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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 2.00 | Not Applicable | Withdrawn | - |
| Bank Loan Ratings | 9.00 | - | ACUITE A4 | Reaffirmed & Withdrawn |
| Bank Loan Ratings | 4.00 | - | Not Applicable | Withdrawn |
| Total Outstanding Quantum (Rs. Cr) | 0.00 | - | - |
| Total Withdrawn Quantum (Rs. Cr) | 15.00 | - | - |
| Rating Rationale |
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Acuité has reaffirmed & withdrawn its short term rating of ACUITE A4 (read as ACUITE A four) on bank facilities of Rs 9.00 Cr & withdrawn the proposed long term rating on the bank facilities of Rs 2.00 Cr & proposed short term rating on bank facilities of Rs 4.00 Cr of National Ventures Private Limited. The rating is being withdrawn on account of the request received from the firm and the NOC received from the banker as per Acuité’s policy on withdrawal of ratings. The rating is reaffirmed on account of experienced management and average financial risk profile of the company. However, these strengths are partially set off by the working capital intensive nature of operations and competitive nature of the industry. |
| About the Company |
| The Chennai-based National Ventures Private Limited (NVPL) was incorporated in June 2000 by Mr. A. S. R. Chowdhary, Mr. A Bhanu Prasad and Mr. A. Krishna Prasad. The company is engaged in trading of industrial minerals and metal ores, agro products among others. |
| Analytical Approach |
| Acuité has considered the standalone business and financial risk profiles of the NVPL to arrive at this rating. |
Key Rating Drivers
| Strengths |
| Experienced management The promoters, Mr. A S R Chowdhary, Mr. A Bhanu Prasad and Mr. A Krishna Prasad possess over four decades of experience in the trading of commodities. Operating Income for FY23 (Prov) stood at Rs 124. 33 crore as against Rs 84.85 Crs in FY22. The reason for increase in the revenue for FY23 is due to bulk orders received of 60 Crs during the year. Further, EBITDA Margin for the FY23 (Prov) stood at 1.69% as against FY22 at 3.90%. The Profit after tax margins (PAT) stood at 1.04% in FY23 (Prov) as against 2.34% in FY22. Average financial risk profile The financial risk profile of the firm remained average marked by average net worth, gearing ratio & debt protection metrics. The net worth stood at Rs 8.39 Cr as on 31 March 2023 (Prov) as against Rs 7.09 Cr same period last year. The gearing level of the company remained at 0.23 times as on 31 March 2023 (Prov) as against 0.39 times same period last year. Also, the Total Outside Liabilities to Tangible Net Worth (TOL/TNW) ratio stood at 12.62 times in as on 31 March 2023 (Prov) compared against 6.52 times as on 31 March 2022. The debt protection matrices of the company is improving marked by Interest Coverage Ratio (ICR) of 2.53 times for FY23 (Prov) and Debt service coverage ratio (DSCR) of 2.24 times for the same period. |
| Weaknesses |
| Working capital intensive nature of operations The operations of the firm remained working capital intensive in nature marked by GCA Days of 320 days for FY23 (Prov) as compared against 210 days for FY22. Furthermore, the receivables days stood at 273 days in FY23 (Prov) against 186 days in FY22. The average credit period given to customers is 120 days. The inventory days of the firm stood at 26 days for FY23 (Prov) as against NIL days for FY22. The creditor days stood at 268 days for FY23 (Prov) compared against 188 days for FY2022. The average credit period given by suppliers is 120 days. Highly fragmented and competitive commodity trading industry The company operates in a highly fragmented and competitive commodity trading (coal, fertilisers, agro-products among others) industry with large number of players in the organised and unorganised segment. |
| Rating Sensitivities |
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Substantial improvement in scale of operations while maintaining profitability margins over the medium term Further elongation of working capital cycle |
| Material covenants |
| None |
| Liquidity Position |
| Adequate |
| The liquidity position of the firm remains adequate marked by moderate net cash accruals of Rs 1.35 Cr in FY23 (Prov) against Rs 0.11 Cr maturing debt obligations for the same period. The current ratio of the firm remains above unity at 1.08 times as on 31 March 2023 (Prov). The firm has unencumbered cash and bank balances of Rs 2.99 Cr as on 31 March 2023 (Prov). |
| Outlook: Not Applicable |
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 23 (Provisional) | FY 22 (Actual) |
| Operating Income | Rs. Cr. | 124.33 | 84.85 |
| PAT | Rs. Cr. | 1.29 | 1.99 |
| PAT Margin | (%) | 1.04 | 2.34 |
| Total Debt/Tangible Net Worth | Times | 0.23 | 0.39 |
| PBDIT/Interest | Times | 2.53 | 5.44 |
| Status of non-cooperation with previous CRA (if applicable) |
| CRISIL vide its press release dated 12th August 2022 had rated the company to CRISIL A4; Issuer Not Cooperating. |
| 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 |
| 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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