Brickwork Ratings reaffirms the long term ratings at BWR BBB - /Stable & short term ratings at BWR A3 for the Bank Loan Facilities of Rs. 50.00 Crs. of Kohinoor Feeds & Fats Pvt. Ltd. (erstwhile Kohinoor Feeds & Fats Ltd.)
ParticularsFacilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||
---|---|---|---|---|---|
Previous | Present | Previous (16 Feb 2021) |
Present | ||
Fund Based | 50.00 | 50.00 | Long Term |
BWR BBB- /Stable
Reaffirmation |
BWR BBB -
/Stable Reaffirmation |
(0.00) | (30.40) | ||||
Non Fund Based | (0.25) | (0.25) | Short Term |
BWR A3
Reaffirmation |
BWR A3
Reaffirmation |
Grand Total | 50.00 | 50.00 | (Rupees Fifty Crores Only) |
BWR has reaffirmed the long term rating to BWR BBB- with a "Stable" outlook & short term rating to BWR A3 of Kohinoor Feeds & Fats Pvt. Ltd. BWR believes that the firm's business risk profile will be maintained over the medium term. The rating outlook may be revised to 'Positive' in case the revenues and profit show sustained improvement backed by a favorable industry scenario. The rating outlook may be revised to 'Negative' if the financial risk profile shows lower than expected figures.
BWR has essentially relied upon the audited financial statements of Kohinoor Feeds & Fats Pvt. Ltd. of FY19, FY20 and FY21 and projected financial statements of FY22 and FY23, publicly available information, and information/clarifications provided by the entity’s management. The rating draws strength from the vast management experience, growth in the revenue of the firm and an above-average financial risk profile. However, the rating is constrained by Highly fragmented and competitive industry, volatility in operations & profit & agricultural risk.
Going forward the ability of the entity to maintain its overall financial risk profile would be its key rating sensitivity.
KEY RATING DRIVERSCredit Strengths:
The entity is engaged in processing of soya bean seeds and manufacturing of Soyabean Oil and Soyabean Meal. The company is certified with ISO 9001:2008 (QMS). The company is also engaged in Trading of Indian Rapeseed meal, Sugar and Rice. The Company is promoted by Mr. A. J. PANJWANI (Managing Director), who is a graduate having 41 years of experience and Mr. N. B. Mahajan (Executive Director), who is a graduate having 26 years of experience in production activities of Agriculture commodities. The promoters are technically and commercially qualified and have a substantial business experience.
TOI has increased to Rs 286.55 Crs in FY22 VS Rs 271.40 Crs in FY21. Tangible Net Worth (TNW) is Rs 29.99 Crs in FY21 VS Rs 24.89 Crs in FY20, indicating more profit retaintions. Total Debt/TNW is at 0.35x in FY21 VS 0.40x in FY20. Net Margin has increased to 1.97% in FY21 VS 1.71% in FY20. Further it is projected to increase to 2.00% in FY22 & 2.06% in FY23. Current Ratio is at 2.48x in FY21 VS 2.32x in FY20, indicating adequate liquidity position. Coverage Ratios as reflected by ISCR & DSCR are at 18.52x & 10.10x respectively in FY21 VS 5.69x & 3.96x respectively in FY20.
The working capital cycle of the company is efficient as indicated by GCA to Sales Ratio stood at 18% with a conversion cycle of 43 days.
The company operates in a highly fragmented soya processing industry consisting of organized and unorganized players in the industry which limits the bargaining power with suppliers and customers. As a result, revenues of the company has been range bound in nature.
KFFL’s major raw material is soyabean seeds. The prices of which are highly volatile in nature. The major risk is timely availability of raw materials as monsoon is fairly unpredictable. Also other concerns are rising prices of oil seeds, unpredictable supply of soya seeds and rising transport costs which makes operstions & profitability vulnerable.
Risk and uncertainty are inherent to agriculture sector. Soya bean seed being an agricultural commodity is exposed to the vagaries of monsoon and other agricultural risks such as diseases, natural disasters, and market and environmental shocks.
For arriving at its ratings, BWR has applied its rating methodology as detailed in the Rating Criteria.
RATING SENSITIVITIES
The ability of the firm to improve its scale of operations, maintain an adequate financial risk profile and liquidity, and improve its profitability margins would be its key rating sensitivities.
Upgrade: The ratings may be upgraded if the revenue and profitability of the entity show significant improvement.
Downgrade: The rating may be downgraded if there is a deterioration in the revenue and profitability.
The liquidity profile of the firm is adequate marked by a current ratio of 2.48x as of March 2021. The limits are utilised to below 50% (for the period Oct 2021 to April 2022) on average, leaving decent headroom in the event of any contingency. The Cash and cash equivalents of the firm stood at Rs 0.35 crs as on March 2021. There are current investments aggregating to Rs 0.50 Crs & Bank FD worth Rs 0.11 Crs. Net Cash Accruals are reported to Rs 5.58 Crs for FY21. Further it is projected to increase to Rs 6.20 Crs & Rs 7.00 Crs in FY22 & FY23 respectively.
ABOUT THE ENTITYThe Company was originally incorporated as a Private Limited Company on 20.12.1990 which was subsequently converted into a Public Limited Company on 01.06.1994 having its registered office at D - 93, MIDC, NANDED, DISTRICT - NANDED – 431 603 (MAHARASHTRA) INDIA. The unit is engaged in processing of soya bean seeds and manufacturing of soya bean oil and soya bean meal. The company is certified with ISO 9001:2008 (QMS). The company is also engaged in Trading of Indian Rapeseed meal, Sugar and Rice. The Company produces excellent quality soya bean meal which commands premium from the poultry and the aqua feed meals worldwide. The unit is having in built quality checkup with a well equipped laboratory with highly qualified professionals with strict quality control standards. The unit is manufacturing the highest quality standard of refined vegetable oil which is widely accepted in the Domestic market with premium. The unit is having continuous research in quality improvements with a customer friendly approach. The entity purchases its raw material from local market.
KEY FINANCIAL INDICATORS (Standalone)Key Parameters | Units |
FY 20-21 (Audited) |
FY 19-20 (Audited) |
---|---|---|---|
Operating Revenue | Rs.Crs. | 271.40 | 283.21 |
EBITDA | Rs.Crs. | 6.96 | 8.19 |
PAT | Rs.Crs. | 5.35 | 4.84 |
Tangible Net Worth | Rs.Crs. | 29.99 | 24.89 |
Total Debt/Tangible Net Worth | Times | 0.35 | 0.40 |
Current Ratio | Times | 2.48 | 2.32 |
Facilities | Current Rating (2022) | 2021 | 2020 | 2019 | |||||
---|---|---|---|---|---|---|---|---|---|
Type | Tenure | Amount (Rs.Crs.) |
Rating | Date | Rating | Date | Rating | Date | Rating |
Fund Based | LT | 50.00 |
BWR BBB-/Stable
(Reaffirmation) |
16Feb2021 |
BWR BBB- Stable
(Reaffirmation) |
NA |
NA
|
17Nov2020 |
BWR BBB- Stable
(Assignment) |
FB SubLimit | LT | (30.40) |
BWR BBB-/Stable
(Reaffirmation) |
NA |
NA
|
NA |
NA
|
NA |
NA
|
Non Fund Based | ST | 0.00 |
NA
|
16Feb2021 |
BWR A3
(Reaffirmation) |
NA |
NA
|
NA |
NA
|
NFB SubLimit | ST | (0.25) |
BWR A3
(Reaffirmation) |
16Feb2021 |
BWR A3
(Reaffirmation) |
NA |
NA
|
17Nov2020 |
BWR A3
(Assignment) |
Grand Total | 50.00 | (Rupees Fifty Crores 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 | |
---|---|
Gaurav Vivek Sattegeri Ratings Analyst gaurav.vs@brickworkratings.com |
Sushil Kumar Chitkara Director - Ratings Board : +91 22 2831 1426, +91 22 2831 1439 sushilkumar.c@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 | Union Bank of India | Cash CreditSanctioned | 38.00 | _ | 38.00 | |
Sub-Limit (Cash Credit) Sanctioned | (30.40) | |||||
Sub-Limit (LG) Sanctioned | (0.25) | |||||
2 | Union Bank of India | Cash Credit (WHR)Sanctioned | 12.00 | _ | 12.00 | |
Total | 50.00 | 0.00 | 50.00 | |||
TOTAL (Rupees Fifty Crores Only) |
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