R P Overseas

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.23.50 Crs. of R P Overseas

Particulars

Facility**	Amount (Rs.Crs)	Tenure	Rating*
Fund Based
Term Loan Cash Credit	13.50 10.00	Long Term	BWR B + (Stable)
Sub Total	23.50
Grand Total	23.50	(Rupees Twenty Three Crores and Fifty lakhs Only)

*Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank facilities are provided in Annexure-I RATING ACTION / OUTLOOK :

BWR believes the R P Overseas business risk profile will be maintained over the medium term. the 'Stable' outlook indicates a low likelihood of rating change over the medium term. The rating outlook may be revised to 'Positive'in case the revenues and profit show sustained improvement. The rating outlook may be revisd to 'Negative' if the revenues go down and profit margins show lower than expected figures

KEY RATING DRIVERS

BWR has principally relied upon unaudited Provisional Financials of FY19, and projected financials from FY20 to FY25, publicly available information and information/clarifications provided by the Company’s management. The assigned ratings draw comfort from experience of promoters, Locational Advantage and Moderate Projected Coverage Indicators. The ratings are, however, constrained on account of Project Execution Risk in respect of time and financial tie up being under process, Projected Profitability Margins and Nature of Constitution, Liquidity, Industry Risk and Climatic Risk, and financial tie up being under process. The ability of the company to implement the project on timely basis and within estimated cost, infuse promoters’ own funds and achieve projected revenue would be its key rating sensitivity.

Strengths

• Locational Advantage:

  The company/Firm is located in Morena cluster and thus has a competitive advantage in terms of skilled labor, logistics, production knowledge and vendors making the company more efficient and cost effective.

• Extensive experience of Partners:

  The partners have an experience of over 15 years in the food processing industry with partner Pawan Bansal engaged in Manufacturing & Trading of Mustard Oil and sand stone since last 15 Years.

• Moderate Projected Coverage:

  Coverage is expected to improve YoY with ISCR projected at 2.82x in FY21 to 4.22x in FY25 and DSCR projected at 2.48x in FY21 to 2.74x

Weakness

• Constitution:

  withdrawal of capital by the proprietor/Partners for any personal contingency would adversely affect the capital structure of the firm.
  Limitations of Proprietorship constitution in terms of capital and management

• Competition in the Industry:

  Entry barriers in the industry are low on account of limited capital and technology requirement and also low differentiation in the end product leading to intense competition and limiting the pricing power resulting in low profitability

• Project Execution Risk:

  Project execution risk is inherent until completion of the manufacturing unit. At its current stage, Building is still under construction and as on 30.04.2019, Plant and Machinery is still being acquired. Financial Tie up is currently under process.

• Liquidity:

  Current Ratio is projected to be Low at 1.27x in FY21 and is expected to increase to 1.39x in FY22 and continue the increasing trend

• Climatic Risk:

  Rice paddy being an agricultural commodity, is exposed to vagaries of monsoon and other climatic risk

ANALYTICAL APPROACH AND APPLICABLE RATING CRITERIA

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

LIQUIDITY POSITION

Current Ratio is at 2.97x  as of 30.04.2019. Cash & Cash Equivalent stood at Rs. 0.64cr as on 30.04.2019. 
 

PROFILE

M/S R P OVERSEAS, a Partnership Firm, formed on 25/01/2019 having its registered office at Morena (M.P.) and the promoter Shri Rahul Garg S\o Shri Bishan Garg and Shri Pawan Bansal S/o Shri Ramesh Chand Bansal. Partners of the firm have decided to establish a New Modern rice mill unit at survey No. 538 and others, Village Jarerua, Tehsil & Distt. Morena (M.P.) in the name of M/S R P OVERSEAS with a proposed capacity of 72000 MT of rice paddy per annum. RP Overseas is to be engaged in the processing  and trading of rice with the main product of the company being parboiled white rice along with by-products such as Broken rice, Rice Bran and Rice Husk. Operations are expected to begin from April 2020.

KEY FINANCIAL INDICATORS

Key Parameters	Units	FY 19-20	FY 20-21
Operating Revenue	Rs.Crs	0.00	128.20
EBITDA	Rs.Crs	0.00	6.29
PAT	Rs.Crs	0.00	1.73
Tangible Net Worth	Rs.Crs	8.67	11.78
Total Debt/Tangible Net Worth	Times	1.25	1.60
Current Ratio	Times	1.40	1.27

RATING HISTORY (INCLUDING WITHDRAWAL AND SUSPENSION)

S.No	Current Rating (2019)				Rating History
	Facilities	Tenure	Amount (Rs.Crs)	Rating	2018	2017	2016
Fund Based
1	Term Loan Cash Credit	Long Term	13.50 10.00	BWR B+ (Pronounced as BWR Single B plus) (Outlook: Stable)	NA	NA	NA
Total			23.50	(Rupees Twenty Three Crores and Fifty lakhs Only)

COMPLEXITY LEVELS OF THE INSTRUMENTS

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 :

• General Criteria
• Approach to Financial Ratios
• Manufacturing Companies

For More Information Contact:

Analytical Contacts	Investor Contacts
Sumanth P Ratings Analyst B : + 91 22 2831 1426/6745 6666 Ext : 689 sumanth.p@brickworkratings.com	Liena Thakur Assistant Vice President - Corporate Communications M : +91 84339 94686 liena.t@brickworkratings.com
Sushil Kumar Chitkara Associate Director - Ratings B : +91 22 2831 1426, +91 22 2831 1439 sushilkumar.c@brickworkratings.com
1-860-425-2742

SL.No.	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)
1	Term Loan	13.50	_	13.50
2	Cash Credit	10.00	_	10.00
Total				23.50
TOTAL (Rupees Twenty Three Crores and Fifty lakhs Only)