|
|
| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 130.72 | ACUITE BBB | Stable | Reaffirmed | - |
| Total Outstanding | 130.72 | - | - |
| Total Withdrawn | 0.00 | - | - |
|
Rating Rationale |
|
Acuité has reaffirmed its long term rating of ‘ACUITE BBB’ (read as ACUITE Triple B) on the Rs 130.72 Cr. bank facilities of Bhagwat Chattels Private Limited (BCPL). The outlook is 'Stable'.
Rationale for reaffirmation: The rating reaffirmation continues to be supported by the experienced management and establish a track record of operations, a steady revenue stream under lease arrangements from reputed clients, and an adequate liquidity position marked by adequate cash accruals against repayment obligations. The rating is, albeit, constrained by susceptibility to lessee's performance along with occupancy and renewal risk. |
| About the Company |
|
BCPL is a Hyderabad-based entity, incorporated in the year 2013 by Mr. Pramod Kumar Gupta and family. The company is a special purpose vehicle (SPV) formed for construction and lease of a warehouse facility at Vapi, Gujarat. The company leased out a warehouse to Hindustan Unilever Limited (HUL) for a period of 9 years, from May 2017 to April 2026. The warehouse built-up area is 480,968 sq. ft. and leased out for a monthly rental of about Rs. 79 lakhs with an escalation at 15 percent every three years. It is a part of the Scalar Group and is a subsidiary of Egwood Industries Private Limited.
|
| Unsupported Rating |
| Not Applicable |
| Analytical Approach |
| Acuité has considered the standalone business and financial risk profile of BCPL to arrive at this rating. |
| Key Rating Drivers |
| Strengths |
BCPL is a part of the Scalar Group promoted by Mr. Pramod Kumar Gupta and family. The promoters of the group have been engaged in the warehouse construction and leasing business for more than a decade through various entities, including Musaddilal Projects Private Limited, Egwood Industries Private Limited, and Musaddilal Properties Private Limited, among others. The group owns contracted warehouse space of ~2.7 million sq. ft. in 7 locations all over India and entered long-term lease agreements of 9–10 years with reputed clients, namely Hindustan Unilever Limited, ITC Limited, and UTI Worldwide (India) Private Limited, under various SPVs. Apart from the leasing business, the Scalar Group has been in the plywood manufacturing business since 1964 under 'Egwood Boards and Panels Private Limited'. Acuité believes that the company will continue to benefit from the experience of the management over the medium term.
BCPL derives its revenues by way of lease rentals from HUL through its warehouse facility based in Vapi, Gujarat. HUL is among India's largest FMCG companies with a diverse product portfolio including soaps and detergents, personal care products, and food and beverages. The total built-up area is 4.81 lakh sq. ft. The facility was rented at a monthly lease rental of about Rs. 79 lakhs with an escalation of 15 percent every three years from May 2017 to April 2026. The operating income stood at Rs. 13.50 Cr. in FY2024 as against Rs. 12.00 Cr. in FY2023. BCPL receives advance payment every month. Apart from that, all the revenue inflows are routed through the ESCROW account, and the company is maintaining a DSRA of three months EMI. HUL is among India's largest FMCG companies with a diverse product portfolio including soaps and detergents, personal care products, and food and beverages. The company has 28 owned factories and many outsourced production facilities across the country. The company has around 18,000 employees, and more than 1,000 suppliers work with the company’s supply chain, spanning its own factories and several others that manufacture on the company’s behalf. The products are stocked in warehouses dotted across the country and delivered to over 3,500 distributors. The company also creates employment opportunities for several thousand more across its value chain, from smallholder farmers who provide raw materials to the distribution partners who take the company's products to customers and consumers.
|
| Weaknesses |
To serve the LRD loan, the company's revenues are entirely dependent on a single customer, i.e., HUL. Acuité believes that any unprecedented stretch in receiving lease rental from HUL is likely to impact BCPL's debt-servicing ability. However, the risk is partially mitigated by the long-term agreement of 9 years and lock-in period for entire years, along with a clause levying a penal interest of 18 percent on delayed rentals as per the lease agreement.
|
| Rating Sensitivities |
|
| Liquidity Position: Adequate |
|
BCPL has adequate liquidity marked by comfortable net cash accruals to its maturing debt obligations. The DSCR stood at 1.20 times for FY2024. BCPL receives advance payment every month. Apart from that, all the revenue inflows are routed through the ESCROW account, and the company is maintaining the DSRA of three months EMI. Acuité believes that the liquidity of the company will remain adequate with steady cash inflows from the reputed customers.
|
| Outlook: Stable |
| |
| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 24 (Actual) | FY 23 (Actual) |
| Operating Income | Rs. Cr. | 13.50 | 12.00 |
| PAT | Rs. Cr. | 0.80 | (2.68) |
| PAT Margin | (%) | 5.96 | (22.33) |
| Total Debt/Tangible Net Worth | Times | (9.59) | (9.19) |
| PBDIT/Interest | Times | 1.18 | 1.17 |
| Status of non-cooperation with previous CRA (if applicable) |
| Not applicable |
| Any other information |
| None |
| Applicable Criteria |
|
• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm • Service Sector: https://www.acuite.in/view-rating-criteria-50.htm • Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm |
| Note on complexity levels of the rated instrument |
|
| |
|
|
||||||||||||||||||
|
|
Contacts |
About Acuité Ratings & Research |
