Tinna Trade Ltd.

Brickwork Ratings upgrades the long term rating and reaffirms the short term rating for the Bank Loan Facilities of Rs. 59.60 Crs. of Tinna Trade Ltd.

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (30 Jul 2020)	Present
Fund Based	39.60	39.60	Long Term	BWR BB- (Stable) Assignment	BWR BB /Stable Upgrade
Non Fund Based	20.00	20.00	Short Term	BWR A4 Assignment	BWR A4 Reaffirmation
	(29.60)	(29.60)
	(29.60)	(29.60)
	(5.00)	(5.00)
Grand Total	59.60	59.60	(Rupees Fifty Nine Crores and Sixty 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

Brickwork ratings has upgraded the long term rating to BWR BB (Stable) and reaffirmed the short term rating to BWR A4 for the bank facilities of M/s Tinna Trade Limited. The rating draws comfort from extensive experience of promoters in the same line of business, well established relationships with buyers & suppliers, promising operational performance on account change in the business strategy to diversify into non agri-trading activities also which provides visibility of the revenue in the short to medium term and supported by moderate net worth and comfortable leverage.

However, the rating is constrained by moderate financial risk profile, exposure to volatility in the prices of agro based commodities and fluctuations in foreign currency and thin profitability margins owing to the nature of the business.

The outlook of the Company is stable as it has strong brand presence in the northern market, diversification to non agri-trading business and comfortable leverage with no long-term liabilities on its balance sheet.

KEY RATING DRIVERS

Credit Strengths:

Experienced promoters and established track record :
The promoters of the company are well qualified and have over a decade of experience in the retail industry. Mr. Gaurav Sekhari has expertise in the business of commodity trading and other business verticals including cargo handling operations and warehousing. The company’s day-to-day operations are looked after by Mr. Gaurav Sekhari, along with a team of experienced professionals.
Well established relationship with buyers and suppliers: :
The long standing experience of the promoters has led to strong relationship with the customers as well as with the suppliers. TTL does not maintain any long term contracts with the suppliers but enjoys the flexibility of procuring desired quality raw materials from Mandi/ local suppliers at prevailing rates. The company has over a period of time has created synergies with domestic suppliers as well which helped them to maintain the same scale of operations. Also, the company is trading in multiple agro and non-agro based commodities diversifying the risk.
Promising operational performance :
The company has shifted its marketing strategy for FY 22 to diversify their agri-trading business into non agricultural products also like steel abrasives and construction chemicals. The company has started trading on relatively higher margin products like importing of Palm oil & RBD (refined, bleached and deodorised) oil, pigeon peas and other pulses. The company has also imported steel shots from China and Ukraine to achieve the target of 4000 tonnes in FY 22. The change in trading strategy by the company has opened the new revenue generating streams which will be stable for the medium term.
Moderate net worth and gearing ratio: :
The company is supported by moderate net worth of Rs. 26.71 Cr against the debt obligations of Rs. 25.78 Cr in FY 21. The gearing ratio of the company is also comfortable at 0.97 times for FY 21 against 0.92 times in FY 20.

Credit Risks:

Moderate financial risk profile :
The company reported an operating income of Rs. 240.76 Crs during FY21 against an operating income of Rs. 291.02 Crs during FY20 registering a decline of ~17% during the year. Decline during the FY 21 was on account of a weak economic scenario due to which the company did not get much opportunity for profitable trade and hence restricted trade to contain losses. Also, the company faced additional challenges in the form of Covid - 19. Sale for sunflower meal having its application in poultry industry got impacted severely due to Covid -19 which almost affected the whole poultry industry.
Exposure to volatility in the prices of agro based commodities and fluctuation in foreign currency :
The company is exposed to fluctuation in the prices of agro based commodities which are dependent on multiple factors like demand and supply situation, climatic conditions, production etc and can have a bearing on the profitability of the company. Since the company is also importing commodities, it is also susceptible to foreign exchange movement
Thin profitability margins owing to the nature of business :
The business segment of trading in agro based commodities is marked by thin profitability margins due to lack of any value addition and presence of fierce competition in the industry further makes the things difficult for the company. The company reported an operating margin of -0.30% during FY21 as against -0.34% during FY20 and net profit margin of -4.53% in FY 21 as compared to -5.81% in FY 20.

ANALYTICAL APPROACH - Standalone

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

RATING SENSITIVITIES

Going forward, the ability of the Company to scale up its trading operations in non agri-products also with improvement in profitability margins will be a key rating sensitivity. Also improvement in debt protection metrics will be a key monitorable.

Positive: Considerable improvement in the topline on account of change in marketing and trading strategy, profitability margins, debt protection metrics with ISCR of over 1.5x will be positive for the company.

Negative: The rating outlook may be revised to downward' if the company fails to revive sales and turnaround its EBITDA as projected during the current fiscal. Also continued stress debt protection metrics can have a negative impact on the rating.

LIQUIDITY INDICATORS - Stretched

Fund based working capital utilization of the company remained moderate with 60% utilization during the last six months period. Unencumbered cash and bank balance came down from 3.22 Crs as on 31 st March 2020 . The current ratio of the company is moderate at 1.43 times and gearing ratio (Analysed) of the company is moderate at 0.97 times for FY 21. The debt protection metrics are also stretched on account of losses in the company since the past 2 years with ISCR at -0.21x and DSCR at 0.64x as per FY 21. The liquidity of the company will be improved further on account of pick up in trading activity and cash inflow from planned monetisation of investments.

ABOUT THE ENTITY

Tinna trade Ltd. (TTL) was set up in 2009 and is a part of the well diversified TINNA GROUP of Companies established four decades ago. In July 2009, M/s. Viterra Inc. of Canada acquired a 60% stake and the company was renamed as Tinna Viterra Trade Private Limited. Subsequently in 2013, Viterra Inc. was acquired by M/s. Glencore PLC. This led to Viterra Inc. exiting the Joint Venture and TTL became a 100% subsidiary of Tinna Rubber & Infrastructure Limited. In June 2013, the company was renamed as TINNA TRADE PVT LTD. Under the leadership of Mr. Gaurav Sekhri, the Company is involved in trading of agri products primarily dealing in pulses like yellow peas, green peas, chickpeas, lentils, kaspa peas, toor and in grains & oilseed like wheat, maize, millet¸ sorghum, barley, mustard, soybean, edible oils, rapeseed meal, etc

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 20-21 (Audited)	FY 19-20 (Audited)
Operating Revenue	Rs.Crs.	240.76	291.02
EBITDA	Rs.Crs.	-0.73	-0.99
PAT	Rs.Crs.	-2.82	-3.70
Tangible Net Worth	Rs.Crs.	26.71	28.23
Total Debt/Tangible Net Worth	Times	0.97	0.92
Current Ratio	Times	1.53	1.33

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	39.60	BWR BB/Stable (Upgrade)	30Jul2020	BWR BB- (Stable) (Assignment)	NA	NA	NA	NA
Non Fund Based	ST	20.00	BWR A4 (Reaffirmation)	30Jul2020	BWR A4 (Assignment)	NA	NA	NA	NA
NFB SubLimit	ST	(29.60)	BWR A4 (Reaffirmation)	NA	NA	NA	NA	NA	NA
		(29.60)	BWR A4 (Reaffirmation)	NA	NA	NA	NA	NA	NA
		(5.00)	BWR A4 (Reaffirmation)	NA	NA	NA	NA	NA	NA
Grand Total		59.60	(Rupees Fifty Nine Crores and Sixty lakhs 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
Sanskriti Jain Rating Analyst sanskriti.j@brickworkratings.com	Tanu Sharma Director - Ratings tanusharma@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

Tinna Trade 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	Canara Bank	Cash Credit - Sanctioned	10.00	_	10.00
2	Canara Bank	ILC/FLC - Sanctioned	_	20.00	20.00
	Sub-Limit (Bank Guarantee) - Sanctioned		(5.00)
3	State Bank Of India (SBI)	Cash Credit - Sanctioned	29.60	_	29.60
	Sub-Limit (ILC/FLC) - Sanctioned		(29.60)
	Sub-Limit (SBLC) - Sanctioned		(29.60)
Total			39.60	20.00	59.60
TOTAL (Rupees Fifty Nine Crores and Sixty lakhs Only)

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