RATING RATIONALE
25May2022

Sri Annapurna Rice Industry

Brickwork Ratings revises/reaffirms the ratings for the Bank Loan Facilities of Rs. 12.00 Crs. of Sri Annapurna Rice Industry

Particulars
Facilities** Amount (Rs.Crs.) Tenure Rating#
Previous Present Previous
(13 Mar 2021)
Present
Fund Based 5.50 6.50 Long Term BWR B /Stable
Reaffirmation
BWR B + /Stable
Upgrade
Non Fund Based 4.50 5.50 Short Term BWR A4
Reaffirmation
BWR A4
Reaffirmation
Grand Total 10.00 12.00 (Rupees Twelve Crores 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
*** The limits have been taken over by the HDFC Bank during November 2021 from PNB


RATING ACTION / OUTLOOK

BWR has essentially relied upon the audited financials up to FY21, provisional financials of FY22, projected financials up to FY24, publicly available information and information/clarifications provided by the firm's management.

The rating upgrades/reaffirms factors of experienced partners, improved revenue and margins in FY22 provisionals basis, locational advantages, and adequate liquidity position. However, the ratings are constrained by the moderate scale of operations, the constitution of the entity, agro-based commodities and intense competition, and the working capital intensive nature of operations. 

The ‘Stable’ outlook indicates a low likelihood of rating change over the medium term. BWR expects that Sri Annapurna Rice Industry 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

BWR has applied its rating methodology as detailed at the end of the document. BWR has adopted a standalone approach for arriving at its ratings.

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 1.34 times. The average working capital utilization for the last 12 months is 90% and the firm is expected to generate adequate net cash accruals of Rs.0.35 Crs and Rs.0.43 Crs against the CPLTD of Rs.0.29 Crs and 0.21 Crs in FY23 and FY24 respectively.

ABOUT THE ENTITY

Sri Annapurna Rice Industry (SARI), established as a partnership firm in March 2017, is located at Mandapeta, East Godavari District of Andhra Pradesh. The firm has entered a lease agreement with Sai Krishna Raw & Boiled Rice Mill and Vijayalakshmi Rice Mill for processing paddy. It is spread across 3 acres of land with 2 rice processing units with a validity period of 6 years (06/01/2020 to 31/10/2026). SARI engaged in the milling of paddy to produce raw rice, parboiled rice, and by-products like broken rice, husk, and rice bran and sold the rice under the unregistered brand name of Gemini. The firm’s installed capacity is 22 Tonnes per hour and the utilized capacity is 90%. The firm procures paddy from the states of Bihar, Bengal, Orissa, Tamil Nadu, and Andhra Pradesh. The go down has a Capacity of 50,000 quintals of paddy. The firm undertakes job work for FCI under the Customs Milled Rice (CMR) scheme. 
 
Mr.M Venkateswara Rao is the managing partner of the firm and has a managing interest in other entities also.

KEY FINANCIAL INDICATORS (Standalone)
Key Parameters Units FY 20-21
(Audited)
FY 19-20
(Audited)
Operating Revenue Rs.Crs. 46.11 43.71
EBITDA Rs.Crs. 0.57 0.64
PAT Rs.Crs. 0.27 0.18
Tangible Net Worth Rs.Crs. 2.91 2.72
Total Debt/Tangible Net Worth Times 1.39 2.35
Current Ratio Times 1.34 1.30

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 6.50
BWR B+/Stable
(Upgrade)
13Mar2021
BWR B Stable
(Reaffirmation)
27Jan2020
BWR B Stable
(Assignment)
NA
NA
Non Fund Based ST 5.50
BWR A4
(Reaffirmation)
13Mar2021
BWR A4
(Reaffirmation)
27Jan2020
BWR A4
(Assignment)
NA
NA
Grand Total 12.00 (Rupees Twelve Crores Only)
*** The limits have been taken over by the HDFC Bank during November 2021 from PNB 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 Annapurna Rice Industry
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 HDFC Bank Cash CreditSanctioned 6.50 _ 6.50
2 HDFC Bank Bank GuaranteeSanctioned _ 5.50 5.50
Total 6.50 5.50 12.00
TOTAL (Rupees Twelve Crores Only)
* The limits have been taken over by the HDFC Bank during November 2021 from PNB

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