| Ask Agencies And Investments Private Limited | ||||
| Rating outlook revised to ‘Stable’; rating reaffirmed | ||||
| Rating Action | ||||
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| 1 crore = 10 million | ||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has revised its outlook on the long-term bank facilities of Ask Agencies and Investments Private Limited (AAIPL; part of the Mansha group) to 'Stable' from 'Negative' while reaffirming the rating at 'CRISIL BBB'.
The outlook revision reflects the better than expected performance of the group in fiscal 2021 supported by demand from retail segment throughout the fiscal and revival in demand from on-premise segment from H2 FY21. Group is estimated to record revenue of Rs 428 crore in fiscal 2021. The group derives around 30-35% of its revenue from on-premise segment (comprising of hotels, restaurants, bars and permit rooms) and the rest 60-65% from retail segment. Due to the lockdown restrictions on account of Covid-19, the operations of on-premise segment had halted thus leading to a subdued demand from the segment during H1 FY21. However, this was offset by the shift in demand from on-premise segment to retail segment. The group generated only around 10% of its revenue from on-premise segment and around 90% from retail segment. Furthermore, the revival in on-premise demand from H2 FY21 has also supported the overall revenue. In the current fiscal, group has achieved revenue of Rs 100.59 crore in Q1 FY22 as compared to Rs 53.69 crore during Q1 FY21. Operating margin is estimated at around 4.5% in fiscal 2021 and is estimated to hover around 4% over the medium term.
The rating continues to reflect the extensive experience of the promoters in the alcohol distribution business, Mansha group’s comfortable financial risk profile and moderate working capital management. These strengths are partially offset by low profitability due to the trading business, susceptibility of operating margin to government regulations, and a moderate scale of operations with significant dependence on principal’s strategy. |
Analytical Approach For arriving at the rating, CRISIL Ratings has combined the business and financial risk profiles of AAIPL, Mansha Agencies and Investments Pvt Ltd (Mansha) and Honest Marketing Pvt Ltd (Honest), collectively referred to as the Mansha group, as they have significant financial and operational fungibilities and common management.
Please refer Annexure - List of entities consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers & Detailed Description Strengths: * Extensive experience of the promoters and established relationships with suppliers: The promoters have been in the business of alcohol distribution for over three decades. The main promoters, Mr Bhupinder Singh, Mr Balwant Singh, Ms Harpreet Kaur and Mr Yohan Arif Aslam Rub, hold extensive experience in this industry through their group companies. They have established strong relationships with their suppliers. The company's services across the value chain of distribution will support its business risk profile over the medium term. The group is the sole distributor for brands of Diageo India Pvt Ltd (DIPL). DIPL has brands such as Smirnoff, Vat 69, Johnny Walker, Blue Label, and Black and White. The group is also a distributor for Moet Hennessy, Allied Blenders and Distillers Pvt Ltd, Carlsberg, Sazerac, Sula Vineyards, United Spirits Ltd, etc. The group's revenue growth is linked to the market position of these brands in the region, while the risk of supplier concentration is mitigated by its strong relationships with principal suppliers.
* Comfortable financial risk profile: The financial risk profile is supported by strong networth and comfortable capital structure and moderate debt protection metrics. Group has a strong networth, estimated at Rs 98.89 crore as on 31st March 2021, backed by steady accretion to reserves. Supported by improving networth and limited reliance on debt, capital structure is comfortable, reflected in gearing and TOLANW of 0.84 time and 1.13 times, estimated, as on 31st March 2021. Capital structure is expected to remain comfortable over the medium term. Group has moderate debt protection metrics, with interest cover and NCAAD estimated at 2.5 times and 0.11 time, respectively, in fiscal 2021.
* Moderate working capital cycle: The Group has a moderate working capital cycle as reflected in its gross current assets (GCA) estimated at 134 days as on March 31, 2021, driven by receivables of 74 days and inventory of 36 days. This led to moderate return on capital employed, estimated at 11.7% in fiscal 2021.
Weaknesses: * Low profitability due to trading business and susceptibility of profit margin to government regulations: Operations are geographically largely concentrated in Maharashtra. The business risk profile remains exposed to changes in local demand-supply dynamics and political or competitive conditions. Moreover, the company faces intense competition from breweries and spirits traders of other brands in the region. Further, on account of the trading business, operating margin has remained in the range of 4-5% over the last 5 fiscals ended 2021. Also, government regulations and taxes impact the pricing of products to a greater extent. Retail and distribution is strictly controlled by the government. Heavy taxes are levied on liquor products in India, which could make the end users switch to cheaper brands; this could affect the revenue of the group.
* Moderate scale of operations: Revenue is estimated at Rs 428 crore in fiscal 2021 reflecting the moderate scale of operations. Furthermore, revenue has a significant linkage and dependence on the principal’s business strategy. |
Liquidity: Adequate The fund-based working capital limit was moderately utilized at 67% on average over the 12 months through June 2021. Cash accrual are expected to be around Rs 9-11 crore per fiscal against yearly debt obligation of around Rs 2.5-3.0 crore in fiscal 2022 and Rs 5.5-5.8 crore in fiscal 2022. Current ratio is estimated at 1.89 times as on March 31, 2021. Unsecured loans of Rs 8.68 crore (estimated as on 31st March 2021) also support the liquidity. Cash and bank balance is estimated at around Rs 8.1 crore (as on March 31, 2021) of which around Rs 7 crore is in the form of lien-marked FDs. Group was sanctioned with GECL loan of Rs 14.19 crore during FY 2021 which supported the liquidity. |
Outlook: Stable CRISIL Ratings believes group will maintain its business risk profile backed by the promoters’ extensive industry experience and their established relationships with suppliers. |
Rating Sensitivity factors Upward factors
Downward factors
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About the Group Incorporated in 1995, AAIPL is promoted by Mr Yohan Aslam, Mr Bhupinder Singh and Ms Harpreet Kaur. It is a distributor of imported premium alcoholic beverages (alcobevs) across the country. Similarly, Mansha is the distributor of domestically procured alcobevs in Mumbai and Goa, and Honest is in a similar business in Nashik. |
Key Financial Indicators (Consolidated)
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Any other information: Not applicable |
| Note on complexity levels of the rated instrument: CRISIL Ratings' complexity levels are assigned to various types of financial instruments. The CRISIL Ratings' complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL Ratings' complexity levels for instruments that they consider for investment. Users may also call the Customer Service Helpdesk with queries on specific instruments. |
Annexure - Details of Instrument(s)
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Annexure – List of entities consolidated
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| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | |||||||||||||||||||||||||||||||||||||||
Annexure - Details of Bank Lenders & Facilities
| Facility | Amount (Rs.Crore) | Name of Lender | Rating |
| Cash Credit | 10 | ICICI Bank Limited | CRISIL BBB/Stable |
| Working Capital Facility | 10 | HDFC Bank Limited | CRISIL BBB/Stable |
This Annexure has been updated on 02-Sept-2021 in line with the lender-wise facility details as on 01-Sept-2021 received from the rated entity.
Criteria Details
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