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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 1.05 | ACUITE B- | Stable | Reaffirmed | - |
| Bank Loan Ratings | 9.98 | - | ACUITE A4 | Reaffirmed |
| Total Outstanding | 11.03 | - | - |
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Rating Rationale |
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Acuité has reaffirmed the long-term rating to ‘ACUITE B-’ (read as ACUITE B minus) and reaffirmed the short-term rating of ‘ACUITE A4’(read as ACUITE A four) to the Rs. 11.03 crore bank facilities of Sunita Impex Private Limited (SIPL). The outlook remains 'stable'
Rationale for Rating The rating reaffirmation reflects the benefits derived from the long operational track record and experienced management. The company’s revenue increased to Rs 18.48 Cr. in FY2023 as against Rs 16.08 Cr. in FY2022. Further, the company has achieved revenues of around Rs.18.85 Cr. till FY2024 (Provisional). The operating margin of the company stood at (3.05) per cent in FY2023 from (16.74) per cent in FY2022. However, the rating is constrained by below average financial risk profile marked by declining net worth, high gearing and moderate debt protection metrics. The company has high working capital requirements as evident from gross current assets (GCA) of 299 days for FY2023 and 275 days for the FY2022. The company has stretched liquidity marked by net cash accruals of Rs. (0.88) Cr. as on FY2023 as against debt obligation of Rs. 0.54 Cr. over the same period. The debt repayments are being serviced out of unsecured loans being brought in the business. |
| About the Company |
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Sunita Impex Private Limited was established as a partnership firm with the name ‘M/s Sunita Textile & Engineer’ in 1974 by the Sonika family of Kolkata, West Bengal. The firm was converted to a private limited company in June, 1991 with its current name. Since its inception, Sunita Impex Private Limited has been engaged in manufacturing and export of readymade garments and trading of engineering goods. The company has a plant situated at Bangalore operating at an installed capacity of 1 million pieces per annum. The readymade garments and engineering goods are sold to countries including France, Bangladesh, Ivory Coast and Ethiopia.
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| Unsupported Rating |
| Not Applicable |
| Analytical Approach |
| Acuité has considered the standalone business and risk profile of SIPL to arrive at the rating. |
| Key Rating Drivers |
| Strengths |
| Long operational track record and experienced management
Sunita Impex Private Limited (SIPL) has been in the garment industry and trading of engineering goods for about five decades since 1974. Acuité believes that the long track record of operations will benefit the company going forward, resulting in steady growth in the scale of operations. Further, the key promoter of the company Mr. Sushil Kumar Sonika and Mr. Sunil Sonika have over four decades of experience in a similar line of operation. Acuité derives comfort from the long term experience of the promoters. |
| Weaknesses |
| Below average financial risk profile
The company's financial risk profile is below average marked by declining net worth, high gearing and moderate debt protection metrics. The tangible net worth of the company stood at Rs. 2.24 Cr. as on FY2023 as compared to Rs.3.37 Cr. as on FY2022 due to losses during the year which eroded the capital. The gearing of the company stood high at 6.81 times as on FY2023. The Total Outside Liabilities/Tangible Net Worth (TOL/TNW) has increased and stood at 8.18 times as on FY2023. The debt protection metrices of the company remain constrained marked by Interest coverage ratio (ICR) of (0.05) times and debt service coverage ratio (DSCR) of 0.18 times for FY2023. The net cash accruals to total debt (NCA/TD) stood at (0.06) times in FY2023. Going forward, Acuité believes that the financial risk profile will remain below average over the medium term. Working capital intensive nature of operations SPIL has high working capital requirements as evident from gross current assets (GCA) of 299 days for FY2023 and 275 days for the FY2022. Debtor days increased to 141 days in FY2023 as against 114 days in FY2022. Inventory days increased to 78 days in FY2023 as against 56 days in FY2022. Creditor days of the company stood at 113 days as on FY2023 as compared to 66 days of FY2022. Acuité believes that the working capital operations of the company will remain at the similar levels over the medium term. |
| Rating Sensitivities |
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| Liquidity Position |
| Stretched |
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The company has stretched liquidity marked by net cash accruals of Rs. (0.88) Cr. as on FY2023 as against debt obligation of Rs. 0.54 Cr. over the same period. The management has brought in unsecured loans in business to cover its debt. The cash and bank balance stood at Rs. 0.30 Cr. for FY 2023. Further, the current ratio of the company stood at 1.20 times in FY2023. The working capital cycle of the company is marked by Gross Current Assets (GCA) of 299 days for FY2023 and 275 days FY2022. The bank limit of the company has been ~ 96.00 percent utilized for the last six months ended in April 2024.
Acuité believes that the liquidity of the company is likely to remain stretched over the medium term. |
| Outlook: Stable |
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Acuité believes the company’s outlook will remain 'stable' over the medium term on account of vast experience of the promoters and long track record. The outlook may be revised to ‘Positive’ in case the company registers healthy growth in revenues while achieving sustained improvement in operating margins, capital structure and working capital management. Conversely, the outlook may be revised to ‘Negative’ in case of further deterioration in the company’s financial risk profile and liquidity position or further elongation in its working capital cycle.
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 23 (Actual) | FY 22 (Actual) |
| Operating Income | Rs. Cr. | 18.48 | 16.08 |
| PAT | Rs. Cr. | (1.13) | (2.48) |
| PAT Margin | (%) | (6.13) | (15.39) |
| Total Debt/Tangible Net Worth | Times | 6.81 | 3.49 |
| PBDIT/Interest | Times | (0.05) | (3.54) |
| 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 • Rating Process and Timeline: https://www.acuite.in/view-rating-criteria-67.htm • Manufacturing Entities: https://www.acuite.in/view-rating-criteria-59.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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