Brickwork Ratings reaffirm the rating for the Bank Loan Facilities of Rs. 16.80 Crs. of T.R. Agro Industries
ParticularsFacilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||
---|---|---|---|---|---|
Previous | Present | Previous (29 Sep 2020) |
Present | ||
Fund Based | 16.80 | 16.80 | Long Term |
BWR BB-/Stable
Reaffirmation |
BWR BB -
/Stable Reaffirmation |
(6.00) | (6.00) | ||||
Grand Total | 16.80 | 16.80 | (Rupees Sixteen Crores and Eighty lakhs Only) |
BWR reaffirmed the long-term rating as BWR BB- with “Stable” Outlook for the bank loan facilities of M/s T. R. Agro Industries.
The rating draws strength from the management experience and moderate financial profile. However, the rating is constrained on account of partnership nature of constitution and presence in fragmented & highly competitive industry.
BWR believes that the business risk profile of “T. R. Agro Industries” will be maintained over the medium term. The Stable outlook indicates a low likelihood of rating change over the medium term. The Rating outlook may be revised to “Positive” in case there is significant improvement in revenues and profit margins of the company going forward. The rating outlook may be revised to “Negative” if there is any deterioration in the financial risk profile including liquidity of the company.
KEY RATING DRIVERSCredit Strengths:
The firm is in existence for more than 20 years having long operational track record in the business cycles. TRAI is managed by the partners: Sham Sunder and Harsh Kumar with 50% share in profits each.
Total Operating income has increased from Rs.80.15crs in FY19(A) to Rs.89.24crs in FY20(A) indicating a growth of 11.34%. The firm has achieved the total operating income of Rs.75.71crs in FY21(Unaudited). The firm has generated the sales of Rs.40.46crs from 01.04.2021 to 30.11.2021 against the projected sales of Rs.100.00crs in FY22. TNW has increased from Rs.6.40crs in FY19 to Rs.7.28crs in FY20 (Analysed TNW has also increased from Rs.11.87crs in FY19 to Rs.12.62crs in FY20). Debt Equity Ratio improved from 7.16x in FY19(A) to 5.94x in FY20(A). ISCR has marginally increased from 1.17x in FY19(A) to 1.19x in FY20(A). DSCR stood at 0.82x in FY20(A). Conversion cycle decreased from 222 days to 170 days in FY20(A). Current ratio increased from 1.32x in FY19(A) to 1.78x in FY20(A)
Firm's constitution has the inherent risk of possibility of withdrawal of partner's capital in case of personal needs of the partners which may affect the capital structure of the firm and consequently the business operations of the firm.
The firm is a part of industry which is highly fragmented with numerous players operating in the unorganized sector with very less product differentiation. This leaves limited flexibility in pricing the end products which affects profitability. The firm has to compete with local & unorganised players due to intense competition and limiting the pricing flexibility of the rice commodity.
For arriving at its ratings, BWR has applied its rating methodology as detailed in the Rating Criteria detailed below (hyperlinks provided at the end of this rationale).
RATING SENSITIVITIES
Going forward, the ability of the company to improve its financial profile and maintaining adequate liquidity will remain the key rating sensitivities.
Positive: Rating may be upgraded in case of substantial improvement in revenues and profit of the company, or on account of any other favourable factor.
Negative: Rating may be downgraded in case there is deterioration in financial profile of the company including the liquidity of the company or on account of any unforeseen unfavourable events.
The firm had cash and cash equivalents balance of Rs.0.78crs as on FY20(A). Long Term Borrowings of Rs.26.43crs in FY20(A) includes Rs. 15.75crs in the form of secured loan which includes Rs. 3.28crs Loan from Axis Bank pledge a/c, Rs.6.46crs Loans from Indus land bank pledge a/c, Rs.2.08crs Loans from SBI pledge a/c and Rs. 1.96crs Laon from Yes bank pledge a/c. and Unsecured loan of Rs. 10.67crs from friends and relatives for indefinite period of time. The firm is having a CPLTD of Rs.18.68crs against the net cash accrual of Rs.0.92crs in FY20(A). Average utilization of OCC limit is around 83.71% for the last 8 months i.e., from April 2021 to Nov 2021. Current ratio stood at 1.78x as on FY20(A). Conversion cycle of 170 days is reported in FY20(A). The firm had ISCR and DSCR of 1.19x and 0.82x in FY21(A).
Holding/Subsidiary Company: Nil
ABOUT THE ENTITYT.R. Agro Industries, is a partnership firm, established in the year 1998 and is promoted by Mr. Sham Sunder and Mr. Harsh Kumar. The firm primarily processes Basmati and Non-Basmati Rice and sells to export houses, under the Husenpari, TR Kachi Carat Gold and Arghaya brands. The firm procures paddy from the commission agents (dealers) who in turn procure the paddy directly from the farmers in the local market. The firm has its factory and storage facilities located at Kotkapura, Punjab. Presently, the unit has a capacity of 7 tons per hour.
KEY FINANCIAL INDICATORS (Standalone)Key Parameters | Units |
FY 19-20 (Audited) |
FY 18-19 (Audited) |
---|---|---|---|
Operating Revenue | Rs.Crs. | 89.41 | 80.42 |
EBITDA | Rs.Crs. | 5.64 | 6.25 |
PAT | Rs.Crs. | 0.12 | 0.12 |
Tangible Net Worth | Rs.Crs. | 7.28 | 6.40 |
Total Debt/Tangible Net Worth | Times | 5.94 | 7.16 |
Current Ratio | Times | 1.78 | 1.32 |
NA
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 | 16.80 |
BWR BB-/Stable
(Reaffirmation) |
29Sep2020 |
BWR BB-Stable
(Reaffirmation) |
29Aug2019 |
BWR BB-Stable
(Reaffirmation) |
07Mar2018 |
BWR BStable
(Reaffirmation/ISSUER NOT COOPERATING*) |
NA |
NA
|
NA |
NA
|
NA |
NA
|
03Aug2018 |
BWR BB-Stable
(Upgrade) |
||
FB SubLimit | LT | (6.00) |
BWR BB-/Stable
(Reaffirmation) |
NA |
NA
|
NA |
NA
|
NA |
NA
|
Non Fund Based | ST | NA |
NA
|
29Sep2020 |
BWR A4
(Reaffirmation) |
29Aug2019 |
BWR A4
(Assignment) |
07Mar2018 |
BWR A4
(Reaffirmation/ISSUER NOT COOPERATING*) |
Grand Total | 16.80 | (Rupees Sixteen Crores and Eighty lakhs 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.
Hyperlink/Reference to applicable CriteriaAnalytical Contacts | |
---|---|
Akash Chaubey Ratings Analyst akash.c@brickworkratings.com |
V.K.Kukreja Associate Director - Ratings Board : +91 11 2341 2232 kukreja.vk@brickworkratings.com |
1-860-425-2742 | media@brickworkratings.com |
SL.No. | Name of the Bank/Lender | Type Of Facilities | Long Term(Rs.Crs.) | Short Term(Rs.Crs.) | Total(Rs.Crs.) |
---|---|---|---|---|---|
1 | Canara Bank | GECLSanctioned | 2.80 | _ | 2.80 |
2 | Canara Bank | OCC/ODBD/WCDL/BillsSanctioned | 14.00 | _ | 14.00 |
Sub-Limit (ODBD) Sanctioned | (6.00) | ||||
Total | 16.80 | 0.00 | 16.80 | ||
TOTAL (Rupees Sixteen Crores and Eighty lakhs Only) |
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