| Ideal Movers Private Limited | ||||||
| Ratings migrated to 'CRISIL B-/Stable/CRISIL A4' | ||||||
| Rating Action | ||||||
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| ^ *Issuer did not cooperate; based on best-available information& *Issuer did not cooperate; based on best-available information | ||||||
| Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||||
| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale Due to inadequate information and in line with the Securities and Exchange Board of India guidelines, CRISIL Ratings had migrated its ratings on the bank facilities of Ideal Movers Private Limited (IMPL) to 'CRISIL B/Stable/CRISIL A4 Issuer Not Cooperating'. However, the company’s management has started sharing the requisite information for a comprehensive review of the rating. Consequently, CRISIL Ratings is migrating the ratings to 'CRISIL B-/Stable/CRISIL A4'.
The rating reflects deterioration in the financial risk profile and liquidity profile of IMPL. The liquidity will remain under pressure over the medium term on account of the group’s large term loan obligations and stretch in its working capital cycle. Continuous stretch in the receivables period has resulted in an increase in IMPL’s gross current assets estimated at 557 days as on March 31, 2022 (468 days a year earlier). The downgrade also reflects deterioration in IMPL’s business risk profile; operating income declined to Rs. 136.14 crore in fiscal 2022 from Rs. 178.57 crore in the previous year. The management’s commitment of retaining unsecured loans extended to the group and continued timely funding support has been a key consideration in the present rating exercise.
The ratings continue reflect the company’s moderate business risk profile and established relations with customers. These strengths are partially offset by customer concentration risk in revenue, large working capital requirement, and aggressive capital structure. |
Analytical Approach The unsecured loan from promoters of Rs. 166 crore as on 31.03.2022 has been treated as NDNE. |
Key Rating Drivers & Detailed Description Weaknesses: Deteriorating Financial Risk Profile-The financial Risk Profile has been deteriorating over the last few years due to fall in revenues leading to losses and negative accruals. The adjusted networth was modest estimated at Rs.24.37 crore as on 31st March,2022 (Rs. 36.93 crore a year earlier), weak debt protection metrics with interest coverage at 0.96 times and NCA/AD of 0.01 for fiscal 2022. Moreover, the adjusted gearing remains high estimated at 6.99 times in fiscal 2022. The financial risk profile is expected to weaken even further over the medium term in tandem with fall in revenues.
Large working capital requirement-Working capital requirement is large due to the high credit extended to large clients, which also delay payments. Gross current assets were around 557 days as on March 31, 2022, driven by debtors of about 513 days.
Strengths: Moderate business risk profile-The group has implemented an asset-heavy business model by increasing the proportion of owned vehicles against very few hired ones. Additionally, diversification into specialised operations, such as car-carrying, crane rental, and project-related logistics, has supported operating margin. Car-carrying operations require customised vehicles, which are difficult to hire. A large owned asset base provides better efficiencies, reduces lease costs, and enhances profitability.
Established relations with customers-The management’s experience of around 18 years in the logistics services industry has helped establish strong relations with customers. Clientele includes players such as the Essar group, Tata Steel Ltd, and JSW Steel Ltd, Welspun in the steel transportation division, Tata Motors Ltd, Hyundai Motor India Ltd, and Mahindra & Mahindra Ltd in car-carrying services segment and L&T in the crane rental division. |
Liquidity: Poor Bank limit utilization is high at 89.3 percent for the past twelve months ended March 2022. Cash accrual are expected to be insufficient against term debt obligation of Rs 12.21 crore over the medium term. However, the company has support from promoters in form of unsecured loans of Rs. 165 crore as on 31st March,2022 and has the ability to raise short term refinancing against its fleet of vehicles. |
Rating Sensitivity Factors
Downward Factors
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About the Company Kolkata-based Ideal Movers group is headed by Mr Srawan Kumar Himatsingka (chairman) and his son, Mr Nakul Himatsingka. It was set up in 1995, and commenced operations in 2000 with its transportation business. It mainly transports steel and related materials. |
Key Financial Indicators
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Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
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| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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* - Issuer did not cooperate; based on best-available information
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| Annexure - Details of Bank Lenders & Facilities | |||
| Facility | Amount (Rs.Crore) | Name of Lender | Rating |
| Bank Guarantee | 1.5 | Axis Bank Limited | CRISIL A4 |
| Bank Guarantee | 5.75 | Bank of India | CRISIL A4 |
| Cash Credit | 13 | Axis Bank Limited | CRISIL B-/Stable |
| Cash Credit | 101 | Bank of India | CRISIL B-/Stable |
| Proposed Fund-Based Bank Limits | 175.65 | Not Applicable | CRISIL B-/Stable |
| Term Loan | 15.1 | IndusInd Bank Limited | CRISIL B-/Stable |
This Annexure has been updated on 05-Apr-2023 in line with the lender-wise facility details as on 04-Apr-2023 received from the rated entity.
Criteria Details
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