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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 5.50 | ACUITE BB | Reaffirmed & Withdrawn | - |
| Bank Loan Ratings | 3.40 | - | ACUITE A4+ | Reaffirmed & Withdrawn |
| Total Outstanding Quantum (Rs. Cr) | 0.00 | - | - |
| Total Withdrawn Quantum (Rs. Cr) | 8.90 | - | - |
| Rating Rationale |
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Acuité has reaffirmed and withdrawn its long-term rating of ‘ACUITE BB’ (read as ACUITE double B) and its short-term rating of ‘ACUITE A4+’ (read as ACUITE A four plus) on the Rs.8.90 crore bank facilities of Saraf Corporation India Private Limited (SCIPL).
The rating has been withdrawn as per Acuite's policy of withdrawal of ratings. The rating has been withdrawn on account of the withdrawal request received from the company, and the NOC from the banker. Rationale for rating reaffirmation The rating reaffirmation considers stable operating performance and financial performance of SCIPL, marked by improved operating income, and healthy financial risk profile. The revenue of the company stood at Rs.62.64 Cr in FY2023 against Rs.49.28 crore in FY2022 and Rs.49.85 crore in FY2021. In 6MFY2024, SCIPL has recorded revenue of Rs.38.10 Cr. The financial risk profile continues to remain healthy marked by healthy net-worth, low gearing levels and moderate debt protection metrices. However, thin profitability margins and exposure to customer concentration risk the constrain the rating. |
| About the Company |
| Mumbai-based, Saraf Corporation India Private Limited (SCPL) was incorporated in 2006 by Mr. Deepak Saraf. The company is engaged in undertaking contracts for catering and housekeeping services and maintenance painting for offshore installations. |
| Unsupported Rating |
| Not Applicable |
| Analytical Approach |
| For arriving at this rating, Acuité has taken a standalone view of the business and financial risk profile of Saraf Corporation India Private Limited. |
Key Rating Drivers
| Strengths |
| Experienced Management
Mr. Deepak Saraf, founder-promoter of SCPL, has an extensive industry experience of more than three decades. Prior to incorporating SCPL, Mr. Saraf was engaged in providing corporate catering services. Mr. Saraf is supported by his son Mr. Daksh Saraf and a team of experienced professionals to run the day-to-day operations of the company. During the year FY2023, company is estimated to generate an operating income of Rs.62.64 crore as against Rs.49.28 crore it generated in FY2022. However, the operating margins continue to remain in the range of 3.5-4 percent during this period. Healthy Financial Risk Profile SCL’s financial risk profile is healthy marked by healthy net worth, gearing and moderate debt protection metrics. The tangible net worth stood at 15.68 crore in FY2023 as against 14.91 crore in FY2022 and Rs.14.19 crore in FY2021. Total Debt of the company stood at 8.36 crore in FY2023 as against 9.42 crore in FY2022 and Rs.3.68 crore in FY2021. The debt of Rs.8.36 crore consists of USL of Rs.3.33 crore and bank borrowings of Rs.5.03 crore. The gearing of the company stood at 0.53 times in FY2023 as against 0.63 times in FY2022 and 0.26 times in FY2021. The TOL/TNW stood at 1.11 times in FY2023 as against 0.98 times in FY2022 and 0.96 times in FY2021. The Interest Coverage ratio of the company stood at 2.94 times in FY2023 as against 3.17 times in FY2022 and 6.40 times in FY2021 owing to increase in interest cost. DSCR ratio stood at 2.54 times in FY2023 against 1.47 times in FY2022 and 2.56 times in FY2021. In FY2023, capex undertaken was of approximately Rs.1.5 crore. Approximately 40 dry and reefer containers were procured, warehouse facility was enhanced. The capex has been funded through internal accruals. |
| Weaknesses |
| Moderate Working Capital Operations
The company’s working capital operations are moderate marked by GCA days of 163 days in FY2023 as against 192 days in FY2022 and 163 days in FY2021. The inventory days stood at 30 days in FY2023 against 28 days in FY2022 and 12 days in FY2021. The debtor days stood at 114 days in FY2023 against 150 days in FY2022 and 140 days in FY2021. Company also draws comfort from its creditors with average credit period of 45-60 days. The creditor days in FY2023 stood at 68 days against 38 days in FY2022 and 95 days in FY2021. Highly competitive industry and customer concentration risk The company operates in a highly competitive industry of catering and hospitality services to offshore installations such as vessels, rigs, and float ships. It also faces risks of being in a tender based nature of business. Furthermore, company faces high customer concentration as one customer contributed around ~89 percent of the revenue in FY2023. However, the risk gets mitigated on account of long-standing relationship with the said reputed customer (ONGC). |
| Rating Sensitivities |
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| All Covenants |
| Not Applicable |
| Liquidity Position |
| Adequate |
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SCIPL has adequate liquidity position marked by net cash accruals of 1.43 Cr against no maturing debt obligations. The company has maintained an unencumbered cash balance of Rs.0.39 Cr in FY2023 as against Rs.0.22 Cr in FY2022.The average bank limit utilisation stood at 86.13 percent for last seven months ending April 2023. Going ahead, cash accruals are expected to be in the range of Rs.1.99 crore to 2.45 crore in FY2024 and FY2025, against no maturing debt obligation.
Acuite believes that the liquidity of the company is likely to remain adequate over the medium term on account of moderate cash accruals against no major debt repayments over the medium term. |
| Outlook: Not Applicable |
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 23 (Actual) | FY 22 (Actual) |
| Operating Income | Rs. Cr. | 62.64 | 49.28 |
| PAT | Rs. Cr. | 0.77 | 0.73 |
| PAT Margin | (%) | 1.23 | 1.47 |
| Total Debt/Tangible Net Worth | Times | 0.53 | 0.63 |
| PBDIT/Interest | Times | 2.94 | 3.17 |
| Status of non-cooperation with previous CRA (if applicable) |
| Not Applicable |
| Any other information |
| None |
| Applicable Criteria |
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• 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 |
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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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