The credit rating agency, CARE Ratings Limited (âCAREâ), has reviewed and reaffirmed the credit ratings of The Waterbase Limited’s banking facilities.
Long Term / Short Term Bank Facilities (LT / ST) – Rs. 73.81 crore – CARE A-; Stable / CARE A2 + (Single A Minus; Outlook: Stable / A Two Plus)
Short term bank facilities – Rs. 0.03 crore – CARE A2 + (A Two Plus)
The ratings given to the bank facilities of The Waterbase Limited (TWL) continue to draw on the experience of its promoters with long experience in the operations of the company in the shrimp feed industry and being part of Karam Chand Thapar (KCT) group. The ratings also take into account the partially integrated nature of its operations with an established brand presence and marketing network. In addition, the ratings derive their strength from its solid capital structure with a negligible level of debt as of March 31, 2021 as well as its adequate liquidity. In addition, the ratings take into account the initiatives taken by the company to diversify its turnover by venturing into farmer’s care products and frozen seafood, whose contribution to total operating income (TOI ) gradually increases.
The ratings are however tempered by the significant drop in its TOI and profitability in fiscal year 21 (refers to the period from April 1 to March 31) due to the impact of the COVID-19 pandemic on its demand, the increase in its raw material costs and its supply. for doubtful debtors. While the company again reported a significant increase in its TOI in T1FY22 compared to T1FY21, the profitability margin remained affected due to the increase in raw material costs which is expected to translate into still low profitability even at during FY22. Nonetheless, debt protection measures remain adequate with a significant reduction in debt levels. In addition, the company’s operations remain working capital intensive with significant funds stranded in accounts receivable and inventory resulting in an extended 158 day operating cycle in FY 21. Ratings are also limited by its moderate capacity utilization, exposure to commodity price volatility, geographic concentration of income and risks inherent in the seafood industry.
The ratings also take into account the company’s capital expenditure plans for capacity expansion and process improvement, which are expected to be funded by internal cash build-ups and liquid investments.
Waterbase Limited shares were last trading in BSE at Rs. 117.55 from the previous close of Rs. 120.50. The total number of shares traded during the day was 35,007 in more than 1,361 trades.
The stock hit an intraday high of Rs. 122.00 and an intraday low of 116.95. The net turnover during the day was Rs. 4,198,830.00.