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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 14.00 | ACUITE BB- | Reaffirmed & Withdrawn | - |
| Total Outstanding Quantum (Rs. Cr) | 0.00 | - | - |
| Total Withdrawn Quantum (Rs. Cr) | 14.00 | - | - |
| Rating Rationale |
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Acuité has reaffirmed and withdrawn the long-term rating of ‘ACUITE BB-’ (read as ACUITE double B minus) on the Rs. 14.00 crore bank facilities of Caslte Liquors Private Limited(CLPL).
The rating has been withdrawn on Acuite's policy of withdrawal of raitngs. The rating has been withdrawn on account of the request recieved from the company, and the NOC received from the banker. Rationale for the rating The rating reaffirmation takes into account the steady business risk profile of the company.Further, the rating also draws comfort from experienced promoter and the company’s long track record in the industry. These strengths are however, offset by the working capital intensive in nature of operations and the vulnerability to changing regulatory environment along with average financial risk profile. |
| About the Company |
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Established in 2003, CLPL is a Bengal-based liquor trading company engaged in the marketing and distribution of Allied Blenders and Distillers Pvt. Ltd for brands of Officers’ Choice and Radico Khaitan Ltd for Indian Made Foreign Liquor (IMFL), and Carlsberg (I) Pvt. Ltd. for Carlsberg & Tuborg beer (South Bengal). CLPL is also a wholesaler for Pernod Ricard India Pvt Ltd, United Spirits Ltd., Diageo, Beam Global Spirits and Wine Inc. for IMFL in the entire West Bengal region. The day-to-day operations are managed by Mr. Hiranmoy Gon and Mrs. Sudipa Gon.
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| Analytical Approach |
| Acuité has considered the standalone business and financial risk profiles of CLPL to arrive at the rating. |
Key Rating Drivers
| Strengths |
The promoter of CLPL, Mr. Hiranmoy Gon, has an experience of over two decades in the liquor business. Over the years, CLPL has established itself as the largest distributor of Allied Blenders and Distillers Private Limited for Officers’ Choice and the second largest distributor of Carlsberg (I) Private Limited for Carlsberg and Tuborg in West Bengal. It is also a distributor for Radico Khaitan Ltd., Bacardi Limited, United Spirits Limited and Diageo in West Bengal. Acuité derives comfort from the extensive experience of the promoters.
CLPL’s average financial risk profile is marked by modest net worth, comfortable gearing and healthy debt protection metrics. The tangible net worth increased to Rs. 10.78 Cr as on FY2022 from Rs.10.66 Cr as on FY2021. Gearing of the company stood at 0.36 on FY2022 as compared to 0.03 as on FY2021. The Total outside Liabilities/Tangible Net Worth (TOL/TNW) stood low at 1.13 times as on FY2022 as against 0.05 times as on FY2021. The healthy debt protection metrics of the company is marked by Interest Coverage Ratio (ICR) at 3.52 times as on FY2022 and Debt Service Coverage Ratio at 3.38 times as on FY2022. Net Cash Accruals/Total Debt (NCA/TD) stood low at 0.11 times as on FY2022. Acuité believes that financial risk profile is expected to be remain average over the medium term in absence of any major debt funded capex plans.
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| Weaknesses |
| Working capital intensive nature of operations
The working capital-intensive nature of operations of the company is marked by high Gross Current Asset days (GCA) of 513 days as on FY2022 due to high inventory days. The inventory period stood at 151 days as on FY2022. However, the debtor days stood comfortable at 86 days as on FY2022. Acuité believes that the working capital management of CLPL will remain intensive over the medium term due to the given the nature of the liquor industry. Low scale of operations coupled with negative operating profitability margin The company operating revenues stood low at Rs. 13.11 Cr. In FY2022 as compared to Rs. 0.13 Cr. in FY2021. The profitability margins of the company stood negative at (2.76) per cent in fY2022 as compared to (454.21) in FY 2021. The profitability margin of the company impacted due to change in the distribution has taken over by the government from private parties which has further impacted the overall profitability margin of the company. The company has a thin PAT margin of 0.90 per cent on FY2022. Further, the PAT margin is supported by other income which consisting of commission received, Interest received, Interest from Vansh Jutex LLP and Sundry Balances written Back. The RoCE of the company stood at 2.54 per cent in FY22 as compared to 0.85 per cent in FY21. |
| Rating Sensitivities |
| None |
| Material covenants |
| None |
| Liquidity Position |
| Stretched |
| The company’s liquidity position is stretched marked by low net cash accruals of Rs.0.43 Cr in FY2022 as against nil long-term debt repayment during the same period. The current ratio stood at 1.58 times as on March 31, 2022, as compared to 13.58 times as on 31st March 2021. Moreoevr, the working capital-intensive nature of operations of the company is marked by Gross Current Assets (GCA) of 513 days as on March 31, 2022. Acuité believes that going forward the liquidity position of the company will remain at similar levels due to the low net cash accruals. |
| Outlook |
| Not Applicable |
| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 22 (Actual) | FY 21 (Actual) |
| Operating Income | Rs. Cr. | 13.11 | 0.13 |
| PAT | Rs. Cr. | 0.12 | 0.05 |
| PAT Margin | (%) | 0.90 | 40.88 |
| Total Debt/Tangible Net Worth | Times | 0.36 | 0.03 |
| PBDIT/Interest | Times | 3.52 | 572.57 |
| Status of non-cooperation with previous CRA (if applicable) |
| None |
| Any other information |
| None |
| Applicable Criteria |
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• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm • Trading Entitie: https://www.acuite.in/view-rating-criteria-61.htm • Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm |
| Note on complexity levels of the rated instrument |
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In order to inform the investors about complexity of instruments, Acuité has categorized such instruments in three levels: Simple, Complex and Highly Complex. Acuite’s categorisation of the instruments across the three categories is based on factors like variability of the returns to the investors, uncertainty in cash flow patterns, number of counterparties and general understanding of the instrument by the market. It has to be understood that complexity is different from credit risk and even an instrument categorized as 'Simple' can carry high levels of risk. For more details, please refer Rating Criteria “Complexity Level Of Financial Instruments” on www.acuite.in.
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