Ayushman Merchants Private Limited

March 13, 2018

Summary of rated instruments

Instrument* Previous Rated Amount Current Rated Amount Rating Action
(Rs. crore) (Rs. crore)
CC 19.00 23.00 [ICRA]BB-(Stable) upgraded from
[ICRA]B+(Stable)
Bank guarantee 1.00 2.00 [ICRA]BB-(Stable) upgraded from
[ICRA]B+(Stable)/[ICRA]A4 reaffirmed
Unallocated - 5.00 [ICRA]BB-(Stable) upgraded from
[ICRA]B+(Stable)/[ICRA]A4 reaffirmed
Total 20.00 30.00

Rating action
ICRA has upgraded the long-term rating assigned to Rs 23.00 crore fund based limits of Ayushman Merchants Private
Limited (AMPL) to [ICRA]BB- (pronounced as ICRA double B minus) from [ICRA]B+ (pronounced as ICRA B plus). ICRA has
also upgraded the long-term ratings assigned to Rs. 2.00 crore bank guarantee limits and Rs. 5.00 crore unallocated limits
of AMPL to [ICRA]BB-(Stable) from [ICRA]B+(Stable) and reaffirmed the short-term rating at [ICRA]A4 (pronounced as
ICRA A four). The outlook on the long-term rating is ‘Stable’.

Rationale
The ratings upgrade favourably factors in increase in DCA volumes over the years from 42302 MT in FY2012 to 74816 MT
in FY2017; and equity infusion of Rs. 1.05 crore in February 2018 and enhancement in working capital limits which would
support the increased working capital requirements. The ratings also consider the extensive experience of the promoters
spanning over 15 years in polymer trading business; moderate customer concentration risk with top 5 customers
contributing to only 36% of total sales in FY2017; and sole DCA (Del Credere agent) & CS (Consignment Stockiest) of
Chemplast Sanmar Limited (CSL) and Grasim Industries Limited (GIL) in the state of Andhra Pradesh (AP), Telangana and
Orissa for sale of PVC resins and CP respectively. However, the ratings are constrained by modest scale of operations of
AMPL in the polymer trading business; moderate financial profile characterised by gearing at 2.87 times and interest
coverage of 1.64 times and NCA/Debt at 4.29% for FY2017; and exposure to default risk on payments from customers,
since credit risk is transferred by CSL and GIL to AMPL being DCA/CS business.

Outlook: Stable
The stable outlook reflects ICRA belief that AMPL will continue to benefit from the extensive experience of its promoters
in the polymer trading business. The outlook may be revised to 'Positive' if substantial growth in the scale of operations
and profitability strengthens the financial risk profile. The outlook may be revised to 'Negative' if revenue reduces than
current levels or stretch in the working capital cycle weakening liquidity.

Key rating drivers

Credit strengths
Experienced promoters with over 15 years of experience in the polymer trading business - AMPL is incorporated in the
year 2007 by Mr. Manoj Dugar and is involved in trading of polymer products. The company is a Del credere agency

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(DCA) cum Consignment Stockiest (CS) of Chemplast Sanmar Limited (CSL) and Grasim industries Ltd (GIL) for state of
Andhra Pradesh, Telangana and Orissa for products PVC resin and Chlorinated Paraffin respectively. The promoters have
more than 15 years of experience in polymer trading business.

Equity infusion to strengthen financial risk profile - The promoters have infused Rs. 1.05 crore fresh equity in February
2018 to support the increased working capital requirements and expected to increase the net worth to Rs 7.19 crore as
of March 31, 2018. Further, enhancement of working capital facilities would also support the increased funding
requirements.

Moderate customer concentration risk with top 5 customers contributing to 36% of total sales in FY2017 - The
company sells to direct manufacturers and traders. Customer Profile of AMPL includes plastic product manufacturers like
Nandi group, Sudharkar group, Jain irrigation systems Limited, Fenoplast Limited and Sreekanth Pipes Limited. The
customer concentration risk has been moderate with top 5 clients contributing 36% of total sales in FY2017.

Sole DCA/CS agent for CSL and GIL in Andhra Pradesh, Telangana and Orissa – AMPL is the sole DCA (Del Credere agent)
& CS (Consignment Stockiest) of Chemplast Sanmar Limited (CSL) and Grasim Industries Limited (GIL) in the state of
Andhra Pradesh (AP), Telangana and Orissa for sale of PVC resins and CP respectively. AMPL handled DCA volumes of
about 74816MT in FY2017 for which it earns a commission of Rs. 450 per MT. The volume handled increased from 42302
MT in FY2012.

Credit challenges
Modest scale of operations in DCA/CS (Del Credere agency/Consignment stockiest) business - AMPL acts as a
Consignment Stockiest (CS) and Del Credere agent (DCA) for Chempalst Sanmar Limited (CSL) and Grasim industries
Limited (GIL).

Exposed to counter party credit risk: The company is eligible for only commission on sales of PVC resin and CPs but the
responsibility for recovery of the entire sale proceeds falls on the company exposing the company to counter party credit
risk. Credit risk is transferred by CSL and GIL to AMPL being DCA/CS business.

Leveraged capital structure with high working capital borrowings –The gearing has increased to 2.87 times as on March
31, 2017 from 1.70 times as on March 31, FY2016 on account of increase in working capital borrowings. The interest
coverage ratio in FY2017 has decreased to 1.64 owing to higher interest charges while TD/OPBDITA is weak at 6.62 times
and NCA/Debt at 4.29% for FY2017.

Analytical approach: For arriving at the ratings, ICRA has applied its rating methodologies as indicated below.

Links to applicable criteria:

Corporate Credit Rating Methodology

About the company:

Ayushman Merchants Private Limited (AMPL) is incorporated in the year 2007 (October) and is involved in trading of
polymers. The company is a DCA/CS of Chemplast Sanmar Limited which is part of the Sanmar group and Grasim
industries Limited. The company deals in PVC resin, chlorinated paraffin and is also into trading of calcium and mineral
powder. The company is managed by Mr. Manoj Dugar who has experience of around 15 years in the polymer industry.

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Key financial indicators
FY2016 FY2017
Operating Income (Rs. crore) 6.53 16.42
PAT (Rs. crore) 0.70 0.65
OPBDIT/ OI (%) 31.09% 14.86%
RoCE (%) 16.49% 14.59%

Total Debt/ TNW (times) 1.70 2.87

Total Debt/ OPBDIT (times) 4.17 6.62
Interest coverage (times) 1.80 1.64
Adj NWC/ OI (%) 2.78% 3.42%

Status of non-cooperation with previous CRA: Not applicable

Any other information: None

Rating history for last three years:

Chronology of Rating History for the
Current Rating (FY2018) past 3 years
Date & Date & Date &
Amount Date & Rating in Rating in Rating in
Amount Outstandi Rating FY2017@ FY2016 FY2015
Rated ng (Rs March
Instrument Type (Rs. crore) Crore) 2018 Mar 2017 Jul 2016 Oct 2014
1 Cash Credit Long Term 23.00 - [ICRA]BB- [ICRA]B+ [ICRA]B+ [ICRA]B+
(Stable)
2 Bank Long 2.00 - [ICRA]BB- [ICRA]B+ [ICRA]B+ [ICRA]B+
guarantee term/Short (Stable)/ /[ICRA]A4 /[ICRA]A4 /[ICRA]A4
Term [ICRA]A4
3 Unallocated Long 5.00 - [ICRA]BB- - - -
term/short (Stable)/
term [ICRA]A4

Complexity level of the rated instrument:

ICRA has classified various instruments based on their complexity as "Simple", "Complex" and "Highly Complex". The
classification of instruments according to their complexity levels is available on the website www.icra.in

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Annexure-1: Instrument Details
Date of Amount
Instrument Issuance / Coupon Maturity Rated
ISIN No Name Sanction Rate Date (Rs. crore) Current Rating and Outlook
NA CC 22/02/2018 NA - 23.00 [ICRA]BB-(Stable)
NA Bank guarantee 22/02/2018 NA - 2.00 [ICRA]BB-(Stable)/ [ICRA]A4
NA Unallocated 22/02/2018 NA - 5.00 [ICRA]BB-(Stable)/ [ICRA]A4
Source: Ayushman Merchants Pvt Ltd

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ANALYST CONTACTS
Mr. K. Ravichandran Mr. R Srinivasan
+91 44 4596 4301 +91 44 4596 4315
ravichandran@icraindia.com r.srinivasan@icraindia.com

Mr. Vinay Kumar G Mr. Naren Rajeev Kumar K

+91 40 4067 6533 +91 40 4067 6529
vinay.g@icraindia.com naren.kumar@icraindia.com

RELATIONSHIP CONTACT
Jayanta Chatterjee
+91 80 4332 6401
jayantac@icraindia.com

MEDIA AND PUBLIC RELATIONS CONTACT

Ms. Naznin Prodhani
Tel: +91 124 4545 860
naznin.prodhani@icraindia.com

Helpline for business queries:

+91-124-2866928 (open Monday to Friday, from 9:30 am to 6 pm)

info@icraindia.com

About ICRA Limited:

ICRA Limited was set up in 1991 by leading financial/investment institutions, commercial banks and financial services
companies as an independent and professional investment Information and Credit Rating Agency.

Today, ICRA and its subsidiaries together form the ICRA Group of Companies (Group ICRA). ICRA is a Public Limited
Company, with its shares listed on the Bombay Stock Exchange and the National Stock Exchange. The international Credit
Rating Agency Moody’s Investors Service is ICRA’s largest shareholder.

For more information, visit www.icra.in

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ICRA Limited
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