Tinna Trade Ltd.

Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 66.76 Crs. of Tinna Trade Ltd.

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (31 Aug 2021)	Present
Fund Based	39.60	36.76	Long Term	BWR BB /Stable Upgrade	BWR BB /Stable Reaffirmation
Non Fund Based	20.00	30.00	Short Term	BWR A4 Reaffirmation	BWR A4 Reaffirmation
Non Fund Based	(5.00)	(5.00)	Short Term	BWR A4 Reaffirmation	BWR A4 Reaffirmation
Grand Total	59.60	66.76	(Rupees Sixty Six Crores and Seventy Six 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 and short term rating at BWR BB (Stable)/ BWR A4 for the bank facilities of Tinna Trade Limited. The rating draws comfort from extensive experience of promoters in the same line of business, well established relationships with buyers & suppliers, improved overall financial risk profile of the company and promising operational performance on account change in the business strategy to focus more on non agri-trading activities also which provides visibility of the revenue in the short to medium term.

However, the rating is constrained by exposure to volatility in the prices of agro based commodities and fluctuations in foreign currency and thin profitability margins owing to the nature of the business. The ratings also factor in the weak credit ratios led by low levels of EBITDA.

Outlook: Stable

BWR believes that the business and financial risk profile of the company will be maintained over the medium term. The outlook may be revised to 'Positive' in case revenue, profitability and solvency position show a sustained improvement leading to an improved financial and liquidity profile. The rating outlook may be revised to 'Negative' in case the profitability generated is much lower than anticipated, there are aggressive debt-funded capex plans, or there is a significant deterioration in the overall liquidity profile of the company.

KEY RATING DRIVERS

Credit Strengths:

Experienced promoters and established track record :
Directors of the company are experienced and have more than 2 decades of diverse industry experience. Educated in London Mr. Gaurav Sekhri started his career with the Tinna Group in 1992. He has been actively involved in the group's agri and non-agri commodities trading business. Directors are further supported by qualified and experienced management personnel as well. Mr. Sanjeev Garg being Chief Operating Officer (COO) has been actively engaged in the group’s commodities trading business. He has 25 years of experience in the field of commodities trading, hedging, finance, foreign exchange, shipping, supply chain and administration.
Well established relationship with buyers and suppliers :
The long standing experience of the promoters has led to strong relationships with the customers as well as with the suppliers. TTL does not maintain any long term contracts with the suppliers but enjoys the flexibility of procuring desired quality raw materials from Mandi/ local suppliers at prevailing rates. The company over a period of time has created synergies with domestic suppliers as well, which helped them to maintain the same scale of operations.
Diversification of business and Improved TOI :
The company has shifted its marketing strategy to focus more on non agricultural products like steel abrasives and steel shots, in order to mitigate the risk of loss from agri products. The company has also started trading in Palm Oil & RBD (refined, bleached & deodorized) Oil from the current financial year, which has gross profit margins of 3-4%, however, the quantum of same is nominal as of now. The company has achieved total sales of Rs. 334.58 crs in FY22 in comparison to Rs. 240.76 crs in FY21, with an increase of 39% y-o-y.

Credit Risks:

Exposure to volatility in the prices of agro based commodities and fluctuation in foreign currency :
The company is exposed to fluctuation in the prices of agro based commodities which are dependent on multiple factors like demand and supply situation, climatic conditions, production etc and can have a bearing on the profitability of the company. Since the company is also importing commodities, it is also susceptible to foreign exchange movement.
Thin profitability margins owing to the nature of business :
The business segment of trading in agro based commodities is marked by thin profitability margins and presence of fierce competition in the industry. The company reported an operating margin of 0.48% and net margin of 0.17% in FY22. Further, debt protection metrics of the company are quite weak with ISCR and DSCR of 0.64x and 1.18x, respectively.

ANALYTICAL APPROACH - Standalone

For arriving at its ratings, BWR has applied its rating methodology as debited in the Rating Criteria detailed below (hyperlinks provided at the end of this rationale).

RATING SENSITIVITIES

Positive: BWR may revise the ratings upward in the case there is substantial improvement in revenue, profitability and overall financial risk profile.

Negative:BWR may revise the rating downward in the case there is substantial decline in revenues, profitability and detoriation in the overall liquidity profile of the company.

LIQUIDITY INDICATORS - Stretched

Fund based working capital utilization of the company remained high with 95% utilization during the last twelve months period. The company cash accruals of Rs. 0.55 crs in FY22, which is expected to be improved to Rs. 4.35 crs in FY23. Moderate current ratio and gearing ratio at 1.34x and 1.22x for FY 22. Debt service coverage ratio i.e. ISCR and DSCR improved from -0.21x and 0.64x in FY21 to 0.42x and 1.18x in FY22, respectively. The company is able to meet its interest expenses from its non operating income which is Rs. 2.72 crs for FY22, despite having such a low ISCR.

ABOUT THE ENTITY

Tinna trade Ltd. (TTL) was set up in 2009 and is a part of the well diversified TINNA GROUP of Companies established four decades ago. Tinna Trade Ltd. (TTL) is a company listed on Bombay Stock Exchange. TTL is engaged in the business of trading of commodities like

Pulses :- Yellow Peas, Chick Peas, Toor, Urad, Lentils, etc
Grains :- Wheat, Maize, Bajra
Oil & oil seeds- CPO, Sunflower oil, PFAD, Soya Bean, Soya Bean Doc/Meals, SFM
Non agri commodities:- Steel abrasives etc.

TTL has presence at all the major Gateway Ports of India which cater to handling of commodities and working through its 12 branch offices. The company has its own team at each location for effective execution, distribution & collection. The company does not have any subsidiary companies.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 21-22 (Audited)	FY 20-21 (Audited)
Operating Revenue	Rs.Crs.	334.58	240.76
EBITDA	Rs.Crs.	1.59	-0.73
PAT	Rs.Crs.	0.58	-2.82
Tangible Net Worth	Rs.Crs.	27.31	26.71
Total Debt/TNW	Times	1.22	0.97
Current Ratio	Times	1.34	1.53

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	36.76	BWR BB/Stable (Reaffirmation)	31Aug2021	BWR BB Stable (Upgrade)	30Jul2020	BWR BB- Stable (Assignment)	NA	NA
Non Fund Based	ST	30.00	BWR A4 (Reaffirmation)	31Aug2021	BWR A4 (Reaffirmation)	30Jul2020	BWR A4 (Assignment)	NA	NA
NFB SubLimit	ST	(5.00)	BWR A4 (Reaffirmation)	NA	NA	NA	NA	NA	NA
Grand Total		66.76	(Rupees Sixty Six Crores and Seventy Six 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
Aanchal Gupta Ratings Analyst aanchal.g@brickworkratings.com	Tanu Sharma Director - Ratings tanusharma@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

Tinna Trade 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	Canara Bank	GECL - Sanctioned	0.99	_	0.99
2	Canara Bank	GECL - Sanctioned	0.57	_	0.57
3	Canara Bank	ILC/FLC - Sanctioned	_	20.00	20.00
	Sub-Limit (Bank Guarantee) - Sanctioned		(5.00)
4	Canara Bank	Cash Credit - Sanctioned	10.00	_	10.00
5	State Bank Of India (SBI)	GECL - Sanctioned	5.60	_	5.60
6	State Bank Of India (SBI)	Cash Credit - Sanctioned	19.60	_	19.60
7	State Bank Of India (SBI)	ILC/FLC - Sanctioned	_	10.00	10.00
Total			36.76	30.00	66.76
TOTAL (Rupees Sixty Six Crores and Seventy Six lakhs Only)

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