AMDD Foods Pvt. Ltd.

Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 213.00 Crs. of AMDD Foods Pvt. Ltd.

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (28 Jul 2021)	Present
Fund Based	56.18	95.00	Long Term	BWR BBB+ Upgrade	BWR BBB + /Stable Reaffirmation
Fund Based	108.00	118.00	Short Term	BWR A2 Upgrade	BWR A2 Reaffirmation
Grand Total	164.18	213.00	(Rupees Two Hundred Thirteen 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
Note: This rating pertains to an existing assignment received prior to October 06, 2022.

RATING ACTION / OUTLOOK

BWR has reaffirmed the long term and short term rating to BWR BBB+/Stable and BWR A2 respectively for the bank loan facilities of AMDD Foods Private Limited owing to the comfortable scale of operations, profitability over the years and comfortable credit profile over the years, along with BWR’s expectations that the same will be sustained in the near term due to the essential nature of industry.

The ratings continue to take into account the steady revenue growth registered by the company over the years despite fall in operating income in fiscal year FY 22 and sustainability of its profitability margins over the years. The rating continues to benefit on account of its established operational track record and long experience of the promoters in the basmati rice industry; wide distribution network and its established relationships with domestic and export clients. However, the ratings remain constrained by the competitive and fragmented nature of the industry which limits the pricing flexibility of the industry participants, agro climatic risks, changes in government regulations and trade policies, both in the domestic as well as importing countries, and customer concentration risk.

The rating outlook continues to be stable on account of order book position of ~ Rs 224 Crs which shows revenue visibility in near term . The rating outlook is also stable on account of a sound demand outlook for the rice industry for both the short and medium term due to its essential nature of industry.

KEY RATING DRIVERS

Credit Strengths:

Established operational track record, several decade-long experience of promoters in the Basmati rice industry :

AMDD is promoted by parent DD International Private Limited which is a fully-integrated rice company with an operational track record of over four decades. Moreover, the company’s management has several-decades-long experience in the Basmati Rice industry. Company benefits from its established group track record .
Strong brand presence; position among Basmati rice exporters in India :

AMDD benefits from its established group track record and its group long track record and brand presence in the domestic market and sizable portion of its revenue (~63 % in FY 22) comes from the export sales which is the major market for basmati players in India. The company markets its products in its own brand Silver grain,Mehak, through well-established distributors in the states of Maharashtra, Gujrat, Andhra Pradesh, Telangana, Karnataka, Tamil Naidu, Rajasthan, Delhi, Uttar Pradesh, Uttarakhand, Punjab, Haryana, West Bengal . Further majority of the exports are direct with personal relationships developed over a period of three decades under Golden grain brand.
Comfortable scale of operations and comfortable order book position :

The growth in operating income over the years has led to increase in scale of operations over the years, growth is however muted in FY 22 due to decline in volumes by 7.84 % , coupled with decline in prices by 1.54 % The order book position is comfortable as indicated by the export order book position of ~Rs 224.40 Crs which shows revenue visibility in the near term. Company has shown good growth over the years . In FY 19 company operating income stood at 590.5 Crs and operating income stood at ~657 Crs in FY 22 . Even after decline in operating income in FY 22 , 3 year CAGR stood at 3.6 % in FY 22.
Comfortable financial risk /credit profile :
AMDD financial risk/credit profile has improved over the years. Debt protection metrics of the company improved in FY 22 as indicated by ISCR of 3.89x in FY 22 as against 3.46 x in FY 21 .Improving trend in ISCR is due to low utilization of fund based limits .Gearing level is comfortable at 1.39 x in FY 22 as compared to 1.24 x in FY21. Operating and net profit margin of the company has remained range bound in the last three fiscal years . Operating profit margin and net profit margin declined to 4.93 % in FY 21 and 2.53 % in FY 21 as compared to 6.60 % and 3.02 % in FY 20 . Operating and net profit margin improved to 5.32 % in FY 22 and 2.64 % in FY22

Credit Risks:

Intense competition :
The Basmati rice industry is highly fragmented and is marked by the presence of numerous players. This intensifies competition and limits the pricing flexibility of the industry participants.
Exposure to foreign exchange risk :
As exports constitute a significant percentage of the turnover, the company remains exposed to currency fluctuations to the extent of unhedged exposure. However, it has a hedging mechanism in place to reduce any impact of fluctuation in foreign exchange rates through export packing credit and forward cover limits and almost 95 % of exposure is hedged resulting in no or very minimal currency risk.
Exposure to agro-climatic risks and changes in trade policies :
Given its operations in an agro-based industry, the company is exposed to agro-climatic risks such as raw material availability, its quality and pricing. Moreover, the company is exposed to changes in trade policies of key importing countries, which can impact export revenues. Though, the group derives strength from the fact that the company has major exports to Saudi Arabia and Nil exports to Iran resulting in lower trade policies risk.
Customer Concentration Risk :
Out of total export revenue in FY 22 ,~81.23 % in FY 22 is to a single customer against cash against documents/LC basis leading to counterparty credit risk . However , counterparty risk is mitigated to some extent due to long term relationship established over the years and company is having long term contract with customer and these contract is mutually binding

ANALYTICAL APPROACH

To arrive at ratings of AMDD Food Private Limited , BWR has applied a standalone approach. BWR has applied a consolidated approach while rating the Parent i.e DDIPL while it has applied the standalone approach while rating the subsidiary i.e. AMDD foods considering the following:

The value of investment by parent company DD investment private limited in AMDD which stood at Rs 20.11Crs in FY 22 can be affected if the subsidiary company is not doing well , however the same is not applicable the other way around . Financial position of AMDD would not be affected directly if the parent company is not doing well other than the impact it can have on the quality of Financial/ liquidity support if needed in case of an adverse circumstance. At present any such eventuality seems to be remote as the liquidity position of AMDD Foods private limited on standalone basis is projected as adequate and so currently it does not require any such support from parent company.

RATING SENSITIVITIES

Positive :BWR may revise the ratings upward if there is a sustained improvement in AMDD's scale of operations and margins, and improvement in credit profile along with notable reduction in customer concentration.

Negative : BWR may revise the ratings downwards if there is a sustained deterioration in the company’s EBITDA and debt protection metrics and/or a stretch in its working capital/liquidity.

LIQUIDITY INDICATORS - Adequate

Working capital utilization has been around 11.55 % for the last six months ending Sep 2022. Working capital utilization is seasonal in nature; it is high over procurement period and low afterwards. The current ratio stood at 1.35 x in FY 21 and at 1.30 x in FY 22. Company reported cash accruals of Rs 20.9 Crs against repayment of Nil. Company is expected to generate cash accruals of Rs 22.1 Crs against repayment of Nil. Company reported ISCR of 3.89 x in FY 22 and company does not have debt funded capex plans in near term

ABOUT THE ENTITY

Promoted by M/s. D.D. International Pvt. Ltd, AMDD Foods Private Limited was established in 2013 as a Amritsar based Basmati Rice company focusing on export and domestic Market. The company’s business is concentrated in the Middle East market . The company’s mill is located in Taran Taran ,Amritsar .The company markets its products in its own brand Silver grain , Mehak, through well-established distributors in the states of Maharashtra, Gujrat, Andhra Pradesh, Telangana, Karnataka , Tamil Naidu , Rajasthan, Delhi, UP, Uttarakhand, Punjab, Haryana, West Bengal. Further majority of the exports are due to relationships developed over a period of four decades under the Golden grain brand. The company has installed capacity of 8MTPH .The company was promoted by Mr. Surinder Mohan Bhatia and Mr . Chander Mohan Bhatia. Now, it is being managed by Mr. Salil Bhatia, Mr. Satyen Bhatia and Mr. Gaurav Bhatia. They are all full time Directors of this company

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 21-22 (Audited)	FY 20-21 (Audited)
Operating Revenue	Rs.Crs.	657.46	726.02
EBITDA	Rs.Crs.	34.99	35.77
PAT	Rs.Crs.	17.36	18.38
Tangible Net Worth	Rs.Crs.	158.94	141.58
Total Debt/TNW	Times	1.39	1.24
Current Ratio	Times	1.30	1.35

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

Not applicable

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	95.00	BWR BBB+/Stable (Reaffirmation)	28Jul2021	BWR BBB+ (Upgrade)	23Jun2020	BWR BBBStable (Reaffirmation)	08Apr2019	BWR BBBStable (Upgrade)
Fund Based	ST	118.00	BWR A2 (Reaffirmation)	28Jul2021	BWR A2 (Upgrade)	23Jun2020	BWR A3+ (Reaffirmation)	08Apr2019	BWR A3+ (Upgrade)
Grand Total		213.00	(Rupees Two Hundred Thirteen Crores Only)

Rating Advisory, as on 05Aug2022
Press Release, as on 05Aug2022
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
Karan Ahluwalia Senior Rating Analyst Board : +91 11 2341 2232 karan.a@brickworkratings.com	Ravi Rashmi Dhar ravi.d@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

AMDD 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	IndusInd Bank	Warehouse Receipts (WHR) - Sanctioned	25.00	_	25.00
2	Punjab National Bank	Gold Card - Sanctioned	_	18.00	18.00
3	Punjab National Bank	Common Covid Emergency Line of Credit (CCECL) - Sanctioned	_	_	0.00
4	Punjab National Bank	Term Loan - Sanctioned	_	_	0.00
5	Punjab National Bank	Cash Credit - Sanctioned	70.00	_	70.00
6	Punjab National Bank	Export Packing Credit (EPC) - Sanctioned	_	100.00	100.00
Total			95.00	118.00	213.00
TOTAL (Rupees Two Hundred Thirteen Crores Only)

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