Rating Rationale
August 06, 2024 | Mumbai
Flomic Global Logistics Limited
Ratings reaffirmed at 'CRISIL BBB-/Stable/CRISIL A3'; Rated amount enhanced for Bank Debt
 
Rating Action
Total Bank Loan Facilities RatedRs.45 Crore (Enhanced from Rs.35 Crore)
Long Term RatingCRISIL BBB-/Stable (Reaffirmed)
Short Term RatingCRISIL A3 (Reaffirmed)
Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings.
1 crore = 10 million
Refer to Annexure for Details of Instruments & Bank Facilities

Detailed Rationale

CRISIL Ratings has reaffirmed its ‘CRISIL BBB-/Stable/CRISIL A3’ ratings on the bank loan facilities of Flomic Global Logistics Limited (FGLL).

 

The rating reflects FGLL's established market presence in logistics business, backed by promoter’s experience and well-established customer base. These strengths are partially offset by moderate financial profile, margin susceptibility to intense competition and global trade and economic scenario.

Analytical Approach

CRISIL ratings have considered the lease liability payments in repayment obligations while arriving at the ratings as it will result in cash outflow from the company’s cash accruals.

Key Rating Drivers & Detailed Description

Strengths:

  • Established market position and experienced management: FGLL has a well-established market position in the freight forwarding business supported by extensive experience of its promoters of more than 3 decades in the industry and strong relationships with key principals and carriers. The promoters of the company have more than 30 years of experience in the industry, which has helped the company establish strong relationships with major shipping lines. FGLL has positioned itself as an end-to-end logistics solutions provider, offering services such as freight forwarding, customs clearance, air exports/imports, door-to-door logistics, etc. The company also provides warehousing services, to cater to a wider range of logistics requirements of its clients and as a result the revenues of the company has also grown by CAGR of 26% for the last three fiscal years ended FY 2024. The revenues moderation in the fiscal 2024 to Rs 332 crores from Rs 422 crores in fiscal 2023 was on account of the moderation in the freight rates. The revenues are expected to grow by around 10% to 20% in fiscal 2025 mainly driven by the increase in the volume sales and better realizations.

 

  • Diversified customer base: FGLL has an established customer base of over 3000 customers, with top 10 customers contributing around 25% to the topline in fiscal 2024 which reduces the concentration of revenues on a single customer. FGLL benefits from its long-standing relationships with a reputed clientele which include large players such as Saint-Gobain India Pvt Ltd, CEAT Limited and other reputed clientele. In addition, the customers are spread across various geographies within India.

 

  • Efficient working capital management: The working capital operations of the company are efficiently managed as reflected in the gross current assets of 100 days as on March 31, 2024 (66 days a year ago). This mainly arises as the company gives a moderate credit period to its customers of around 60 to 90 days and the same is realized within the stipulated timeline with no stretch observed. Furthermore, to ensure no bad debts are incurred company does various checks before onboarding a new customers. Working capital cycle further remains supported by the fund based bank limits and credit received from the shipping lines of around 15 days. Moving forward with the no change in the credit period offered policy, the working capital cycle is expected to remain efficient over the medium term.

 

Weaknesses:

  • Moderate financial profile: The financial risk profile of the company is marked with estimated net worth of Rs 43.35 crores as on March 31, 2024 (41.45 crores as on March 31, 2023). The net worth continues to improve on the back of steady accretion to the reserves. The capital structure is moderate as reflected in the gearing and total outside liability to adjusted net worth ratio of 2.1 to 2.2 times and 3.2 to 3.3 times as on March 31, 2024 (1.7 times and 2.4 times a year ago). The liabilities include the long term warehouse leases. The debt protection measures are adequate with interest cover and net cash accruals to adjusted debt ratio of 3.4 to 3.5 times and 0.2 to 0.3 times as on March 31, 2024 (4.45 times and 0.38 times a year ago). Overall financial risk profile of the company is expected to improve over the medium term on back of steady accretion to the reserves and in absence of any large debt funded capex or any dividend outflows.

 

  • Margins susceptible to intense competition susceptibility of business to economic scenario: Operating margins have remained volatile in the range of 6.9% to 9.37% for the past three fiscals through fiscal 2024. Since the company has limited bargaining power against the large shipping carriers, margins are expected to remain in the similar range and may fluctuate given the intense competition. Limited ability to pass on increases in prices to customers due to intense competition could also affect the profitability over the medium term. The logistics business is directly linked to global trade and economic scenario, and hence, a steep fall in it could weaken the business by constraining profitability. The operations are also dependent on end user industry cycle such as pharmaceuticals, stones, food and beverage, etc. Sluggishness in global trade could impact volumes and thus profitability. Growth in volumes as well as the profits over the medium term will remain a key monitorable.

Liquidity: Adequate

FGLL is expected to generate cash accrual of Rs 22 to 26 crores per annum which are sufficient against term debt and lease liability payment obligation (largely lease liability) of Rs 21.6 crores over the medium term. Bank limit utilization is at comfortable level of 67% for the past twelve months ended Jun 2024. The company had healthy unencumbered cash and bank balance of around Rs. 20 crore as on March 31, 2024, which includes fixed deposit.

Outlook: Stable

CRISIL Ratings believe FGPL will continue to benefit from the extensive experience of its promoter, and established relationships with clients.

Rating Sensitivity factors

Upward factors:

  • Sustained improvement in the scale of operations driven by higher volumes and sustenance of operating margins leading to net cash accruals above Rs 30 crores.
  • Improvement in the financial risk profile and sustenance of working capital cycle.

 

Downward factors:

  • Decline in revenue or operating profits resulting in cash accruals of below Rs 21 crores.
  • A substantial increase in its working capital requirements thus weakening its liquidity and financial profile.

About the Company

SCPL, incorporated in 1981, is engaged in providing multi-cargo, multi surface logistics business along with warehousing. The company has been handling both port to port shipments as well as end to end shipments across the globe. Its head office located in Mumbai including 21 branch offices and 18 warehouses spread across pan India. SCPL is promoted by Mr. Lancy Barboza and Anita Barboza. The company is listed on the BSE.

Key Financial Indicators

As on / for the period ended March 31

Unit

2024

2023

Operating income

Rs crore

332.15

422.38

Reported profit after tax

Rs crore

2.18

9.48

PAT margins

%

0.66

2.3

Adjusted Debt/Adjusted Net worth

Times

2.13

1.74

Interest coverage

Times

3.43

4.4

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 and are included (where applicable) in the 'Annexure - Details of Instrument' in this Rating Rationale.

CRISIL Ratings will disclose complexity level for all securities - including those that are yet to be placed - based on available information. The complexity level for instruments may be updated, where required, in the rating rationale published subsequent to the issuance of the instrument when details on such features are available.

For more details on the CRISIL Ratings` complexity levels please visit www.crisilratings.com. Users may also call the Customer Service Helpdesk with queries on specific instruments.

Annexure - Details of Instrument(s)

ISIN Name of the
instrument		 Date of
Allotment		 Coupon
Rate (%)		 Maturity
Date		 Issue size
(Rs.Crore)		 Complexity
Level		 Rating assigned
with outlook
NA Bank Guarantee NA NA NA 2 NA CRISIL A3
NA Cash Credit NA NA NA 43 NA CRISIL BBB-/Stable
Annexure - Rating History for last 3 Years
  Current 2024 (History) 2023  2022  2021  Start of 2021
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Fund Based Facilities LT 43.0 CRISIL BBB-/Stable   -- 25-10-23 CRISIL BBB-/Stable   --   -- --
Non-Fund Based Facilities ST 2.0 CRISIL A3   -- 25-10-23 CRISIL A3   --   -- --
All amounts are in Rs.Cr.
Annexure - Details of Bank Lenders & Facilities
Facility Amount (Rs.Crore) Name of Lender Rating
Bank Guarantee 2 ICICI Bank Limited CRISIL A3
Cash Credit 33 ICICI Bank Limited CRISIL BBB-/Stable
Cash Credit 10 ICICI Bank Limited CRISIL BBB-/Stable
Criteria Details
Links to related criteria
CRISILs Bank Loan Ratings - process, scale and default recognition
CRISILs Approach to Financial Ratios
Rating criteria for manufaturing and service sector companies
CRISILs Criteria for rating short term debt

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