RATING RATIONALE
26Jul2021

Tasty Dairy Specialities Ltd.

Brickwork Ratings Downgrades the ratings for the Bank Loan Facilities of Rs. 95.00 Crs. of Tasty Dairy Specialities Ltd.

Particulars
Facilities** Amount (Rs.Crs.) Tenure Rating#
Previous Present Previous
(08 Sep 2020)
Present
Fund Based 94.00 94.00 Long Term BWR BBB (Stable)
Assignment
BWR BBB - /Stable
Downgrade
Non Fund Based 1.00 1.00 Short Term BWR A3+
Assignment
BWR A3
Downgrade
Grand Total 95.00 95.00 (Rupees Ninety Five 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

Brickwork Ratings (BWR) downgrades the long-term rating to BWR BBB- and short-term rating to BWR A3 for the bank loan facilities of Tasty Dairy Specialities Ltd. (TDSL or the company).
 
The rating downgrades take into account deteriorated company performance in Q4FY21 resulting in negative PAT PAT of - 13.83 Crs, EBITDA loss of Rs -13.56 Crs on account of inventory written off of Rs 16.95 Crs and consequent weakening of credit profile. ISCR (interest service coverage ratio) and DSCR (debt service coverage ratio) of the company deteriorated to -2.67x and -0.91x in FY21 besides elongated conversion cycle and risk associated with the perishable nature of milk and its products. The rating is however supported by experienced promoters and established business, comfortable gearing and current ratio.
 
The outlook is Stable considering the essential nature of milk demand and its by-products.
 
Note : The present rating amount is considered as per initial rating as BWR does not have complete information and rating action/review is mainly on the basis of Q4 results of the company. 
 

KEY RATING DRIVERS

Credit Strengths:


Credit Risks:

RATING SENSITIVITIES

Upward: The outlook may be revised to Positive or the rating may be upgraded if there is a substantial improvement in the scale of operations of the company, improvement in profitability and liquidity of the company, besides other ratios like gearing and current ratio continue to be comfortable.
Downward: BWR may revise the ratings downwards if there is a further deterioration in the financial risk profile and liquidity of the company, or inability to recover from the current level.

LIQUIDITY INDICATORS - Stretched

The company had cash accruals (profit after tax plus depreciation) of Rs -12 Crs in FY21 (5.85 Crs in FY20), simultaneously ISCR and DSCR of the company is negative because of negative cash accruals in FY21.The working capital utilization of the company is above 95%. Although, the company had cash & cash equivalent of Rs 1.80 Crs at the end of March 2021 but considering the other points liquidity is stretched.

ABOUT THE ENTITY

Promoted by Mr. Atul Mehra, the Company was originally incorporated as a private limited company on 30th July, 1992 under the name Tasty Dairy Specialities Private Limited.Subsequently, it was converted into a public limited in 2004 and the name of the company was changed to “Tasty Dairy Specialities Limited ''. The Company is listed in the SME segment on Bombay Stock Exchange.The Company is currently involved in processing milk, along with bulk milk procurement and handling during which primarily caters to bulk institutional customers. Company is further involved in value added milk products like Skimmed Milk Powder, Butter, Ghee etc. which are packaged under the brand names “Ujjwal”, “Shikhar”, “Verifresh”, "Cima", "Mithai Master”.The Company markets the branded products in Uttar Pradesh, Madhya Pradesh and Bihar, and its plant is located in Jainpur, Uttar Pradesh. The Company with the existing plant and machinery is capable of handling approximaely 5,00,000 litres of raw milk per day.

KEY FINANCIAL INDICATORS (Standalone)
Key Parameters Units FY 20-21
(Audited)
FY 19-20
(Audited)
Operating Revenue Rs.Crs. 328.01 403.16
EBITDA Rs.Crs. -13.56 12.27
PAT Rs.Crs. -13.83 4.20
Tangible Net Worth Rs.Crs. 58.62 72.70
Total Debt/Tangible Net Worth Times 1.00 0.66
Current Ratio Times 1.62 1.87

RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)
Facilities Current Rating (2021) 2020 2019 2018
Type Tenure Amount
(Rs.Crs.)
Rating Date Rating Date Rating Date Rating
Fund Based LT 94.00
BWR BBB-/Stable
(Downgrade)
08Sep2020
BWR BBB (Stable)
(Assignment)
NA
NA
NA
NA
Non Fund Based ST 1.00
BWR A3
(Downgrade)
08Sep2020
BWR A3+
(Assignment)
NA
NA
NA
NA
Grand Total 95.00 (Rupees Ninety Five Crores Only)
COMPLEXITY LEVELS OF THE INSTRUMENTS - Simple

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.

Hyperlink/Reference to applicable Criteria
Analytical Contacts

Raman Thakur

Senior Rating Analyst Board : +91 11 2341 2232 raman.t@brickworkratings.com

Tanu Sharma

Director - Ratings tanusharma@brickworkratings.com
1-860-425-2742 | media@brickworkratings.com
Tasty Dairy Specialities Ltd.
ANNEXURE-I
Details of Bank Facilities rated by BWR
SL.No. Name of the Bank/Lender Type Of Facilities Long Term(Rs.Crs.) Short Term(Rs.Crs.) Total(Rs.Crs.)
1 Kotak Mahindra Bank Bill Discounted (BD)Sanctioned 8.00 _ 8.00
2 Punjab National Bank Cash CreditSanctioned 44.00 _ 44.00
3 Punjab National Bank Term LoanSanctioned 1.35 _ 1.35
4 Punjab National Bank Bill Discounted (BD)Sanctioned 10.00 _ 10.00
5 Punjab National Bank Bank GuaranteeSanctioned _ 1.00 1.00
6 Un tied portion Facilities FB (CC/TL/OD)Proposed 30.65 _ 30.65
Total 94.00 1.00 95.00
TOTAL (Rupees Ninety Five Crores Only)
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