January 24, 2014
Mumbai
Sure Cargo Control Private Limited
 
  Ratings Reaffirmed
 
Total Bank Loan Facilities Rated Rs.50 Million
Long Term Rating CRISIL B/Stable (Reaffirmed)
Short Term Rating CRISIL A4 (Reassigned)
(Refer to Annexure 1 for Facility-wise details)

CRISIL's ratings on the bank facilities of Sure Cargo Control Pvt. Ltd (SCCPL) continue to reflect SCCPL's small scale of operations in a highly fragmented industry and weak financial risk profile, marked by high gearing. These rating weaknesses are partially offset by the extensive experience of SCCPL's promoters in the cargo securing business as well as synergy benefits arising from its diversified product portfolio.

Outlook: Stable

CRISIL believes that SCCPL will maintain a stable credit risk profile over the medium term on the back of its promoters' experience in the industry. The outlook may be revised to 'Positive' if SCCPL is able to scale up its operations significantly while sustaining its profitability and working capital managementor if it improves its capital structure by infusion of capital. Conversely, the outlook may be revised to 'Negative' if its financial risk profile deteriorates due to lower-than-expected accruals or in case the company undertakes substantial debt-funded capital expenditure programme, or if there is further stretch in its working capital requirements.

Update
SCCPL reported topline of Rs.134 million for 2012-13 (refers to financial year, April 1 to March 31); registering a growth of 22 per cent on a year-on-year basis and commensurate with CRISIL's estimates. The company reported a decline of 200 basis points in its operating profitability to 4.4 per cent for 2012-13 on account of rise in raw material costs. SCCPL diversified its service offerings in 2012-13 by venturing into fleet services. The company has added a fleet of 14 trucks to serve as a cargo transporter. The company has been able to leverage on its existing clientele for cargo securing products to generate revenue from the fleet service domain. CRISIL believes that significant scale up of operations will remain a challenge for SCCPL in the near term on account of sluggishness in demand for cargo transport.

SCCPL's operations continue to be working-capital-intensive, in line with past trends, as reflected in its gross current assets of 162 days as on March 31, 2013. The company has funded the fleet addition largely via debt, resulting in deterioration in capital structure to more than 3.5 times. CRISIL believes that over the medium term, SCCPL will continue to operate at a high gearing. CRISIL also believes that SCCPL will generate sufficient accruals to meet its debt obligations due in 2013-14 and 2014-15.

SCCPL reported profit after tax (PAT) of Rs 2.0 million operating income of Rs 135 million for 2012-13, as against PAT of Rs 3.8 million on operating income of Rs 109 million for 2011-12.

About the Company

Incorporated in 2008 and promoted by Mr. Ram Ratan Singhi, SCCPL provides cargo packaging solutions. The company is based in Gurgaon (Haryana).

Annexure 1 - Details of various bank facilities
Current facilities Previous facilities
Facility Amount (Rs.Million) Rating Facility Amount (Rs.Million) Rating
Overdraft Facility 10 CRISIL A4 Cash Credit 10 CRISIL B/Stable
Proposed Long Term Bank Loan Facility 25.3 CRISIL B/Stable Proposed Long Term Bank Loan Facility 25.3 CRISIL B/Stable
Term Loan 14.7 CRISIL B/Stable Term Loan 14.7 CRISIL B/Stable
Total 50 -- Total 50 --
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Last updated: May, 2013

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January 24, 2014

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