AMDD Foods Pvt. Ltd.

Brickwork Ratings Revises the ratings for the Bank Loan Facilities of Rs. 164.18 Crs. of AMDD Foods Pvt. Ltd.

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (23 Jun 2020)	Present
Fund Based	95.05	56.18	Long Term	BWR BBB /Stable Reaffirmation	BWR BBB + /Stable Upgrade
Fund Based	90.00	108.00	Short Term	BWR A3+ Reaffirmation	BWR A2 Upgrade
Grand Total	185.05	164.18	(Rupees One Hundred Sixty Four Crores and Eighteen lakhs 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 upgraded the long term and short term rating to BWR BBB+/Stable and BWR A2 respectively for the bank loan facilities of AMDD Foods Private Limited owing to the sustained improvement in the company’s scale of operations, profitability over the years and improvement in the credit profile over the years, along with BWR’s expectations that the same will be sustained in the near term due to the essential nature of industry.

The ratings continue to take into account the steady revenue growth registered by the company and sustainability of its profitability margins over the years. The rating continues to benefit on account of its established operational track record and long experience of the promoters in the basmati rice industry; wide distribution network and its established relationships with domestic and export clients. However, the ratings remain constrained by the competitive and fragmented nature of the industry which limits the pricing flexibility of the industry participants, agro climatic risks, changes in government regulations and trade policies, both in the domestic as well as importing countries, and customer concentration risk.

The rating outlook continues to be Stable on account of order book position of ~ Rs 243 Crs which shows revenue visibility in near term in spite of slowdown in global economy due to Covid-19 pandemic industry. The rating outlook is also Stable on account of a sound demand outlook for the rice industry for both the short and medium term due to its essential nature and is hence, not impacted much by the Covid-19 pandemic.

KEY RATING DRIVERS

Credit Strengths:

Established operational track record, several decade-long experience of promoters in the Basmati rice industry: :
AMDD is promoted by Parent DD International Private Limited which is a fully-integrated rice company with an operational track record of over four decades. Moreover, the company’s management has several-decades-long experience in the Basmati Rice industry. Company benefits from its established group track record.
Strong brand presence; position among Basmati rice exporters in India : :
AMDD benefits from its established group track record and its group long track record and brand presence in the domestic market and sizable portion of its revenue (~60 % in FY 21) comes from the export sales which is the major market for basmati players in India.The company markets its products in its own brand Silver grain,Mehak, through well-established distributors in the states of Maharashtra, Gujrat, Andhra Pradesh, Telangana, Karnataka, Tamil Naidu, Rajasthan, Delhi, Uttar Pradesh, Uttarakhand, Punjab, Haryana, West Bengal. Further majority of the exports are direct with personal relationships developed over a period of three decades under Golden grain brand.
Good growth in Operating Income over the years and comfortable order book position :
The Operating Income of the company improved by 23.22 % in FY20 to Rs 727.6 Crs from Rs 590.46 Crs in FY 19 due to increase in Volumes by 26 % and weaker price realisations by 3%. Operating income remained flat at Rs 726.03 Crs in FY 21 as per the FY 21 provisional balance sheet.The Order book position is comfortable as indicated by the export order book position of ~ 243 Rs Crs which shows revenue visibility in the near term. The growth in operating income over the years has led to increase in scale of operations over the years , growth is however expected to be muted in next two fiscal years due to Covid-19 pandemic in spite of the essential nature of industry.
Improved financial risk /credit profile: :
AMDD financial risk/credit profile has improved over the years. Debt protection metrics of the company improved in FY 20 as indicated by Interest coverage ratio (ISCR) of 2.52x in FY 20 as against 2.06 x in FY 19 and Debt coverage ratio (DSCR) of 2.08 x in FY 20 as against 1.79 x in FY 19. ISCR and DSCR further improved to 3.83 x and 2.72 x in FY 21 Provisional. Improving trend in ISCR is due to low utilization of fund based limits, reduction of overall debt and DSCR is due to reduction of long term debt. Gearing improved to 1.04 x in FY 20 as compared to 2.93 x in FY 19 and stood at 1.23 x in FY 21 provisional. Gearing has improved over the years due to reduction in overall debt and low utilization of fund based limits.

Credit Risks:

Intense competition :
The Basmati rice industry is highly fragmented and is marked by the presence of numerous players. This intensifies competition and limits the pricing flexibility of the industry participants.
Exposure to foreign exchange risk :
As exports constitute a significant percentage of the turnover, the company remains exposed to currency fluctuations to the extent of unhedged exposure. However, it has a hedging mechanism in place to reduce any impact of fluctuation in foreign exchange rates through export packing credit and forward cover limits and almost 95 % of exposure is hedged resulting in no or very minimal currency risk.
Exposure to agro-climatic risks and changes in trade policies :
Given its operations in an agro-based industry, the company is exposed to agro-climatic risks such as raw material availability, its quality and pricing. Moreover, the company is exposed to changes in trade policies of key importing countries, which can impact export revenues. Though, the group derives strength from the fact that the company has major exports to Saudi Arabia and less exports to Iran resulting in lower trade policies risk.
Customer Concentration Risk :
Out of total export revenue in FY 20 ,~74 % of sales in FY 20 and ~81 % in FY 21 is to a single customer against cash against documents/LC basis leading to counterparty risk. However , counterparty risk is mitigated to some extent due to the long term relationship established over the years with the group of almost four decades resulting in no credit risk over the years.

RATING SENSITIVITIES

Positive :BWR may revise the ratings upward if there is a sustained improvement in AMDD's scale of operations and margins, and improvement in credit profile along with notable reduction in customer concentration.

BWR may revise the ratings downwards if there is a sustained deterioration in the company’s EBITDA and debt protection metrics and/or a stretch in its working capital/liquidity.

LIQUIDITY INDICATORS - Superior

Working capital utilization has been around 64.37 % for the last six months ending June 2021. Working capital utilization is seasonal in nature; it is high over procurement period and low afterwards. The current ratio stood at 1.48 x in FY 20. Company reported cash accruals of Rs 25.13 Crs against CPLTD of Rs 2.16 Crs in FY 20. Company reported cash accruals of Rs 22.58 Crs against CPLTD of Rs 2.16 Cr in FY 21.

ABOUT THE ENTITY

Promoted by M/s. D.D. International Pvt. Ltd, AMDD Foods Private Limited was established in 2013 as a Amritsar based Basmati Rice company focusing on export and domestic Market. The company’s business is concentrated in the Middle East market . The company’s mill is located in Taran Taran ,Amritsar .The company markets its products in its own brand Silver grain , Mehak, through well-established distributors in the states of Maharashtra, Gujrat, Andhra Pradesh, Telangana, Karnataka , Tamil Naidu , Rajasthan, Delhi, UP, Uttarakhand, Punjab, Haryana, West Bengal. Further majority of the exports are due to relationships developed over a period of four decades under the Golden grain brand. The company has installed capacity of 8MTPH and capacity utilisation is optimum at 98 % in FY 18. The company was promoted by Mr. Surinder Mohan Bhatia and Mr . Chander Mohan Bhatia. Now, it is being managed by Mr. Salil Bhatia, Mr. Satyen Bhatia and Mr. Gaurav Bhatia. They are all full time Directors of this company

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 19-20 (Audited)	FY 18-19 (Audited)
Operating Revenue	Rs.Crs.	727.60	590.46
EBITDA	Rs.Crs.	48.03	41.83
PAT	Rs.Crs.	21.97	17.02
Tangible Net Worth	Rs.Crs.	123.37	101.40
Total Debt/Tangible Net Worth	Times	1.04	2.93
Current Ratio	Times	1.48	1.24

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	56.18	BWR BBB+/Stable (Upgrade)	23Jun2020	BWR BBB/Stable (Reaffirmation)	08Apr2019	BWR BBB/Stable (Upgrade)	20Mar2018	BWR BBB-/Stable (Assignment)
Fund Based	ST	108.00	BWR A2 (Upgrade)	23Jun2020	BWR A3+ (Reaffirmation)	08Apr2019	BWR A3+ (Upgrade)	20Mar2018	BWR A3 (Assignment)
Grand Total		164.18	(Rupees One Hundred Sixty Four Crores and Eighteen lakhs Only)

COMPLEXITY LEVELS OF THE INSTRUMENTS - NA

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
Karan Ahluwalia Senior Rating Analyst Board : +91 11 2341 2232 karan.a@brickworkratings.com	Tanu Sharma Director - Ratings tanusharma@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

AMDD Foods Pvt. 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	Punjab National Bank	Cash Credit - Sanctioned	40.00	_	40.00
2	Punjab National Bank	Export Packing Credit (EPC) - Sanctioned	_	90.00	90.00
3	Punjab National Bank	Term Loan - Sanctioned	3.18	_	3.18
4	Punjab National Bank	Gold Card - Sanctioned	_	18.00	18.00
5	Punjab National Bank	Common Covid Emergency Line of Credit (CCECL) - Sanctioned	13.00	_	13.00
Total			56.18	108.00	164.18
TOTAL (Rupees One Hundred Sixty Four Crores and Eighteen lakhs Only)

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