| JWR Logistics Private Limited | ||||||
| Ratings reaffirmed at 'CRISIL A- / CRISIL A2+ '; outlook revised to 'Stable'; rated amount enhanced for Bank Debt | ||||||
| Rating Action | ||||||
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| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has revised its outlook on the long-term bank facilities of JWR Logistics Pvt Ltd (JWR; a part of the JW group) to ‘Stable’ from ‘Negative’, and reaffirmed the rating at ‘CRISIL A-’; the short-term rating has been reaffirmed at ‘CRISIL A2+’.
The revision in outlook reflects a sustained improvement in JW group’s financial risk profile, marked by improvement in total outside liabilities to adjusted networth (TOLANW) and Debt/EBITDA ratio to 2.1 times and 3 times, respectively, as on March 31, 2020, from 2.88 times and 3.88 times, a year ago. The same is expected to improve further to 1.33 times and 2.52 times, respectively, estimated as on March 31, 2021. The improvement is backed by healthy growth in revenues and sustained strong operating margins, coupled with repayment of term loans. Lower reliance on working capital debt, repayment of term loans and steady accretion to reserves, should continue to support the financial profile in the medium term.
The ratings continue to reflect JW group’s strong business risk profile, backed by its established market position in container freight station (CFS) operations at the Jawaharlal Nehru Port Trust (JNPT), Mumbai, healthy relationships with customers, and strong operating margin. The ratings also factor in the efficient working capital management and above-average financial risk profile, despite its partial weakening. These strengths are partially offset by exposure to intense competition in CFS operations and susceptibility of revenue and profitability to global cargo movements. |
Analytical Approach CRISIL Ratings has combined the business and financial risk profile of JWR with those of JWC Logistics Park Pvt Ltd (JWC), JWL Cold Store Pvt Ltd (JWL), JAC Air Services Pvt Ltd, JAC Ground Handling & Allied Services Pvt Ltd, and LRK Logistics Pvt Ltd. That’s because all the six companies, collectively referred to as the JW group, have a common management, and significant operational and financial linkages.
Unsecured loans have been treated as debt..
Please refer Annexure - Details of Consolidation, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers & Detailed Description Strengths: Extensive experience of the promoter, and established market position in the logistic industry: The three-decade-long experience of the promoter in the logistics business, has helped the group establish a strong market position in the CFS operations and diversify its service offerings to include Container freight station facility, third party logistics and cold storage solutions. Having its own land and equipment and a favourable import-export mix has helped the group improve utilisation of container facilities and service clients on time. These factors, coupled with healthy relationships with major shipping lines and large corporates across India and abroad, have aided growth in revenue (Rs 398 crores in fiscal 2020, from Rs 218.31 crore in fiscal 2017).
Strong operating margins: The JW group follows an asset-heavy model as it owns land and a fleet of trailers. This has helped save on rentals, and is well reflected in the healthy operating margin of over 28% over the four years through fiscal 2020. A favourable export import mix and increasing revenue from the high margin cold storage business should help the strong operating margin sustain over the medium term.
Efficient working capital management: The JW group manages its working capital cycle efficiently. Gross current assets were low at 57 days as on March 31, 2020. Receivable days were at 34 days as on March 31, 2020, as the group deals with reputed customers and receives payments on time. This ensures lower dependence on working capital bank debt.
Above-average financial risk profile: Financial risk profile was strong, marked by a large networth of Rs 176.58 crore, and moderate gearing and TOLANW ratios of 1.95 times and 2.1 times, respectively, as on March 31, 2020. I it expected to improve over the medium term, aided by steady accretion to reserves and repayment of loans. Debt protection metrics are adequate with interest coverage and net cash accrual to adjusted debt ratios at 4.21 times and 0.24 time, respectively, in fiscal 2020, and expected to be at similar levels in fiscal 2021.
Weaknesses: Exposure to intense competition in CFS operations at JNPT: With operations restricted within JNPT, the group faces intense competition from large number of CFS operators at JNPT itself and from those operating at other ports. Established players are present at multiple ports, and are either owned by or affiliated to dedicated shipping lines. Growing number of CFS operators leads to build-up of surplus facilities and intensifies price-based competition.
Susceptibility of revenue and profitability to cargo movements: The CFS business remains susceptible to risks arising from variations in shipping rates, trade volume, export-import trade, and customs policies. As of now, JNPT commands a major share in the overall Indian port sector. However, increasing competition from newer ports at Mundra and Hazira, may adversely impact JNPT’s cargo volume, and weaken revenue growth for JW group. |
Liquidity: Strong JW Group enjoys strong liquidity driven by expected cash accruals of over Rs.80 crores per annum in fiscal 2021 and fiscal 2022 against yearly debt repayments of Rs. 42 crores and Rs. 38 crores respectively. JW Group‘s fund based limits have been utilized at 40% on an average over the 12 months through September 2020. Cash and Bank balances as on March 31, 2020 were at Rs.7.44 Crores. CRISIL Ratings expects internal accruals, cash & cash equivalents and unutilized bank lines to be sufficient to meet its repayment obligations and incremental working capital requirements. |
Outlook: Stable CRISIL Ratings believes the JW group will continue to benefit from a strong business risk profile, backed by its established market position at JNPT.
Rating sensitivity factors Upward factors
Downward factors
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About the Group JWL, incorporated in 2012 at JNPT, offers cold storage solutions for perishable commodities and pharmaceutical products JWC, incorporated in 2004, operates a CFS at JNPT, specialising in full container load cargo.
JWR, incorporated in 2010, operates a CFS at JNPT, specialising in less than container load cargo.
JAC Air Services Pvt Ltd, incorporated in 1986, at Panvel,I is engaged in the business of cargo handling and provides freight forwarding and logistics related services.
JAC Ground Handling & Allied Services Pvt Ltd, incorporated in 2007, is engaged in providing manpower.
LRK Logistics Pvt Ltd, incorporated in 2018, there is no business in the company.
The Mumbai based group is promoted and managed by Mr Lalit Jobanputra along with his son, Mr Raj Jobanputra, and his daughter, Ms Kruti Jobanputra. |
Key Financial Indicators (Consolidated)
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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 – List of entities consolidated
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| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of various bank facilities | |||
| Facility | Amount (Rs.Crore) | Name of lender | Rating |
| Overdraft Facility | 3 | Axis Bank Limited | CRISIL A2+ |
| Term Loan | 58.18 | Axis Finance Limited | CRISIL A-/Stable |
| Term Loan | 18.31 | Axis Finance Limited | CRISIL A-/Stable |
| Term Loan | 35 | IndusInd Bank Limited | CRISIL A-/Stable |
| Total | 114.49 | - | - |
This Annexure has been updated on <11 Aug 2021> in line with the updated lender-wise facility details as on <03 Aug 2021> received from the rated entity.’
Criteria Details
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