Rating Rationale

Bir Horizons

28 Mar 2019

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of ₹. 9.14 Crores of Bir
Horizons.

Particulars

Amount
Rating*
Facilities (₹ Crs) Tenure
(Fund based) 1.50
Cash Credit
2.04 Long Term BWR BB-
Term Loan-I*
(Pronounced as BWR Double B minus)
Outlook:​ Stable
1.44
Term Loan-II*

(Non Fund Based) 4.16 BWR A4

Short Term
LCBD (Pronounced as BWR Single A four)

Total 9.14 INR Nine Crores and Fourteen Lakhs Only

*Please refer to BWR website ​www.brickworkratings.com/​ for definition of the ratings
* O/s out of the sanction of INR 3.50 crores and INR 2.25 crores respectively.

Rationale/Description of Key Rating Drivers/Rating sensitivities

Brickwork Ratings has principally relied upon the audited financial results upto FY 2018, projected
financials upto FY 2021, publicly available information and information/clarifications provided by the
management of the concern.
The ratings have factored in strong experience of the proprietor, moderate gearing and comfortable debt
protection metrics as well as comfortable interest coverage metrics. The ratings are however, restricted by
medium scale of operations, highly competitive nature of industry and inherent risk associated with the
constitution of the entity as a proprietorship concern.
Going forward, the concern’s ability to scale up its operations and bringing down the gearing further by
introducing additional capital in the business will be the key rating sensitivities.

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Credit Strengths

❖ Strong experience of the proprietor: ​Mr. Gurudayal Singh established the concern
in 1988 and has experience of almost five decades in the textile industry. He is supported
by his son Mr. Jasbir Singh who is currently operating the concern and has experience of
almost two and a half decades in the line of business.
❖ Moderate gearing: ​The concern is moderately geared which is marked by Total
Debt/Tangible Net Worth and TOL/TNW of 1.47x and 2.14x respectively in FY 2018.
This is due to the capital infusion by the proprietor and moderate debt level.
❖ Comfortable debt protection and interest coverage metrics: ​The concern has
reportedly comfortable debt protection and interest coverage metrics which is reflected
by DSCR and ISCR of 1.37x and 3.31x respectively in FY 2018 although the same was
1.95x and 4.46x respectively in FY 2017 but the trend of comfortability in coverage may
remain there in the medium term.

Credit Concerns

❖ Medium scale of operations: ​The concern has medium scale of operations as it has
reported the total operating revenue of INR 46.51 crores in FY 2018 which has declined
from INR 50.26 crores in FY 2017. Although the concern is expecting to close the current
financial year by clocking the total operating revenue of INR 67.00 crores in FY 2019 of
which the concern has already achieved INR 57.00 crores till January 2019.
❖ Highly competitive nature of industry: ​The entity faces direct competition from
various organized and unorganized players in the market. There are number of small and
regional players who are located in and around area and catering to the same market
which has limited the bargaining power of the concern and has exerted pressure on its
margins.
❖ Inherent risk associated with the constitution of the firm: ​The entity is
constituted as a proprietorship concern and is exposed to the risk of withdrawal of funds
in case of personal exigencies which may affect business operations.

Analytical Approach

For arriving at its ratings, BWR has applied its rating methodology as detailed in the Rating Criteria
detailed below (hyperlinks provided at the end of this rationale).

Rating Outlook: Stable

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BWR believes the ​Bir Horizons ​business risk profile will be maintained over the medium term. The
‘Stable’ outlook indicates a low likelihood of rating change over the medium term. The rating outlook
may be revised to 'Positive' in case the revenues and profit show sustained improvement. The rating
outlook may be revised to 'Negative' if the revenues go down and profit margins show lower than
expected figures.

About the Concern

Established in 1988, Bir Horizons is a Noida-based proprietorship concern engaged in manufacturing of
fabrics and also undertakes job work of knitting, dyeing, rotary printing, sueding and brushing for some
premium brands. The concern is owned by Mr. Gurudayal Singh having rich experience of almost 5
decades in the textile industry. The proprietor is supported by his son, Mr. Jasbir Singh, Managing
Director having experience of two and a half decades in the line of business. The plant and office of the
concern is located in Surajpur, Greater Noida.

Liquidity Position
The company’s liquidity is supported by cash and cash equivalents of INR 0.16 crores in FY 2018. The
total amount of fund based working capital facility of INR 1.50 crores which has been 80% utilized. The
current ratio and quick ratio of the firm is 1.18x and 0.74x respectively in FY 2018 signify stress in the
liquidity.

Concern’s Financial Performance

Key Parameters Units FY 2018 FY 2017

Result Type Audited Audited

Operating Revenue ₹ Cr 46.51 50.26

EBITDA ₹ Cr 5.13 6.38

PAT ₹ Cr 0.44 2.25

Tangible Net worth ₹ Cr 13.36 13.95

TOL/TNW Times 2.14 1.70

Current Ratio Times 1.18 1.26

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Rating History for the last three years

S.No Current Rating (Mar 2019)

Facilities Rating History
Type
(Long
Amount
Term/ Rating 2018 2017 2016
(₹ Crs)
Short
Term)

1. (Fund Based) 1.50 NA NA NA

Cash Credit BWR BB-
(Pronounced as BWR
2. Long Term 2.04 NA NA NA
Term Loan-I* Double B minus)
Outlook: ​Stable
3. Term Loan-II* 1.44 NA NA NA

BWR A4
(Non Fund Based)
4. Short Term 4.16 (Pronounced as BWR NA NA NA
LCBD
Single A four)
Total 9.14 ₹ Nine Crores and Fourteen Lakhs Only

Status of non-cooperation with previous CRA (if applicable)- NA

Any other information: NA

Hyperlink/Reference to applicable Criteria

● General Criteria

● Approach to Financial Ratios

● Manufacturing Companies

● Short Term Debt

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For any other criteria obtain hyperlinks from website

Analytical Contacts Media

Satvinder Kumar Gakhar [email protected]
Associate Director-Ratings
Relationship Contact
[email protected] [email protected]
Phone: 1-860-425-2742

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BWR complexity levels are ​meant for educating investors. ​The BWR complexity levels are available
at​ ​www.brickworkratings.com/download/ComplexityLevels.pdf​ ​ Investors queries can be sent ​to ​[email protected]​.

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DISCLAIMER

Brickwork Ratings (BWR) has assigned the rating based on the information obtained from the issuer and other reliable sources,
which are deemed to be accurate. BWR has taken considerable steps to avoid any data distortion; however, it does not examine
the precision or completeness of the information obtained. And hence, the information in this report is presented “as is” without
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