RATING RATIONALE
19Jan2022

Sri Buchiyyamma Rice Mill

Brickwork Ratings reaffirms the rating for the Bank Loan Facilities of Rs. 13.80 Crs. of Sri Buchiyyamma Rice Mill

Particulars
Facilities** Amount (Rs.Crs.) Tenure Rating#
Previous Present Previous
(04 Feb 2021)
Present
Fund Based 13.80 13.80 Long Term BWR BB- /Stable
Reaffirmation
BWR BB - /Stable
Reaffirmation
(0.00) (3.00)
Grand Total 13.80 13.80 (Rupees Thirteen Crores and Eighty 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 essentially relied upon the audited financials up to FY21, 8MFY22 provisional financials of FY22, projected financials up to FY23, publicly available information, and information/clarifications provided by the firm's management.

The rating reaffirms factors of experienced partners, adequate capital structure and adequate liquidity position, and locational advantages. However, the rating is constrained by revenue remains a moderate scale of operations and low profitability margins, moderate debt service coverage metrics, Constitution of the entity, agro-based commodities and intense competition, customer and working capital intensive nature of operations. 

The ‘Stable’ outlook indicates a low likelihood of rating change over the medium term. BWR expects that the Sri Buchiyyamma Rice Mill business risk profile will be maintained over the medium term. The outlook may be revised to Positive in case of better than expected operating income and improvement in financial risk profile debt-protection indicators. The outlook may be revised to Negative if the operating metrics weaken or if larger than anticipated Capex leads to deterioration in credit metrics and liquidity
 

KEY RATING DRIVERS

Credit Strengths:


Credit Risks:

ANALYTICAL APPROACH - Standalone

As it is a firm, a standalone approach has been adopted and BWR has applied its rating methodology as detailed in the Rating Criteria detailed below (hyperlinks provided at the end of this rationale). 
 

RATING SENSITIVITIES

Upward - Sustained improvement in scale of operations with improved profitability margins and capital structure. Specific credit metrics that could lead to an upgrade of the firm's rating include (1) Total Debt/Partners capital below 1.00 times on a continuous basis, (2) DSCR and ISCR greater than 3.0 times on a continuous basis.

Downward - Specific credit metrics that could lead to a downgrade if there is any decline in revenue, debt service coverage metrics and further there is a significant deterioration in the credit profile of the firm. 

LIQUIDITY INDICATORS - Adequate

The liquidity position of the firm is adequate as its current ratio as on March 31, 2021, is moderate at 3.61 times and it had a cash & bank balance of Rs.4.83 Crs. The average CC utilization for the last 12 months is 60% and the firm is expected to generate net cash accruals of Rs.0.50 Crs and Rs.0.50 Crs as against the CPLTD Nil in FY22 and FY23 respectively.

ABOUT THE ENTITY

Sri Buchiyyamma Rice Mill(SBRM) was established in 1983, Tossipudi, East Godavari, Andhra Pradesh. SBRM procures Paddy from the farmers and commission agents and engages in the rice processing and trading. SBRM engages in the boiled rice process and does the raw rice process under the CMR scheme. The firm  procures paddy majorly from the states of Andhra Pradesh, Telangana and Orissa and sells in Kerala. SBRM sells rice under the unregistered brands of Hindu Sitara and Star Sitara. The installed capacity of the firm is 144 MT per day and average utilization is more than 70% of the capacity. The SBRM's rice processing unit is spread across around 2 acres of the firm's own land. The firms entered a lease agreement with Sree Buchiyyamma Agro Private Limited for the godown facility. The firm has a 380 kva power facility to run the operations smoothly. 
 
Mr. K Papa Reddy is the managing partner of the firm and is also director in the Sree Buchiyyamma Agro Private Limited.   

KEY FINANCIAL INDICATORS (Standalone)
Key Parameters Units FY 20-21
(Audited)
FY 19-20
(Audited)
Operating Revenue Rs.Crs. 59.65 55.46
EBITDA Rs.Crs. 2.79 3.10
PAT Rs.Crs. 0.30 0.30
Tangible Net Worth Rs.Crs. 14.66 12.35
Total Debt/Tangible Net Worth Times 1.33 0.08
Current Ratio Times 2.02 4.38

NON-COOPERATION WITH PREVIOUS CREDIT RATING AGENCY

ICRA has continued the rating of CRISIL B+/Stable, Issuer Not Cooperating on 9th June 2021 for the bank loan facilities Rs.25.00 Crs of Sri Buchiyyamma Rice Mill.

RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)
Facilities Current Rating (2022) 2021 2020 2019
Type Tenure Amount
(Rs.Crs.)
Rating Date Rating Date Rating Date Rating
Fund Based LT 13.80
BWR BB-/Stable
(Reaffirmation)
04Feb2021
BWR BB- Stable
(Reaffirmation)
04Mar2020
BWR BB-Stable
(Assignment)
NA
NA
FB SubLimit LT (3.00)
BWR BB-/Stable
(Reaffirmation)
NA
NA
NA
NA
NA
NA
Grand Total 13.80 (Rupees Thirteen Crores and Eighty 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

Prashanth Boorala

Ratings Analyst Board : +91 40 2331 0161 / 2331 0071 prashanth.b@brickworkratings.com

Nagaraj K

Associate Director - Ratings Board : +91 80 4040 9940 nagaraj.ks@brickworkratings.com
1-860-425-2742 | media@brickworkratings.com
Sri Buchiyyamma Rice Mill
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 Open Cash Credit / Cash Credit (Hypothecation/Pledge)Sanctioned 13.80 _ 13.80
Sub-Limit (Letter of Guarantee) Sanctioned (3.00)
Total 13.80 0.00 13.80
TOTAL (Rupees Thirteen Crores and Eighty lakhs Only)
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