RATING RATIONALE
31Jul2026
Fortune Cotton and Agro Industries
Brickwork Ratings reaffirms the long-term ratings at BWR BBB - with Stable Outlook and short-term ratings at BWR A3, for the Bank Loan Facilities of Rs. 240.00 Crs. of Fortune Cotton and Agro Industries.
Particulars| Facilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||
|---|---|---|---|---|---|
| Previous | Present | Previous (13 May 2025) |
Present | ||
| Fund Based | 20.00 | 20.00 | Long Term |
BWR BBB- /Stable
Assignment |
BWR BBB -
/Stable Reaffirmation |
| Non Fund Based | 220.00 | 220.00 | Short Term |
BWR A3
Assignment |
BWR A3
Reaffirmation |
| (50.00) | (50.00) | ||||
| Grand Total | 240.00 | 240.00 | (Rupees Two Hundred Forty Crores Only) | ||
**Details of Bank Loan facilities,consolidation or instruments are provided in Annexure
RATING ACTION / OUTLOOK
Brickwork Ratings (BWR) reaffirms the long-term ratings at BWR BBB- with a Stable outlook and short-term ratings at BWR A3 for the bank loan facilities worth Rs. 240.00 crore of Fortune Cotton and Agro Industries.
The rating reflects the firm’s established presence and operational track record, supported by the extensive industry experience of its partners spanning over three decades. The rating factors in the long-term relationships maintained with a reputed clientele, alonside the firm’s compliance with necessary regulatory standards such as FSSAI certifications for its refinery units in place. The rating also considers the stable financial performance and supported by satisfactory feedback from Karnataka Bank.
However, the ratings are constrained by the constitution risk associated with partnership firms, compressing operating and net profit margins. The ratings also reflect exposure to foreign exchange risk, given that firms required raw materials are largely imported.
The Stable outlook indicates the firm's stable risk profile and is expected to be maintained over the medium term, backed by sustained growth in scale of operations, growing capital base and comfortable debt coverage metrics. The outlook also factors in adequate liquidity and the company’s ability to service debt obligations comfortably from operating cash flows. However, significant underperformance in revenue, deteriorating profitability, or liquidity challenges could result in a revision to a negative outlook.
KEY RATING DRIVERSCredit Strengths:
-
Experienced Partners :
FCAI is promoted by experienced promoters who brings over three decades of experience in the edible oil and cotton industry. Mr. Vishwanath Matti the managing partner actively manages the daily operations with the support of his family partners, Mr. Maritammappa Asuti, Mr. Sharath Sajjanar, and Mr. Ashok Asuti. Their collective industry knowledge greatly benefits the operational efficiency of the firm. The partnership structure remains stable with no partner exits or capital withdrawals recorded.
-
Satisfactory Risk Profile :
The financial risk profile of the firm remains satisfactory. The company achieved a 6% YoY revenue growth, increasing from Rs. 1242.95 Crs in FY25 to Rs.1313.61 Crs in FY26. OPBDIT stood at Rs. 7.75 Crs with an operating margin of 0.59%. The PAT stood at Rs. 8.60 Crs with a net margin of 0.65% reflecting margin compressions inherent to the nature of the business. Tangible net worth grew to Rs. 115.06 Crs, driven by consistent profit accretion. The firms leverage remained comfortable with a Total Debt to TNW ratio of 1.19 times, backed by healthy debt coverage ratios - ISCR of 4.32 times and DSCR of 6.79 times for the provisional year.
-
Hedging Strategies to Mitigate Price Volatility and Forex Risks :
The firm continues to employ hedges forex exposure and partially mitigates procurement price risk. With crude palm oil primarily imported from East Asian countries, the firm actively enters into forward contracts based on anticipated currency trends to protect its cost structure and margins.
-
Geographical Concentration Risk :
The revenue generation profile of the firm is highly concentrated, with the vast majority of its sales restricted to the single state of Karnataka.
-
Constitution Risk :
As a partnership firm, the company is inherently exposed to the risk of capital withdrawal. Any significant withdrawal of funds by the partners for personal contingencies could directly deplete the net worth and negatively impact the overall capital structure of the firm.
-
Revenue Volatility :
The firm primarily operates in the edible oil segment, which contributes over 90% of firms total revenue. The firm is primarily involved in the manufacturing and refining of edible oil, which is a volume driven and low value additive product. As a result, the operating and net profit margins remain inherently thin and highly susceptible to supply chain cost escalations. Due to commodity product profile which are influenced by global macroeconomic factors makes firms profitability vulnerable to sharp fluctuations in imported raw material. To mitigate pricing risk, the firm strategically procures raw materials by adopting hedging strategies and maintaining sufficient inventories to ensure supply continuity and customer retention.
BWR has adopted a Standalone approach while arriving at its ratings and applied its rating methodology as detailed in the Rating Criteria (hyperlinks provided at the end of this rationale).
RATING SENSITIVITIES
Positive/ Upward Factors:
- Sustained growth in scale of operations in line with projections, with improvement in EBITDA & PAT margins from current levels.
- Tangible Net Worth not to fall below current levels.
- Debt protection metrics indicated by ISCR and DSCR to be at levels of ISCR of 2.00 times and DSCR of 1.5 times respectively.
Negative/ Downwards Factors:
- Moderation in scale of operation by 15% along with moderation in profitability, impacting the cash accruals.
- Deterioration in debt protection metrics with ISCR below 1.5 times and DSCR below 1 time.
- Material withdrawal of capital by the partners leading to reduction in the Tangible Net Worth.
Adequate liquidity is characterized by sufficient cushion in accruals vis-a-vis repayment obligations and moderate cash balance of Rs. 1.43 Crs in FY26 (Prov.). The company does not envisage any near time capex. The bank funded working capital limits have been utilised to an average extent of 0.17% for the past 15 months. The current ratio of 1.58 times in FY26 (Prov.) indicates a healthy state of affairs. During FY26 the company has generated net cash accruals of Rs.12.19 Crs. The company projects the net cash accrual of Rs.13.34 Crs in FY27 which is sufficient to cover upcoming term loan obligations of Rs 4.88 Crs thus indicating adequate liquidity.
ABOUT THE ENTITY| Macro Economic Indicator | Sector | Industry | Basic Industry |
|---|---|---|---|
| Fast Moving Consumer Goods | Fast Moving Consumer Goods | Agricultural Food & other Products | Edible Oil |
Fortune Cotton and Agro Industries (FCAI) is a family-owned partnership firm established in 2009, based in Karnataka. The firm is currently led by Mr. Vishwanath Matti, the Managing Partner, along with three other partners Mr. Sharath S. Sajjanar, Mr. Ashok S. Asuti, and Mr. Maritamappa M. Asuti belonging to the same family. The firm derives over 90% of its revenue from the sale of edible oils, with the remaining contribution coming from cotton and related products. As of March 31, 2024, the firm has an installed capacity of 2.1 lakh MTPA in its edible oils division. In the cotton division, the installed capacities include 50 MT for the production of Cotton Ginning per day and 100 Kg for the production of Silk Reeling per day. Additionally, FCAI operates a 1 MW captive solar power plant, which meets approximately 90% of the firm’s total power requirements.
ESG ProfileNA
KEY FINANCIAL INDICATORS (Standalone)| Key Parameters | Units |
FY 23 - 24 (Audited) |
FY 24 - 25 (Audited) |
FY 25 - 26 (Provisional) |
|---|---|---|---|---|
| Operating Revenue | Rs.Crs. | 1040.36 | 1242.95 | 1313.61 |
| EBITDA | Rs.Crs. | 10.71 | 10.27 | 9.08 |
| PAT | Rs.Crs. | 8.04 | 9.99 | 8.60 |
| Tangible Net Worth | Rs.Crs. | 90.28 | 106.46 | 115.06 |
| Total Debt / Tangible Net Worth | Times | 1.13 | 0.35 | 1.19 |
| Current Ratio | Times | 1.66 | 3.33 | 1.58 |
The terms of sanction of the rated facilities include standard covenants normally stipulated for such facilities.
STATUS OF NON-COOPERATION WITH PREVIOUS CRA
Not Applicable
RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)| Facilities | Current Rating (2026) | 2025 | 2024 | 2023 | |||||
|---|---|---|---|---|---|---|---|---|---|
| Type | Tenure | Amount (Rs.Crs.) |
Rating | Date | Rating | Date | Rating | Date | Rating |
| Fund Based | LT | 20.00 |
BWR BBB-/Stable
(Reaffirmation) |
13May2025 |
BWR BBB- Stable
(Assignment) |
NA |
NA
|
NA |
NA
|
| Non Fund Based | ST | 220.00 |
BWR A3
(Reaffirmation) |
13May2025 |
BWR A3
(Assignment) |
NA |
NA
|
NA |
NA
|
| NFB SubLimit | ST | (50.00) |
BWR A3
(Reaffirmation) |
13May2025 |
BWR A3
(Assignment) |
NA |
NA
|
NA |
NA
|
| Grand Total | 240.00 | (Rupees Two Hundred Forty Crores Only) | |||||||
| Analytical Contacts | |
|---|---|
|
Santosh S K Ratings Analyst santosh.sk@brickworkratings.com |
Suryanarayan N Director suryanarayan.n@brickworkratings.com |
| Media Contact | media@brickworkratings.com | Client Support | clientsupport@brickworkratings.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 | Karnataka Bank Ltd | Over DraftSanctioned | 20.00 | _ | 20.00 | Simple## |
| 2 | Karnataka Bank Ltd | Letter of CreditSanctioned | _ | 215.00 | 215.00 | Simple## |
| Sub-Limit (Inland Letter of Credit) Sanctioned | (50.00) | |||||
| 3 | Karnataka Bank Ltd | Forward ContractSanctioned | _ | 5.00 | 5.00 | Simple## |
| Total | 20.00 | 220.00 | 240.00 | |||
| TOTAL (Rupees Two Hundred Forty 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.
| Instrument | Issue Date | Amount (Rs.Crs) | Coupon Rate (%) | Maturity Date | ISIN Particulars | Complexity of the Instrument |
|---|---|---|---|---|---|---|
| Nil | Nil | Nil | Nil | Nil | Nil | Nil |
| Name of Entity | % Ownership | Extent of consolidation | Rationale for consolidation |
|---|---|---|---|
| Nil | Nil | Nil | Nil |
| Instrument / Activity | Regulator |
|---|---|
| Listed/Proposed to be listed bonds/debentures/preference share (all securities) | SEBI |
| Unlisted/Proposed to be unlisted Bonds/Debentures/ Preference share (all securities) | MCA |
Listed PTCs / Securitisation Notes (originated by entities regulated by RBI) 1| SEBI | |
Listed PTCs / Securitisation Notes (originated by entities not regulated by RBI) 1| SEBI | |
Unlisted PTCs / Securitisation Notes (originated by entities regulated by RBI) 1| RBI | |
| Listed Commercial Paper and NCDs with original maturity less than 1 year | RBI |
| Unlisted Commercial Paper and NCDs with original maturity less than 1 year | RBI |
Loan Facilities (Fund/Non-Fund Based) from Bank/NBFCs/NHB/FIs 2| RBI | |
| External Commercial Borrowings and other similar borrowings | RBI |
| Certificates of Deposit | RBI |
| Fixed Deposits raised by NBFC's, Banks, HFCs, Fis | RBI |
| Fixed Deposits raised by corporates other than NBFCs, Banks, HFCs, Fis | MCA |
| Inter Corporate Deposits/Loans extended by Corporates | MCA |
Borrowing programme 3| - | |
Issuer Ratings 4| - | |
| Credit Ratings for Capital Protection Oriented Schemes (by Mutal Funds and AIFs) | SEBI |
| Credit quality ratings (CQRs) for Mutual Fund Schemes and Schemes of AIFs | SEBI |
| Listed Security Receipts | SEBI |
| Unlisted Security Receipts | RBI |
| Independent Credit Evaluation (ICE) | RBI |
| Expected Loss Ratings (for Loan Facilities (Fund/Non-Fund Based) from Bank/NBFCs/NHB/Fis) | RBI |
| Expected Loss Ratings (Listed/Proposed to be listed bonds/debentures/preference share (all securities)) | SEBI |
| Expected Loss Ratings (Unlisted/Proposed to be unlisted Bonds/Debentures/ Preference share (all securities)) | MCA |
Unlisted PTCs / Securitisation Notes (originated by entities not regulated by RBI) 1| Investor-side Regulator | such as IRDAI, PFRDA 5 |
| Monitoring Agency | SEBI |
| Research activities, incidental to rating, such as research for Economy, Industries and Companies 6 | NA |
- Includes securitisation transactions involving assignee payout, acquirer's payout.
- Includes bank facilities such as liquidity facility, second loss facility that are part of securitisation transactions.
- The rated instrument may involve issuance of different instruments such as debt securities (listed or otherwise), bank loans, commercial paper (listed or otherwise), etc. The regulator of the instrument may accordingly be SEBI, RBI or MCA and can only be determined upon issuance. In PRs subsequent to issuance(s), BWR shall separately capture the rated quantum details along with names of respective regulators.
- There is no instrument being rated and hence, Regulator of the Instrument is not applicable.
- These ratings were assigned during regulatory regime prior to the introduction of SEBI CRA Circular dated Feb 10, 2026, and accordingly, investor side regulators have been included.
- Permitted by SEBI vide SEBI Master Circular for CRAs
For any grievances relating to rating of instruments regulated by other FSR (Financial Sector Regulators), please contact grievance@brickworkratings.com.
Brickwork Ratings (BWR), a Securities and Exchange Board of India [SEBI] registered Credit Rating Agency and accredited by Reserve Bank of India [RBI]. BWR is the 5th agency to get a credit rating registration in India in 2009 and its corporate office in Bengaluru. It has a country-wide presence with representatives in 150+ locations. Canara Bank is Brickwork’s strategic partner and promoter.
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