Download Report

Rating Rationale
Brickwork Ratings reaffirms ratings of ‘BWR BB-’ for the Bank Loan
facilities amounting to ₹ 12.50 Cr (enhanced from ₹
8.00 Cr) of
Vedamatha Enterprises Pvt. Limited
Brickwork Ratings has reviewed the Rating1f or Bank Loan facilities of ₹ 12.50 Cr
(enhanced from ₹ 8.00 Cr) of Vedamatha Enterprises Pvt. Limited (VEPL or the ‘Company’)
sanctioned/ availed from State Bank of Hyderabad as:
Facility
Previous
Limits
(₹ Cr)
Present
Limits
(₹ Cr)
Fund Based:
Cash Credit
8.00
12.50
Total
8.00
12.50
Rating
History
Present
Rating
BWR BB(Pronounced BWR
BB Minus)
(Outlook:Stable)
BWR BB(Pronounced BWR
BB Minus)
(Outlook:Stable)
(Reaffirmation)
Tenure
Long
Term
(INR Twelve Crores & Fifty Lakhs only)
BWR has essentially relied upon audited financials up-to FY14, projections up-to FY16,
publicly available information and information and clarifications provided by the Company’s
management.
The Rating has factored experience of the promoter and growth in revenue of the company.
However, the rating is constrained by the company’s low profit margins, low tangible
netwoth, high overall gearing, and low net cash accruals.
Background:
Vedamatha Enterprises Pvt Ltd (VEPL) was incorporated in 2002 in Bengaluru. The
Company was promoted by Narahari Sutrave and Suman Narahari. Before starting VEPL,
promoter was engaged in the business of selling silk sarees. The company is an authorized
dealer of Hindustan Unilever Ltd (HUL). Promoter has been dealing in HUL products for
around 15 years. Further, VEPL is also involved in the business of selling sarees through
Devanand Silks, located at Chickpet in Bangalore, which contributes about 6 per cent to
VEPL’s turnover. Currently Vedamatha Enterprises having 30 full time employees. Diamond
Bag Centre, Raj Marketing, Kusum General Stores are the key customers of the company.
1
Please refer to www.brickworkratings.com for definition of the Ratings
www.brickworkratings.com
1
20 Feb 2015
Financial Performance:
During the FY14, the total operating income of the Company has increased by 25% to
₹ 61.38 Cr from ₹ 49.31 Cr in FY13. The tangible Net Worth has increased from ₹ 2.52 Cr in
FY13 to ₹ 2.71 Cr in FY14 on account of retention of profit. Current ratio has improved in FY
14 to 1.23 times, The Company’s PAT was a meagre Rs 0.19 Crores in FY14 compared to `
0.15 Crores in the previous year, due to high interest and finance costs. The Company is
having high conversion cycle due to high inventory holding days, and consequently gearing
levels continued to remain high at 3.57 times as on March 31, 2014.
Rating Outlook:
Going forward, ability to achieve and sustain revenues, improve the profitability and
improved debt protection metrics, will be key rating sensitivities. The outlook is expected to
be stable over the year.
Analyst Contact
Relationship Contact
[email protected]
[email protected]
Phone
Media Contact
1-860-425-2742
[email protected]
Disclaimer: Brickwork Ratings (BWR) has assigned the rating based on the information obtained from the issuer and other reliable sources,
which are deemed to be accurate. BWR has taken considerable steps to avoid any data distortion; however, it does not examine the precision or
completeness of the information obtained. And hence, the information in this report is presented “as is” without any express or implied
warranty of any kind. BWR does not make any representation in respect to the truth or accuracy of any such information. The rating assigned
by BWR should be treated as an opinion rather than a recommendation to buy, sell or hold the rated instrument and BWR shall not be liable
for any losses incurred by users from any use of this report or its contents. BWR has the right to change, suspend or withdraw the ratings at
any time for any reasons.
www.brickworkratings.com
2
20 Feb 2015