company
Atlas Logistics, incorporated in 1999 by Mr. Y M Sachdeva and Mr. Venkatesh Rao, provides logistics solutions, including freight forwarding and customs clearance. The company also provides warehousing services. It has 26 offices across India, and ten offices overseas. Of the promoters, the Sachdeva family are financial investors with the day to day management being handled by Mr. Venkatesh Rao.

Atlas Logistics reported a profit after tax (PAT) of Rs.24.3 million on net sales of Rs.2323 million for 2008-09, against a PAT of Rs.59.5 million on net sales of Rs.2065 million for 2007-08.