Rating Rationale amounting ₹

Rating Rationale
Brickwork Ratings assigns ‘BWR B’ & ‘BWR A4’ for the Bank Loan Facility
amounting ₹ 5.08 Cr of Welcos Spunfab.
Brickwork Ratings (BWR) has assigned Ratings1 to Welcos Spunfab’s Bank Loan Facilities
amounting to ₹ 5.08 Cr sanctioned/availed by Oriental Bank of Commerce as:
Facility
Fund Based:
Term Loan
Cash Credit
Fund Based
PC
Non – Fund Based
FDBP/FUDBP
Total
Tenure
Limit ( ₹ Cr)
0.28
4.80
Long Term
(4.80)
Short Term
Rating
BWR B
(BWR Single B)
Outlook : Stable
BWR A4
(BWR A Four)
(4.80)
5.08
(INR Five Crores Eight Lakhs only)
FDBP - Foreign Documentary Bill Purchased, FUDBP - Foreign Usance Documentary Bill Purchased, PC – Packing Credit
FDBP. FUDBP, PC are sub limit of CC facility with option of interchangeability. Term loan outstanding is as on 16th July 2014
BWR has principally relied upon the audited financials of FY11, FY12, FY13 of Welcos Spunfab
("the Firm" or WSF), publicly available information and information/ clarifications provided by
the Firm’s management.
The ratings assigned to the Bank Loan Facilities of Welcos Spunfab factors in, the Promoters’
experience, established operations, locational advantage being located in one of the textile hub
of Rajasthan. The ratings is however constrained by modest scale of operations coupled with low
net-worth, stretched operating cycle, concentrated exports in a fragmented industry with
inherent competition.
Company Profile:
Welcos Spunfab is a partnership firm established on 1st March 2005. Mr. Naresh Jain and his
mother Mrs. Manjula Jain are partners of the firm. Firm is into manufacturing of synthetic
fabric from yarn and grey cloth. Firm has its manufacturing unit in Bhilwara, Rajasthan with
installed capacity of 30 lakh meters/ annum of fabric The firm procures raw materials from local
suppliers of Bhilwara, Rajasthan and exports its products mostly to Afghanistan.
Management Details:
The managing Partner, Mr. Naresh Jain with an experience over a decade takes care of business
under the guidance of his father Mr. Pradeep Jain. Mr Pradeep Jain has more than three
1
Please refer to www.brickworkratings.com for definition of the Ratings
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1
22 Oct 2014
decades of experience in trading of yarn under proprietorship firm – Naresh Kumar & Co. Mrs.
Manjula Jain, mother of Mr. Naresh Jain is a sleeping partner of the firm with shareholding of
60% and rest 40% of shares holding with Mr. Naresh Jain.
Financial Performance:
Revenue from operations has declined from ₹25.24 Crores in FY12 to ₹17.94 Crores in FY13 with
net profits marginally decreased from ₹0.13 Crores in FY12 to ₹0.12 crores in FY13. Operating
profit margin has improved from 4.80 percent in FY12 to 5.74 percent in FY13. Leverage of the
company stood at 2.51 times for FY13 (debt includes unsecured loans from promoters). Tangible
networth of the firm is ₹2. 12 crores in FY13. The receivables of ₹3.54 Crores on revenues of
₹17.94 Crores in FY13 need to efficiently managed as compared to receivables of ₹4.83 Crores on
revenues of ₹25.24 Crores in FY12
As per provisional financials of FY14, firm has achieved estimated sales revenue of ₹22.32 crores
with net profit of ₹0.25 crores, However the tangible networth of the firm has decreased to ₹2.05
Crores due to withdrawals which may stretch the leverage on non-funding by way of adequate
capital.
Rating Outlook
Going forward, consistently increasing the top line with improving the profit margins, infusion
of capital and retention of profits, efficiently manage the working capital and geographical
diversification of its revenues would remain the key rating sensitivities.
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.
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22 Oct 2014