| JWR Logistics Private Limited | ||||||
| Rating outlook revised to 'Positive'; Ratings reaffirmed; rated amount enhanced for Bank Debt | ||||||
| Rating Action | ||||||
| ||||||
| 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 Private Limited (JWR; a part of the JW group) to ‘Positive’ from ‘Stable’, while reaffirming the long-term rating at ‘CRISIL A-'; the short-term rating has been reaffirmed at ‘CRISIL A2+’.
The outlook revision reflects expected improvement in JW group’s business and financial risk profile, backed by higher accretion to reserves. Revenues have grown year-on-year and is expected to grow further in fiscal 2022, on account of capacity expansion, healthy demand and moderate revision in rates, while sustaining operating profitability of around 30%. This coupled with limited dependence on debt for working capital, repayment of existing debt and no large debt funded capital expenditure, has improved capital structure over the past two years, and is expected to further improve in near term. Hence, sustenance of the revenue growth and debt to earning margins will remain key rating sensitivity factor. Liquidity continues to be adequate with healthy accruals against repayment obligations, unutilized bank lines and cash and bank balances.
The rating continues to reflect the 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 rating also factors in the company’s efficient working capital cycle and strong financial risk profile. 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
Unsecured loans have been treated as debt.
Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers & Detailed Description
The promoters have experience of more than three decades in the logistics business, which has helped the group establish a strong market position in CFS operations and diversify its service offerings to include container freight station facility, third-party logistics and cold storage solutions. . These factors, coupled with healthy relationships with major shipping lines and large corporates across India and abroad, have aided growth in revenue (Rs 484 crore in fiscal 2021, from Rs 218.31 crore in fiscal 2017).
JW group follows an asset-heavy model as it owns land and a fleet of trailers. This has helped the group save on rentals and is well reflected in healthy operating margin of over 28% over the four fiscals through 2021 and is estimated to be over 30% for the next three financial years. 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.
JW group's working capital cycle remained efficient, with gross current assets of 62-75 days over the past three fiscals. Debtors have remained in the range of 35-45 days over the past four fiscals ended March 31, 2021, as the group deals with reputed customers from which payments are made on timely basis. This leads to low dependence on bank lines to fund working capital requirements.
The financial risk profile is strong, as indicated by large networth of Rs 253 crore and comfortable gearing and total outside liabilities to adjusted networth ratio of 1.18 times and 1.32 times, respectively, as on March 31, 2021, which is estimated to be 1time and 1.2 time, respectively, as on March 31, 2022. It is expected to improve over the medium term, aided by steady accretion to reserves and repayment of loans. The debt protection metrics are adequate with interest coverage and net cash accrual to adjusted debt ratios of 4.50 times and 0.35 time, respectively, in fiscal 2021, and expected to improve in fiscal 2022 with higher operating profitability.
Weaknesses:
The group's operations are limited to JNPT and it faces intense competition from large CFS operators at JNPT port (about 33 operators) and from those operating at other ports. The group's larger peers have presence at multiple ports and are either owned by or have affiliation with dedicated shipping lines. The increasing number of CFS operators leads to build-up of surplus CFS facility and has intensified price-based competition. Thus, intense competition may constrain the group's scalability and pricing power.
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 the JW group. |
Liquidity: Strong JW Group has strong liquidity driven by expected cash accruals of more than Rs. 101 crore per annum in fiscal 2023 and fiscal 2024, against long term repayment obligations around Rs.39 crore and Rs. 44 crore, respectively. JW Group’s fund-based limits (Cash Credit and Overdraft) of Rs. 18 crore was 20% utilized on an average (over the 12 months ended January 2022). The group has capex plans of around Rs. 100 crore per annum, partly funded through debt. Cash and cash equivalents were Rs. 33.89 crore as on March 31, 2021. The group can fund its repayment obligations, capex requirements and incremental working capital requirements through internal accruals and unutilized bank lines. |
Rating Sensitivity factors
Downward factors:
|
About the Group
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, 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, provides 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
|
| 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)
|
Annexure – List of entities consolidated
|
| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||||||
|
This Annexure has been updated on 07-Mar-2022 in line with the lender-wise facility details as on 03-Aug-2021 received from the rated entity.
Criteria Details
|