Parshotam Lal & Co.

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs. 50.00 Crs. of Parshotam Lal & Co.

Particulars

Facilities**	Amount(Rs.Crs.)	Tenure	Rating#
Fund Based	48.50	Long Term	BWR BB - /Stable Assignment
	(29.00)	Short Term	BWR A4 Assignment
	(29.00)
Non Fund Based	1.50	Short Term	BWR A4 Assignment
Grand Total	50.00	(Rupees Fifty Crores Only)

#Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank Loan facilities,consolidation or instruments are provided in Annexure RATING ACTION / OUTLOOK

BWR has assigned the long-term rating of BWR BB-/Stable and the short-term rating of BWR A4 for the bank loan facilities of Parshotam Lal & Co.

The rating draws strength from the established Track Record & experienced Promoters in the businesses, significant Sales Growth, and continues to maintain a healthy scale of operations, being recognized as a Government of India Two Star Export House with APEDA and FIEO membership secures access to regulated export markets, and adequate liquidity profile. However, the rating is constrained by low Profit Margins and Margin Volatility, the working capital-intensive nature of operations reflected in high inventory requirements, and heavy dependence on government export regulations, raw material procurement policies, and global rice market trends makes the firm vulnerable to abrupt changes in government trade policies, anti-dumping duties, or commodity price swings.

The ‘Stable’ outlook indicates a low likelihood of rating change over the medium term. BWR believes Parshotam Lal & Co.’s business and financial risk profile will be maintained over the medium term. The outlook may be revised to Positive if a sustained increase in the scale of operations and higher than envisaged profitability result in an improved financial risk profile and better gearing and debt protection metrics. The outlook may be revised to Negative if lower than expected revenue or profitability, a stretch in the working capital cycle, unanticipated capex or weakening gearing impact the financial risk profile.

KEY RATING DRIVERS

Credit Strengths:

• Established Track Record & Experienced Promoters :

  The promoters of the firm possess extensive industry experience, with the business having been established over 60 years ago and growing under successive generations of family leadership. This deep-rooted expertise provides a strong understanding of rice production, marketing, and export operations, enabling effective decision-making, risk management, and strategic expansion. Their proven track record in scaling the business, navigating regulatory changes, and sustaining long-term customer and supplier relationships adds significant value to the company’s reputation and operational stability.

• Significant Sales Growth and Execution :

  The firm continues to maintain a healthy scale of operations, with revenues of Rs.93.23 crore in FY24 and Rs.112.46 crore in FY25 with EBITDA rising from Rs.3.08 Cr in FY24 to Rs.3.87 Cr in FY25. The company is projecting a strong revenue increase, from ?112.46 crore in FY25 to ?145.25 crore in FY26—a growth of about 29% year-on-year. This not only indicates rising demand and successful market expansion but also demonstrates effective execution of sales and production strategies, which will enhance market share and strengthen future growth prospects. The company has achieved ?53.47 crore sales up to August, marking a ~50% increase in five-month sales compared to the same period of FY25 (Provisional)

• Export Certification and Market Access :

  Being recognized as a Government of India Two Star Export House with APEDA and FIEO membership secures access to regulated export markets and inspires confidence in buyers regarding product quality and compliance. These certifications boost the company’s credibility, facilitate entry into attractive international markets, and provide resilience against domestic market volatility.

Credit Risks:

• Low Profit Margins and Margin Volatility :

  Despite growing sales, operating and net profit margins remain low (around 3–3.5% OPBDIT; below 1% PAT margin) due to intense industry competition, limited pricing flexibility, and volatility in raw material costs. This exposes the business to profit erosion during periods of input cost spikes or adverse market conditions.

• High Working Capital Requirement and Leverage :

  The firm has rising short-term borrowings and total liabilities, which have increased to support higher working capital cycles and inventory stocking. While this is necessary for business scale, it puts pressure on cash flows, raises interest costs, and may challenge liquidity especially during periods of slower collections or unexpected demand shocks.

• Industry and Policy Risk Exposure :

  Heavy dependence on government export regulations, raw material procurement policies, and global rice market trends makes the company vulnerable to abrupt changes in government trade policies, anti-dumping duties, or commodity price swings. These external risks may impact profitability, cost structure, and market access unpredictably.

ANALYTICAL APPROACH - Standalone

For arriving at its ratings, BWR has considered the standalone performance of the firm. BWR has applied its rating methodology as detailed in the Rating Criteria (hyperlinks provided at the end of this rationale).

RATING SENSITIVITIES

Going forward, the ability of the firm to improve the scale of operations and profitability, maintain a strong liquidity position, effectively manage working capital, and strengthen the overall credit profile would be the key rating sensitivities.

Positive:

• A significant improvement in the scale of operations (revenues above 150 crs), operating margins of over 7% and net margin of over 2% on a sustained basis.
• Improvement in DSCR above 2x and ISCR above 2.5x on a sustained basis.
• Improvement in gearing and TOL/TNW below 2x on a sustained basis.

Negative:

• Decline in the scale of operations (revenues below 90crs) leading to declined operating profit margins below 3% on sustained basis, which results in deterioration in the company’s liquidity position.
• DSCR declines below 1.0x and ISCR declines below 1.20x on a sustained basis.

LIQUIDITY INDICATORS - Adequate

The firm’s liquidity profile remains adequate, supported by moderate internal accruals. The net cash accrual for FY25 is Rs.1.39 Crs against no major repayment obligations. The company is expected to generate cash accruals of Rs.2.35 crore in FY26, comfortably covering its CPLTD of Rs.0.62 crore even after accounting for the 15% cash margin Rs. 0.15 Crs required on bank guarantees, indicating adequate debt servicing capability. Further, it has unutilized working capital limits of around 20%. The firm’s ability to secure higher limits from banks mitigates the immediate pressure; therefore, the liquidity is assessed as comfortable. Additionally, the current ratio stood at 1.21x in FY24 and 1.22x in FY25, the ratio continues to remain above unity.

ABOUT THE ENTITY

Parshotam Lal and Co. is a Government of India–recognized Two Star Export House, certified by the Agricultural and Processed Food Products Export Development Authority (APEDA) and a member of the Federation of Indian Export Organisations (FIEO).

The firm is a family-owned business engaged in rice production and export for over six decades. The foundation of the business was laid by Late Sh. Sohan Lal Galhotra in 1956 with the establishment of the region’s first rice mill. The firm was formally incorporated in 1979, marking the beginning of its structured operations.

After the founder’s demise in 1991, the business continued under the leadership of his successors — Mr. Parshotam Lal, Mr. Rajinder Rajan, Mr. Ravi Kumar Galhotra, and Mr. Vishal Galhotra — who have been actively managing production and overall operations. In 2014, Mr. Anil P.L. Galhotra joined the enterprise, overseeing the Export and Marketing divisions, contributing to the firm’s continued growth in international markets.

The firm currently operates two milling plants and five Sortex (sorting and packaging) units dedicated to rice processing and export operations. The combined installed capacity enables the company to process around 395 tons of rice per day and pack approximately 10 export containers per day.

The factory is situated on Faridkot Road, Guru Har Sahai (Guruharshai), Punjab.

KEY COVENANTS OF THE FACILITY RATED

The terms of sanction include standard covenants normally stipulated for such facilities.

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

Not Applicable

ANY OTHER INFORMATION

Nil

RATING HISTORY FOR LAST THREE YEARS (including withdrawal and suspended)

Facilities	Current Rating  (2025)			2024		2023		2022
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	48.50	BWR BB-/Stable (Assignment)	NA	NA	NA	NA	NA	NA
FB SubLimit	ST	(29.00)	BWR A4 (Assignment)	NA	NA	NA	NA	NA	NA
		(29.00)	BWR A4 (Assignment)	NA	NA	NA	NA	NA	NA
Non Fund Based	ST	1.50	BWR A4 (Assignment)	NA	NA	NA	NA	NA	NA
Grand Total		50.00	(Rupees Fifty Crores Only)

Hyperlink/Reference to applicable Criteria

• General Criteria
• Approach to Financial Ratios
• Short Term Debt
• Manufacturing Company

Analytical Contacts
Chinmaya R Rating Analyst chinmaya.r@brickworkratings.com	Nitika Srivastava nitika.s@brickworkratings.com
1-860-425-2742 | media@brickworkratings.com	Customer Support | CustSupport@brickwrokratings.com

SL.No.	Name of the Bank/Lender	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)	Complexity of the Instrument
1	Punjab National Bank	Term Loan - Sanctioned	4.00	_	4.00	Simple##
2	Punjab National Bank	Cash Credit - Sanctioned	37.00	_	37.00	Simple##
	Sub-Limit (PC/PCFC) - Sanctioned		(29.00)
	Sub-Limit (Post shipment Credit) - Sanctioned		(29.00)
3	Punjab National Bank	Bank Guarantee - Sanctioned	_	1.00	1.00	Simple##
4	Punjab National Bank	Forward Contract - Sanctioned	_	0.50	0.50	Simple##
5	Punjab National Bank	Gold Card - Sanctioned	3.00	_	3.00	Simple##
6	Punjab National Bank	Cash Credit (WHR) - Sanctioned	4.50	_	4.50	Simple##
Total			48.50	1.50	50.00
TOTAL (Rupees Fifty Crores Only)

## BWR complexity levels are meant for educating investors. The BWR complexity levels are available at www.brickworkratings.com / download / ComplexityLevels.pdf. Investors queries can be sent to info@brickworkratings.com.