| Western Carriers India Limited | ||||||
| Rating outlook revised to 'Positive'; Rating reaffirmed; rated amount enhanced for Bank Debt | ||||||
| Rating Action | ||||||
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| 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 revised its outlook on the long-term bank facilities of Western Carriers India Limited (WCIL) to ‘Positive’ from ‘Stable’ while reaffirming the rating at ‘CRISIL A-‘; the short-term rating of the company has been reaffirmed at ‘CRISIL A2+’.
The revision in outlook reflects significant improvement in the business risk profile of WCIL aided by substantial increase in the scale of operations over the last two fiscals. Revenue levels grew to Rs. 1470 Cr in fiscal 2022 against Rs. 1110 Cr in fiscal 2021 registering a 32% growth. H1FY23 revenue stood at over Rs. 800 Cr and WCIL is estimated to cross Rs. 1600 Cr of topline for FY23. Operating margins have remained stable at over 7% during the last two fiscals and should remain at similar levels going forward. Cash accruals were increased to Rs. 72.7 Cr as on March 2022 against Rs. 51 Cr in last fiscal; and the same is expected to grow further on account of growing revenue levels. The growth in scale of operations is likely to sustain over the medium term being backed by steady increase in client-wise revenue levels as well as addition of new clients/business YOY.
The ratings continue to reflect extensive experience of the promoter in the transport and logistics business, established market position of WCIL, adequate infrastructure, healthy scale of operations, reputed clientele, and comfortable financial risk profile. These strengths are partially offset by large working capital requirement and susceptibility to economic downturns. |
Analytical Approach 1% redeemable non-cumulative preference shares have been treated as neither debt nor equity. |
Key Rating Drivers & Detailed Description Strengths: Established market position and adequate infrastructure The promoter has close to four decades of experience in the transport and logistics industry; his strong understanding of market dynamics and healthy relations with customers and suppliers helped WCIL establish a strong market position and set up adequate infrastructure and network with over 70 branches and multiple warehouses (rented and own). Though the vehicles are hired, the company has the necessary equipment to facilitate transport handling at many points across the country.
Healthy scale of operations and reputed and stable clientele The company has established relationships with multiple blue-chip customers such as Hindustan Unilever Ltd ('CRISIL AAA/Stable'), Vedanta Ltd ('CRISIL AA/Stable/CRISIL A1+'), and Hindalco Industries Ltd. This led to a sustained healthy scale, reflected in revenue of Rs 1,470 crore and Rs 1,110 crore for fiscals 2022 and 2021, respectively.
Comfortable financial risk profile Adjusted networth was Rs 211.33 crore as on March 31, 2022, due to high paid-up share capital, securities premium, and general reserve; adjusted gearing was 0.76 time. Debt protection metrics have been comfortable, with interest coverage and net cash accrual to total debt ratios of 7.84 times and 0.45 time, respectively, for fiscal 2022.
Weakness: Large working capital requirement The working capital cycle is likely to remain stretched and will be closely monitored. Gross current assets were 84 days as on March 31, 2022; driven by receivables of 77 days. Furthermore, significant receivables outstanding for more than 180 days increase working capital requirement.
Susceptibility to economic downturns The business risk profile remains susceptible to economic downturns, though the risk is mitigated by a diverse customer base across different sectors. Nevertheless, a subdued economic scenario can adversely affect scale and working capital cycle. |
Liquidity: Adequate Bank limit utilisation was high, at around 83% for the 12 months through November 2022. However, with limit enhancement in Dec 2022, BLU position is expected to show improvements. Cash accrual is projected at over Rs 80 crore per annum, sufficient to meet term debt obligation of Rs 10-15 crore over the medium term; the surplus cash will aid financial flexibility. Current ratio was healthy at 1.73 times on March 31, 2022. Unencumbered cash and bank balance of Rs 8-9 crore maintained throughout the year supports overall liquidity. Low gearing and moderate networth provides adequate financial cushion to combat any adverse condition or downturn in the business. |
Outlook Positive CRISIL Ratings believes that WCIL will continue to benefit from extensive experience of the promoters and their established relationship with reputed clients. Sustainability of current revenue levels as well as operating margins, while maintaining stability in terms of financial risk profile will remain rating drivers going forward. |
Rating Sensitivity factors Upward factors
Downward factors
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About the Company WCIL, incorporated in 2011 and promoted by Mr Rajendra Sethia, provides multimodal logistics (road, rail, water, custom house agency, storage, and warehousing) services across India. Mr Rajendra Sethia and his son, Mr Kanishka Sethia, manage the business.
Western Carriers, a proprietorship firm set up in 1976 by Mr Rajendra Sethia, was taken over by WCIL in June 2013. |
Key Financial Indicators
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Status of non cooperation with previous CRA: WCIL has not cooperated with Credit Analysis & Research Ltd. which classified it as non-cooperative vide release dated March 16, 2021. The reason provided by Credit Analysis & Research Ltd. is non-furnishing of information by WCIL for monitoring of ratings. |
Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
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| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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* - Issuer did not cooperate; based on best-available information
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| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||||||||||||||||||||||
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This Annexure has been updated on 03-Feb-2023 in line with the lender-wise facility details as on 03-Feb-2023 received from the rated entity.
Criteria Details
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