| IA Multi Ventures Private Limited | ||||||
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| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
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| This Rating Rationale is published solely to update the bank-wise facility details as provided by the rated entity; other sections are same as the previous Rating Rationale dated August 03, 2022. |
Detailed Rationale CRISIL Ratings’ ratings on the bank facilities of IA Multi Ventures Private Limited (IAMVPL) continue to reflect the extensive experience of the promoters in the trading industry, the company’s efficient working capital management. These strengths are partially offset by low operating margin on account of the trading business and an average financial risk profile. |
Key Rating Drivers & Detailed Description Strengths: Extensive experience of the promoters The three-decade-long experience of the promoters, their strong understanding of the market dynamics and healthy relationships with suppliers and customers will continue to support the business risk profile. The company acts as a super stockist for Samsung mobiles, Procter & Gamble, Dabur, Godrej Consumer Products Ltd and other various agencies. Hence, the product basket of IAMVPL is diversified, mitigating the risk of obsolescence in case of any new technology coming into the market. This has led to revenue of Rs 396.34 crore in fiscal 2022 despite operations getting impacted in Q1 FY22 amid pandemic. Sales of Rs 106 crore has been booked in Q1 FY23. IAMVPL is planning to launch its website and open a retail store in Srinagar. However, timely commencement and stabilization of new business leading to further growth in revenue will remain a key monitirable.
Efficient working capital management Operations are efficiently managed, as reflected in gross current assets (GCAs) of 56 days the fiscals ended March 31, 2022, driven by receivables of 27 days and inventory of 30 days. Company provides credit period of 20-30 days to most of their customers thereby leading to efficient debtor cycle. Inventory of around 20-30 days is being maintained by company though it is slightly higher in festive season. Working capital cycle is partially supported by creditors of 10-15 days. Prudent management of working capital cycle will remain a key monitorable.
Weaknesses: Low operating margin because of trading business Small initial investment and low complexity of operations have resulted in the existence of innumerable entities, much smaller in size, leading to significant fragmentation and operation margin of 2% over the three fiscals through 2022.
Leveraged capital structure Modest networth and increased dependence on external debt, to support business growth, has resulted in leveraged capital structure with gearing estimated at 4.76 times as of Mar 31, 2022; networth is estimated at around Rs 15.19 crore. Going forward, with steady accretion to reserves along with no capital withdrawals, capital structure is expected to improve, and its significant & ustained improvement will remain a key monitorable. |
Liquidity: Stretched Bank limit utilization averaged 98% over the 12 months through May 2022. Net cash accruals are expected at Rs 4-5 crore per annum, but it will sufficiently cover yearly debt obligation of Rs 2-3 crore over the medium term. Current ratio was low at 0.97 time on March 31, 2022. |
Outlook: Stable IAMVPL will continue to benefit from the promoters’ extensive experience. |
Rating Sensitivity Factors Upward Factors
Downward Factors
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About the Company IAMVPL, incorporated in 2015 and based in Srinagar, is engaged in trading and acts as a super stockist of products for various entities, such as Samsung mobiles, Procter & Gamble and Godrej Consumer Products. The company is owned and managed by Mr Irjan Ahmed Gujju, Mr Arshad Ahmad Gujju and Mr Ali Mohammad Gujju. |
Key Financial Indicators
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Status of noncooperation with previous CRA IAMPL has not cooperated with Brickwork Ratings India Private Limited (BWR), which has classified it as non-cooperative vide release dated 13-July-2021. The reason provided by BWR is non-furnishing of information for monitoring of ratings. |
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)
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| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||||||||||
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This Annexure has been updated on 09-Sep-2022 in line with the lender-wise facility details as on 02-Nov-2021 received from the rated entity.
Criteria Details
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