RATING RATIONALE
17Nov2022

LT Foods Ltd.

Brickwork Ratings reaffirms and withdraws the ratings for the Bank Loan Facilities of Rs. 752.64 Crs. of LT Foods Ltd.

Particulars
Facilities** Amount (Rs.Crs.) Tenure Rating#
Previous Present Previous
(23 Dec 2021)
Present
Fund Based 789.00 664.64 Long Term BWR A+/Stable
Reaffirmation
BWR A + /Stable
Reaffirmation/Withdrawal
Non Fund Based 91.00 88.00 Short Term BWR A1+
Reaffirmation
BWR A1 +
Reaffirmation/Withdrawal
Grand Total 880.00 752.64 (Rupees Seven Hundred Fifty Two Crores and Sixty Four 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 (BWR) has reaffirmed the long- and short-term rating of LT Foods Limited (LTF) to BWR A+(Stable)/BWR A1+ for the above bank loan facilities and simultaneously  withdraw the ratings. The rating reaffirmation  is underpinned by the company’s strong business profile and consistent  improvement in the credit profile and financial performance in FY21 and H1FY23, in turn driven by a growing EBITDA and PAT in its resilient rice processing business, along with comfortable credit ratios. The ratings continue to factor in the company’s long track record and experienced management, strong distribution network, diversified product portfolio and strong brand recall, geographical diversification and large scale of operations, coupled with a sound financial risk profile. The rating is, however, constrained by the inherent business risks of the susceptibility of the profitability margins to an adverse movement in raw material prices, competitive nature of the industry, working capital intensity and exposure to commodity, currency and agro climatic risks, which could result in pressure on the margins. The withdrawal of ratings is due to fact that company has submitted No objection certificate and No dues certificate from all lenders. 

BWR also notes that the group, , registered a consolidated turnover of Rs 5427.37 Crs in FY22, compared with Rs 4741.91Crs in FY21 at a growth rate of 14.55% due to the essential nature of the industry. The group’s PAT improved from Rs 289.08 Crs in FY21 to Rs 309.20 Crs in FY22. At the group level, funds raised through the QIP during FY18 helped cover the working capital requirements and thus, reduced dependence on external debt over the years. As a result, the group's total outside liabilities to net worth (TOL/ANW) ratio improved to 1.07x as on 31 March 2022 (from around 1.23x as on 31 March 2021) and may improve further due to the reduction in debt levels with no major capex plans over the medium term. The overall debt protection metrics (consolidated) improved in FY22 as compared to FY21, as indicated by the interest service coverage ratio (ISCR) and debt service coverage ratio (DSCR) of 8.68x and 4.77x in FY22 against 6.42x and 4.2x in FY21 respectively; the debt protection metrics overall are expected to improve further in the next two fiscal years with no major debt-funded capital expenditure over the medium term. At consolidated level growth  in H1 FY 23 is ~31.70 % driven by 15 % from volumes and 16 % from improvement in price realization. At consolidated level growth in topline is 31.70 % to Rs 3335.94 Crs in H1 FY 23 as compared to Rs 2523.84 Crs in H1 FY 22. Improvement in EBITDA is 15.56 % to Rs 338.54 Crs in H1 FY 23 as compared to Rs 292.95 Crs in H1 FY 22. PAT improved by 21.36 % to Rs 190.56 Crs in H1 FY 23 as compared to Rs 157.01 Crs in H1 FY 22 .ISCR improved to 9.82 x in H1 FY 23 as against 8.84 x in H1 FY 22. Gearing increased marginally to 0.49 x in H1 FY 23 as compared to 0.43 x in H1 FY 22.TOL/TNW increased marginally to 0.84 x in H1 FY 23 as compared to H1 FY 22.

The rating outlook is stable on account of a sound demand outlook for the rice industry for both the short and medium term due to its essential nature and is hence, not impacted much by the Covid-19 pandemic.

ABOUT THE ENTITY

LTF was incorporated as a private limited company in 1990, although it has a track record of operations since 1950, and it mills, processes and markets rice (largely Basmati). The company has established brands such as Daawat, Royal, Devaaya, Rozana, Heritage and Chef's Secretz, varying from basic to premium quality, both in the domestic and overseas markets. It has facilities in Haryana, Punjab, with a combined milling capacity of 104 tonnes per hour (tph) and individual capacity of 57 tph. The capacity utilisation was 66% in FY21 at a standalone level.

ANY OTHER INFORMATION

 

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 664.64
BWR A+/Stable
(Reaffirmation/Withdrawal)
23Dec2021
BWR A+Stable
(Reaffirmation)
04Nov2020
BWR A+ Stable
(Assignment)
NA
NA
0.00
NA
NA
NA
11Nov2020
BWR A+Stable
(Reaffirmation)
NA
NA
Non Fund Based ST 88.00
BWR A1+
(Reaffirmation/Withdrawal)
23Dec2021
BWR A1+
(Reaffirmation)
04Nov2020
BWR A1+
(Assignment)
NA
NA
0.00
NA
NA
NA
11Nov2020
BWR A1+
(Reaffirmation)
NA
NA
Grand Total 752.64 (Rupees Seven Hundred Fifty Two Crores and Sixty Four 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

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
LT Foods 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 CTBC Bank Company Limited Forward ContractSanctioned _ 5.00 5.00
2 CTBC Bank Company Limited Working Capital Demand LoanSanctioned 50.00 _ 50.00
3 Doha Bank Working Capital Demand LoanSanctioned 60.00 _ 60.00
4 HDFC Bank Forward ContractSanctioned _ 10.00 10.00
5 HDFC Bank EPC/ PCFC/ FBP/ PSFCSanctioned 40.00 _ 40.00
6 ICICI Bank Forward ContractSanctioned _ 10.00 10.00
7 ICICI Bank EPC/ PCFC/ FBP/ PSFCSanctioned 25.00 _ 25.00
8 IDFC First Bank Limited Working Capital Demand LoanSanctioned _ _ 0.00
9 Indian Bank Gold CardSanctioned _ _ 0.00
10 Indian Bank Post ShipmentSanctioned _ _ 0.00
11 Indian Bank ILC/FLCSanctioned _ _ 0.00
12 Indian Bank EPC/ PCFC/ FBP/ PSFCSanctioned _ _ 0.00
13 Indian Bank CC (H)/WCDLSanctioned _ _ 0.00
14 IndusInd Bank EPC/ PCFC/ FBP/ PSFCSanctioned 77.00 _ 77.00
15 IndusInd Bank ILC/FLCSanctioned _ 15.00 15.00
16 KB Kookmin Bank Working Capital Demand LoanSanctioned _ _ 0.00
17 Kotak Mahindra Bank Forward ContractSanctioned _ 1.00 1.00
18 Kotak Mahindra Bank EPC/ PCFC/ FBP/ PSFCSanctioned 10.00 _ 10.00
19 Kotak Mahindra Bank CC (H)/WCDLSanctioned 30.00 _ 30.00
20 Punjab National Bank CC (H)/WCDLSanctioned 191.00 _ 191.00
21 Punjab National Bank ILC/FLCSanctioned _ 38.00 38.00
22 Punjab National Bank Forward ContractSanctioned _ 3.00 3.00
23 Punjab National Bank Gold CardSanctioned 24.00 _ 24.00
24 Qatar National Bank EPC/ PCFC/ FBP/ PSFCSanctioned 40.00 _ 40.00
25 State Bank Of India (SBI) EPC/ PCFC/ FBP/ PSFCSanctioned 84.00 _ 84.00
26 State Bank Of India (SBI) Bank GuaranteeSanctioned _ 6.00 6.00
27 Un tied portion CC (H)/WCDLSanctioned 33.64 _ 33.64
Total 664.64 88.00 752.64
TOTAL (Rupees Seven Hundred Fifty Two Crores and Sixty Four lakhs Only)
Print and Digital Media

The Rating Rationale is sent to you for the sole purpose of dissemination through your print, digital or electronic media. While it may be used by you acknowledging credit to BWR, please do not change the wordings in the rationale to avoid conveying a meaning different from what was intended by BWR. BWR alone has the sole right of sharing (both direct and indirect) its rationales for consideration or otherwise through any print or electronic or digital media.

About Brickwork Ratings

Brickwork Ratings (BWR), a Securities and Exchange Board of India [SEBI] registered Credit Rating Agency and accredited by Reserve Bank of India [RBI], offers credit ratings of Bank Loan, Non- convertible / convertible / partially convertible debentures and other capital market instruments and bonds, Commercial Paper, perpetual bonds, asset-backed and mortgage-backed securities, partial guarantees and other structured / credit enhanced debt instruments, Security Receipts, Securitization Products, Municipal Bonds, etc. BWR has rated over 12,000 medium and large corporates and financial institutions’ instruments. BWR has also rated NGOs, Educational Institutions, Hospitals, Real Estate Developers, Urban Local Bodies and Municipal Corporations. BWR has Canara Bank, a leading public sector bank, as one of the promoters and strategic partner. BWR has its corporate office in Bengaluru and a country-wide presence with its offices in Ahmedabad, Chandigarh, Chennai, Hyderabad, Kolkata, Mumbai and New Delhi along with representatives in 150+ locations.

Disclaimer

Brickwork Ratings India Pvt. Ltd. (BWR), a Securities and Exchange Board of India [SEBI] registered Credit Rating Agency and accredited by the Reserve Bank of India [RBI], offers credit ratings of Bank Loan facilities, Non- convertible / convertible / partially convertible debentures and other capital market instruments and bonds, Commercial Paper, perpetual bonds, asset-backed and mortgage-backed securities, partial guarantees and other structured / credit enhanced debt instruments, Security Receipts, Securitization Products, Municipal Bonds, etc. [ hereafter referred to as "Instruments"]. BWR also rates NGOs, Educational Institutions, Hospitals, Real Estate Developers, Urban Local Bodies and Municipal Corporations.

BWR wishes to inform all persons who may come across Rating Rationales and Rating Reports provided by BWR that the ratings assigned by BWR are based on information obtained from the issuer of the instrument and other reliable sources, which in BWR's best judgment are considered reliable. The Rating Rationale / Rating Report & other rating communications are intended for the jurisdiction of India only. The reports should not be the sole or primary basis for any investment decision within the meaning of any law or regulation (including the laws and regulations applicable in Europe and also the USA).

BWR also wishes to inform that access or use of the said documents does not create a client relationship between the user and BWR.

The ratings assigned by BWR are only an expression of BWR's opinion on the entity / instrument and should not in any manner be construed as being a recommendation to either, purchase, hold or sell the instrument.

BWR also wishes to abundantly clarify that these ratings are not to be considered as an investment advice in any jurisdiction nor are they to be used as a basis for or as an alternative to independent financial advice and judgment obtained from the user's financial advisors. BWR shall not be liable to any losses incurred by the users of these Rating Rationales, Rating Reports or its contents. BWR reserves the right to vary, modify, suspend or withdraw the ratings at any time without assigning reasons for the same.

BWR's ratings reflect BWR's opinion on the day the ratings are published and are not reflective of factual circumstances that may have arisen on a later date. BWR is not obliged to update its opinion based on any public notification, in any form or format although BWR may disseminate its opinion and analysis when deemed fit.

Neither BWR nor its affiliates, third party providers, as well as the directors, officers, shareholders, employees or agents (collectively, "BWR Party") guarantee the accuracy, completeness or adequacy of the Ratings, and no BWR Party shall have any liability for any errors, omissions, or interruptions therein, regardless of the cause, or for the results obtained from the use of any part of the Rating Rationales or Rating Reports. Each BWR Party disclaims all express or implied warranties, including, but not limited to, any warranties of merchantability, suitability or fitness for a particular purpose or use. In no event shall any BWR Party be liable to any one for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of any part of the Rating Rationales and/or Rating Reports even if advised of the possibility of such damages. However, BWR or its associates may have other commercial transactions with the company/entity. BWR and its affiliates do not act as a fiduciary.

BWR keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of the respective activity. As a result, certain business units of BWR may have information that is not available to other BWR business units. BWR has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with each analytical process.

BWR clarifies that it may have been paid a fee by the issuers or underwriters of the instruments, facilities, securities etc., or from obligors. BWR's public ratings and analysis are made available on its web site, www.brickworkratings.com. More detailed information may be provided for a fee. BWR's rating criteria are also generally made available without charge on BWR's website.

This disclaimer forms an integral part of the Ratings Rationales / Rating Reports or other press releases, advisories, communications issued by BWR and circulation of the ratings without this disclaimer is prohibited.

BWR is bound by the Code of Conduct for Credit Rating Agencies issued by the Securities and Exchange Board of India and is governed by the applicable regulations issued by the Securities and Exchange Board of India as amended from time to time.