| S R Overseas - Panipat | ||||
| Rating migrated to 'CRISIL B/Stable' | ||||
| Rating Action | ||||
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| & *Issuer did not cooperate; based on best-available information | ||||
| 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 rating on the long-term bank facilities of S R Overseas - Panipat (SROP) to ‘CRISIL B+/Stable Issuer Not Cooperating'. However, the firm’s management has subsequently started sharing the information necessary for carrying out a comprehensive review of the rating. Consequently, CRISIL Ratings is migrating its rating on the bank facility of SROP to ‘CRISIL B/Stable’.
The rating reflects the firm’s modest scale of operations and tightly matched accruals against repayment obligation. These weaknesses are partially offset by the extensive experience of the promoters and moderate financial risk profile. |
Key Rating Drivers & Detailed Description Weakness: Modest scale of operations Intense competition will continue to constrain scalability, as reflected in modest revenue of Rs 21.02 crore in fiscal 2021, pricing power and profitability. Additionally, the firm has stopped producing bedsheets and shifted to manufacturing polar blankets only, which exposes the firm to risks related to seasonality. As a result, operating income fell to Rs 17.68 crore in fiscal 2022.
Tightly match accruals against repayment obligation Company’s repayment obligation for FY22 was at 0.67 crores with an estimated cash accruals of 0.77 crores leading to a Net cash accruals/repayment obligation (NCA/RO) of 1.13 times. Though expected growth in business will lead to a higher cash accrual, increase in repayment obligation towards term loans will result in NCA/RO in the range of 1.2-1.4 times over the medium term. Improvement in business risk profile leading to NCA/RO over 1.5 time will remain a key rating sensitive factor.
Strengths: Extensive experience of the promoters The promoters have over two decades of experience in the blanket manufacturing business. Their strong understanding of market dynamics and healthy relationships with suppliers and customers will continue to support the business and operating efficiency. The firm has established clientele in north India.
Moderate financial risk profile Total outside liabilities to tangible net worth (TOLTNW) ratio is estimated at 3-4 times as on March 31, 2022, driven by sizeable debt. The TOLTNW ratio is expected to improve aided by accretion to reserve and absence of debt-funded capital expenditure; albeit the ratio will remain high at 2-4 times over the medium term. Net worth was small at Rs 1.75 crore as on March 31, 2022. Debt protection metrics were average, as reflected in interest coverage and net cash accrual to total debt ratios of 2.5-3 times and 0.1-0.15 time, respectively, in fiscal 2022. |
Liquidity: Poor Cash accrual, projected at Rs 1-1.2 crore per annum, will just about cover yearly debt obligation of Rs 0.8-1 crore. Bank limit utilization was high at 86% on average for the 12 months through June 2022. Current ratio is expected at 1.15-1.4 times over the medium term. The promoters will continue to provide need-based funding support by way of unsecured loans. |
Outlook: Stable CRISIL Ratings believes SROP will continue to benefit from the extensive experience of the promoters and established relationships with customers. |
Rating Sensitivity Factors Upward factors
Downward factors
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About the Company Set up in 2014 as a partnership firm in Panipat, Haryana, by Mr Vijender Singh and Mr Balraj Singh, SROP manufactures polar blankets. |
Key Financial Indicators
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Status of noncooperation with previous CRA SROP has not cooperated with Brickwork Ratings India Pvt Ltd (BRIPL), which has classified the firm as non-cooperative through release dated January 21, 2022. The reason provided by BRIPL is non-furnishing of information for monitoring the ratings.
SROP has not cooperated with Acuite Rating and Research Limited (ARARL), which has classified the firm as non-cooperative through release dated March 06, 2020. The reason provided by ARARL is non-furnishing of information for monitoring the 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. | |||||||||||||||||||||||||||||||||||||||
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* - Issuer did not cooperate; based on best-available information
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| Annexure - Details of Bank Lenders & Facilities | |||||||||
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Criteria Details
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