Jyotirmayee Foods Pvt. Ltd

Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 26.53 Crs. of Jyotirmayee Foods Pvt. Ltd

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (11 Dec 2020)	Present
Fund Based	26.42	26.53	Long Term	BWR BB /Stable Reaffirmation	BWR BB /Stable Reaffirmation
Grand Total	26.42	26.53	(Rupees Twenty Six Crores and Fifty Three 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 reaffirmed the long term rating at 'BWR BB/Stable' for the bank loan facilities of Jyotirmayee Foods Pvt Ltd.

The Rating derives strength from the extensive business experience of management, favorable location of manufacturing unit, improvement in operating income and profitability margins and improvement in financial risk profile . However, the rating is constrained by working capital intensive nature of operations, intensively fragmented and competitive edible oil industry and dependence on vagaries of nature. Going forward, the ability of the company to increase revenues, improve its profitability margins, strengthen its financial risk profile and manage its working capital efficiently will remain the key rating sensitivities.

The rating outlook has been assigned as "Stable" as BWR believes that Jyotirmayee Foods Pvt Ltd business risk profile 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 the revenue and profitability margins show sustained improvement. The rating outlook may be revised to 'Negative' if the financial risk profile goes down.

KEY RATING DRIVERS

Credit Strengths:

Experienced management of the company :
The company was promoted by Mr. R H Ramgopal and his family members. The promoters are having more than three decades of experience in rice milling industry among other business experience. The other directors of the company are also qualified and have decade of experience. The extensive experience of the promoters in related business industry helps company in establishing relationship with customers and suppliers.
Favorable Geographical location :
The company’s unit is located in East Godavari dist, Andhra Pradesh which ensures availability of raw material (Rice Bran) directly from farmers and rice mills and benefited by transportation cost.
Improvement in operating income and profitability margins :
The operating income of the company increased from Rs. 57.83 crore in FY20 to Rs. 68.07 crore in FY21 on account of increase in sales of Rice bran oil. The operating income of the company declined in FY20 as the company shut down its production for 3 months in FY20 as it was getting machinery installed and also the Covid 1st wave which hit in March end hampered the production of company. The company has achieved Rs. 91.5 cr sales as on date in FY22 and is confident to achieve its projected sales of Rs. 100 cr in FY22. The profitability margins also improved with operating margin improving from -1.41% in FY20 to 12.17% in FY21. The Net profit margins also improved from -6.31% in FY20 to 6.22% in FY21.
Improvement in financial risk profile of the company :
The Tangible Net worth of the company improved from Rs. 3.63 crore as on 31 March 2020 to Rs. 7.87 crore as on 31 March 2021. The Total debt/ Tangible Net worth of company improved from 5.88 times as on 31 March 2020 to 3.75 times as on 31 March 2021. The current ratio improved from 0.85 times as on 31 March 2020 to 1.06 times as on 31 March 2021. The ISCR improved from -0.36 times in FY20 to Rs. 2.69 times in FY21. The DSCR improved from -0.31 times in FY20 to 2.34 times in FY21.

Credit Risks:

High Working capital requirement :
The company has high working capital requirement due to nature of business operations. The average CC utilization from April 2021 to Dec 2021 is 90% which is on higher side.
Fragmented nature of industry :
The edible oil industry is highly competitive and fragmented in nature because of the presence of established players having a good brand recognition along with numerous small players which results in low margins.
Dependence on vagaries of nature :
Agro-based industry is characterized by its seasonality, as it is dependent on availability of products , which further varies with different harvesting periods. The production depends on favorable climatic conditions and is susceptible to vagaries of nature.

ANALYTICAL APPROACH - Standalone

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 increase its revenues, improve profit margins, decrease gearing , improve current ratio and better working capital management shall be key rating sensitivities

Positive: The ratings may be upgraded if profitability, liquidity and overall credit profile show substantial improvement.

Negative: The rating may be downgraded in case there is a significant deterioration in business and financial risk profile of the company from its current level

LIQUIDITY INDICATORS - Stretched

The company’s liquidity position is stretched characterized by high working capital utilization of around 90% from 01 April 2021 to December 2021 .The Cash and Cash Equivalents for FY 21 stood at Rs 0.17 Crs. The current ratio stood at 1.06 times as on 31 March 2021.

ABOUT THE ENTITY

Jyotirmayee Foods Pvt. Ltd. was incorporated on 5 January, 2007, started its commercial operations from June 2011 and it has a solvent extraction plant located at Surampalem road, Peddapuram, East Godavari, Andhra Pradesh. The company is promoted by Mr. R.H. Ramgopal along with his family members. The company is engaged in production of rice bran crude oil and de-oiled rice bran. The company sells its products i.e. Rice bran crude oil to the refineries located in Andhra Pradesh and Telangana states. The de-oiled rice bran is sold to companies involved in manufacturing of animal feed. The company had stopped business operations in FY 15-16 and FY 16-17 and started operations in January 2018. During June 2019, the company had purchased additional machineries to expand its production.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 20-21 (Audited)	FY 19-20 (Audited)
Operating Revenue	Rs.Crs.	68.07	57.83
EBITDA	Rs.Crs.	8.28	-0.81
PAT	Rs.Crs.	4.23	-3.65
Tangible Net Worth	Rs.Crs.	7.87	3.63
Total Debt/Tangible Net Worth	Times	3.75	5.88
Current Ratio	Times	1.06	0.85

KEY COVENANTS OF THE FACILITY RATED

The terms of sanction include standard covenants normally stipulated for such facilities.

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

CARE Ratings revised the rating to CARE B+/Stable from CARE BB-/Stable with continuation under Issuer Not Cooperating category on 05 February 2021 for the bank loan facilities of Rs. 22.72 crore of Jyotirmayee Foods Pvt Ltd.

ANY OTHER INFORMATION

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	26.53	BWR BB/Stable (Reaffirmation)	11Dec2020	BWR BB Stable (Reaffirmation)	13Nov2019	BWR BB Stable (Upgrade)	NA	NA
Grand Total		26.53	(Rupees Twenty Six Crores and Fifty Three 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
Roshan Ranjan Ratings Analyst roshan.r@brickworkratings.com	Nagaraj K Associate Director - Ratings Board : +91 80 4040 9940 nagaraj.ks@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

Jyotirmayee 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	Union Bank of India	Term Loan - Out-standing	1.76	_	1.76
2	Union Bank of India	Open Cash Credit / Cash Credit (Hypothecation/Pledge) - Sanctioned	19.00	_	19.00
3	Union Bank of India	Funded Interest Term Loan - Out-standing	_	_	0.00
4	Union Bank of India	GECL - Out-standing	2.12	_	2.12
5	Union Bank of India	GECL - Out-standing	3.65	_	3.65
Total			26.53	0.00	26.53
TOTAL (Rupees Twenty Six Crores and Fifty Three lakhs Only)

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