Note:- For activities or ratings of instruments falling under the purview of Financial Sector Regulators other than SEBI, the grievance / dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available.
Rating Rationale
Acuité has reaffirmed the long-term rating of ‘ACUITE BB-’(read as ACUITE double B minus) and short-term rating of ‘ACUITE A4’ (read as ACUITE A four) on Rs.12.50 crore bank loan facilities of Parekh Timber Traders (PTT). The outlook is ‘Stable’.
Rationale for the rating
The rating reaffirmation continues to reflect firm’s small scale of operations while operating performance remained stable. The rating also considers below average financial risk profile of the firm, working capital intensive operations and susceptibility of the profitability to volatility in the material prices and forex fluctuation risk. The rating also constrained on account of risk of capital withdrawal associated with partnership constitution. The rating, however, draws comfort from the experienced management, established track record of operations and adequate liquidity position of the firm.
About the Company
Established in the year 1984, Parekh Timber Traders (PTT) is a Karnataka based partnership firm engaged in wholesale and retail trading of timber used for windows, doors, interior designing, etc. PTT is promoted by partners, Mr. Arjun Manjhi Patel, Mr. Ashish N Patel, Mr. Dhanji Patel, Mr. Mayur N Patel, Mr. Mehul H Patel, Mr. Vijay Patel and Mr. Vinodkumar Ramji Patel.
Unsupported Rating
Not Applicable
Analytical Approach
Acuite has considered a standalone approach to arrive at the rating of Parekh Timber Traders (PTT).
Key Rating Drivers
Strengths
Established track record of operations and experienced management
Established in the year 1984, PTT has a long track record of the operation of more than three decades in the business of trading of woods. The partners of the firm have experience of more than two decades in the same line of business. The experience of the partners has helped the firm in establishing healthy relationships with its customers and suppliers. PTT has its customer base spread across Karnataka and Tamil Nadu. Acuité believes that PTT will sustain its existing business risk profile on the back of established track record of operations, experienced management and healthy relations with its customers and suppliers.
Small scale of operations albeit stable operating performance
Parekh Timber Traders (PTT) reported an operating income of Rs. 45.25 crore in FY26 (Prov.), as compared to Rs. 39.28 crore in FY25, reflecting increased demand for the products and its ability to capitalize on opportunity-driven business during the year. The firm caters to a diversified customer base across industries, including manufacturers of structural building elements, cladding products, sheet materials, and furniture. A significant portion of its raw materials, primarily lumber, is imported from regions such as Dubai, Indonesia, Malaysia, and African countries.
The profitability profile of the firm has remained broadly stable, with operating margins generally range-bound at around 4%. However, operating margin improved to 6.97% in FY26 (Prov.) from 4.45% in FY25, supported by a one-time, high-scale, opportunity-based order. Consequently, the PAT margin also strengthened and stood at 2.59% (Prov.) in FY26, as compared to 0.69% in FY25. Acuite believes, the firm’s ability to improve its scale of operations and profitability will remain as a key rating monitorable.
Weaknesses
Below average financial risk profile
Financial risk profile of the firm is below average with low net worth, average gearing and comfortable debt protection indicators. Net worth of the firm stood at Rs.6.68 crore as on 31st March 2026(prov.) as against Rs.4.85 crore as on 31st March 2025 due to accretion of profits to reserves. Gearing of the firm stood at 1.49 times as on 31st March 2026(prov.) as against 2.34 times as on 31st March 2025. The total debt of the firm stood at Rs.9.92 Cr. as on 31st March 2026(prov.) against Rs.11.33 Cr. as on 31st March 2025. The firm does not have any term loans. Total outside liabilities to Tangible net worth (TOL/TNW) stood at 3.20 times as on 31st March 2026(prov.) as against 4.17 times as on 31st March 2025. Interest coverage ratio (ICR) stood comfortable at 2.18 times in FY26(prov.) as against 1.35 times in FY25 and debt service coverage ratio (DSCR) stood at 1.83 times in FY26(prov.) as against 1.26 times in FY25. Net Cash Accruals to Total Debt (NCA/TD) of the firm stood at 0.13 times for FY26(Prov.) as against 0.03 times for FY25. Acuite believes that the financial risk profile is likely to remain average in the absence of any debt-funded capital expenditure and any large deviations in incremental working capital requirements.
Intensive Working capital operations
Working capital operations of the firm are intensive marked by gross current assets (GCA) of 184 days in FY26(prov.) as against 182 days in FY25. GCA days are driven by high debtor days. The firm offers a credit period of ~90 days to its customers. Debtors’ collection period stood at 101 days in FY26 (Prov.) as against 110 days in FY25. Inventory days stood similar at 70 days in FY26(Prov.) and FY25. Round logs and lumbers form a part of raw materials which are majorly imported from Indonesia, Dubai, Malaysia and other countries in Africa. The firm opens an LC of 180 days for such purchases. Creditor days stood at 100 days in FY26(Prov.) as against 86 days in FY25. The average utilization of the fund-based limits stood moderate at around 64.51 per cent for past 06 months ended May 2026. Acuite believes that the working capital operations of the firm will remain intensive over the medium term due to its nature of business.
Risk capital withdrawal
The firm is exposed to the risk of partners withdrawing capital, which can disrupt operations. Such withdrawals may reduce financial flexibility and weaken the firm’s overall financial risk profile if not adequately managed.
Susceptible of profitability to volatility in material prices and forex fluctuations
PTT caters to industries like manufacturers of structural elements in all sorts of buildings, cladding products and for manufacturing of sheet materials and furniture. Around 60-70 per cent of the sales are B2B sales and the remaining are B2C Sales. The major raw material procured by the firm is wood, which accounts for ~90-95 per cent of its cost of sales; and the prices of raw material are highly volatile in nature. Majority of the lumbers are imported from Dubai, Indonesia, Malaysia and African countries; hence profitability is exposed to forex fluctuation risk as firm is not hedging its exposure.
Rating Sensitivities
Potential triggers (individual or collective) for an upward rating action:
Significant improvement in the scale of operation while improving the profitability margin
Improvement in financial risk profile with DSCR above 2 times on a sustained basis
Improvement in working capital management
Potential triggers (individual or collective) for a downward rating action:
Significant decline in revenues and profitability
Deterioration in financial risk profile with DSCR below 1 time on a sustained basis
Elongation in working capital cycle with GCA above 230 days consistently
Liquidity Position
Adequate
The firm’s liquidity position is adequate, marked by net cash accruals against the comfortable maturity debt obligations. The firm generated net cash accruals of Rs.1.27 Crore in FY26(prov.) against no long-term debt repayment obligations. The average utilization of the fund-based limits stood around 64.51 per cent for past 06 months ended May 2026. The firm maintains unencumbered cash and cash equivalent of Rs.1.92 crore as on March 31, 2026(prov.). The current ratio of the firm stands at 1.75 times as on March 31, 2026(prov.) as against 1.95 times as on 31 March 2025. Acuite believes that the liquidity of the firm is likely to remain adequate over the medium term.
Outlook: Stable
Other Factors affecting Rating
None
Particulars
Unit
FY 26 (Provisional)
FY 25 (Actual)
Operating Income
Rs. Cr.
45.25
39.28
PAT
Rs. Cr.
1.17
0.27
PAT Margin
(%)
2.59
0.69
Total Debt/Tangible Net Worth
Times
1.49
2.34
PBDIT/Interest
Times
2.18
1.35
Status of non-cooperation with previous CRA (if applicable)
Note:- For activities or ratings of instruments falling under the purview of Financial Sector Regulators other than SEBI, the grievance / dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available.
Contacts
List of instruments and names of regulators of the instruments
