Rating Rationale
August 02, 2022 | Mumbai
Anmol India Limited
'CRISIL BBB+/Stable/CRISIL A2' assigned to Bank Debt
 
Rating Action
Total Bank Loan Facilities RatedRs.50 Crore
Long Term RatingCRISIL BBB+/Stable (Assigned)
Short Term RatingCRISIL A2 (Assigned)
1 crore = 10 million
Refer to Annexure for Details of Instruments & Bank Facilities

Detailed Rationale

CRISIL Ratings has assigned its ‘CRISIL BBB+/Stable/CRISIL A2 ratings to the bank facilities of Anmol India Limited (AIL).

 

The rating reflects AIL's established presence in the coal trading industry, Geographical and customer diversification in revenues and healthy debt protection. These strengths are partially offset by Modest, but improving, operating margin and exposure to counterparty risks, volatility in coal prices and changes in regulatory policies.

Key Rating Drivers & Detailed Description

Strengths:

  • Established presence in the coal trading industry: Benefits from the promoter family’s experience of over three decades, their understanding of industry trends, the company’s established market position and customer base, and healthy relations with suppliers and transporters should continue to support the business. Backed by the promoters’ experience the company has tripled its turnover between fiscals 2020 and 2022, from Rs 553 crore to Rs 1058 crore.

 

  • Geographical and customer diversification in revenues: AIL caters to a wide number of clients on a pan India level. The top 10 customers generate revenue of about 30% in fiscal 2022. Diversity in geographic reach and clientele should continue to support the business risk profile. Company has portfolio of more than 200 regular customers (wholesalers and traders) wherein normally 60-70% of imports are already tied up with the customers before company places order for import and approximately 25% of balance is sold before the goods land on ports and is kept for sales to small traders and brick klins. No single customer accounts for more than 3% of revenue, mitigating the client concentration risk.

 

  • Healthy debt protection:  AIL’s debt protection measures have been at comfortable level despite leverage due to moderately healthy profitability. The interest coverage and net cash accrual to total debt (NCATD) ratio are at 4.25 times and 0.08 times for fiscal 2022. AIL debt protection measures are expected to remain at similar level over medium term.

 

Weaknesses:

  • Modest, but improving, operating margin: Operating margin was 2.01% in fiscal 2022 and is estimated at a similar level in the medium term. The coal traded to brick klins renders high profitability to the company in comparison to the other customers. The margin have improved from 1.4% in fiscal 2020 but remains modest owing to the cash discounts offered to its customers. Improvement in the same is expected to remain a key sensitivity factor.

 

  • Exposure to counterparty risks, volatility in coal prices and changes in regulatory policies: Customers are primarily from the steel and power industries where demand is currently subdued, and also includes small players. Some major customers have faced sharp decline in liquidity in recent months. The group may face challenges if receivables exceed usance of letters of credit. Although the transaction size per customer is controlled, exposure to sizeable counterparty risks should persist over the medium term, especially in the prevailing volatile business environment. Furthermore, the business risk profile remains exposed to fluctuations in coal prices and the regulatory policies of the government.

Liquidity: Adequate

Bank limit utilization is low at around 12.41 percent for the past twelve months ended May 2022. Cash accruals are expected to be over Rs 16 crore which are sufficient against term no debt obligation over the medium term. In addition, it will be act as cushion to the liquidity of the company. Current ratio is healthy at 1.49 times on March31, 2022. The promoters are likely to extend support in the form of unsecured loans to meet its working capital requirements and repayment obligations.

Outlook: Stable

CRISIL Ratings believes AIL will continue to benefit over the medium term from its longstanding relationships with principals and experience of the management to mitigate the inherent risk in trading business. 

Rating Sensitivity Factors

Upward factors

  • Improvement in revenue and profitability leading to cash accrual of more than Rs 30 crore per fiscal
  • Leverage below 1.5 times

 

Downward factors

  • Decline in the revenue and profitability leading to cash accruals of less than 10 crores
  • Stretch in working capital cycle and higher leverage leading to deterioration in the financial risk profile

About the Company

AIL was incorporated in 1998. It is engaged in importing and trading in coal and pet coke in domestic market. The company is based in Jalandha and promoted by. Mr. Vijay Goel, Mr. Tilak Raj Aggarwal, Ms. Neelam Rani, Mr. Sahil Aggarwal and Ms. Deepika are the promoters. The company has been listed on NSE.

Key Financial Indicators

As on/for the period ended March 31

 Unit

2022

2021

Operating income

Rs.Crore

1,058.66

693.75

Reported profit after tax

Rs.Crore

15.48

9.88

PAT margins

%

1.46

1.42

Adjusted Debt/Adjusted Networth

Times

2.96

1.19

Interest coverage

Times

3.50

5.16

Any other information: Not applicable

Note on complexity levels of the rated instrument:
CRISIL Ratings' complexity levels are assigned to various types of financial instruments. The CRISIL Ratings' complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL Ratings' complexity levels for instruments that they consider for investment. Users may also call the Customer Service Helpdesk with queries on specific instruments.

Annexure - Details of Instrument(s)

ISIN

Name of instrument

Date of allotment

Coupon

rate (%)

Maturity date

Issue size

(Rs.Crore)

Complexity

Levels

Rating assigned

with outlook

NA

Cash Credit

NA

NA

NA

5

NA

CRISIL BBB+/Stable

NA

Post Shipment Credit

NA

NA

NA

5

NA

CRISIL BBB+/Stable

NA

Letter of Credit

NA

NA

NA

40

NA

CRISIL A2

Annexure - Rating History for last 3 Years
  Current 2022 (History) 2021  2020  2019  Start of 2019
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Fund Based Facilities LT 10.0 CRISIL BBB+/Stable   --   -- 27-08-20 Withdrawn (Issuer Not Cooperating)* 31-08-19 CRISIL BBB-/Stable --
      --   --   -- 19-06-20 CRISIL BB+ /Stable(Issuer Not Cooperating)*   -- --
Non-Fund Based Facilities ST 40.0 CRISIL A2   --   --   --   -- --
All amounts are in Rs.Cr.
* - Issuer did not cooperate; based on best-available information
Annexure - Details of Bank Lenders & Facilities
Facility Amount (Rs.Crore) Name of Lender Rating
Cash Credit 5 Axis Bank Limited CRISIL BBB+/Stable
Letter of Credit 20 Axis Bank Limited CRISIL A2
Letter of Credit 20 HDFC Bank Limited CRISIL A2
Post Shipment Credit 5 HDFC Bank Limited CRISIL BBB+/Stable

This Annexure has been updated on 02-Aug-2022 in line with the lender-wise facility details as on 02-Aug-2022 received from the rated entity.

Criteria Details
Links to related criteria
CRISILs Approach to Financial Ratios
CRISILs Bank Loan Ratings - process, scale and default recognition
Criteria for rating trading companies
CRISILs Criteria for rating short term debt

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