Ganesh Foods

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.16.00 Crs. of Ganesh Foods

Particulars

Facilities**	Amount(Rs.Crs)	Tenure	Rating*
Fund Based Cash Credit-Sanctioned Term Loan-Sanctioned	10.00 6.00	Long Term	BWR BB- (Pronounced as BWR Double B minus) (Outlook : Stable)
Non-Fund Based Sub-Limit (Foreign Letter of Credit)-Sanctioned	(0.89)	Short Term	BWR A4 (Pronounced as BWR A Four)
Total	16.00	(Rupees Sixteen Crores 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 : Stable

BWR believes that Ganesh Foods 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

Credit Strengths:

• Financial Risk Profile :

  The adjusted Tangible Networth stands at Rs. 8.08crs in HYFY20. The financial risk profile remained moderate with adjusted gearing of 3.74 times as on March 31, 2019 which has improved to 2.02 times as per HYFY20 financials, interest coverage of 1.73 times and adjusted DSCR at 1.13 times for HYFY20. FY20 is the initial year of operation, BWR expects the financials to ameliorate upon establishment.

• Presence in major rice-growing area results in easy availability of paddy :

  The firm’s milling unit is located in Punjab, which is a major rice-growing area resulting in easy availability of paddy. It has a milling capacity of 10 MTPH and reported 80% capacity utilisation. The demand prospects for rice, a staple food grain, remain favourable with India being the world’s second largest producer and consumer of rice.

• Vast experience of promoters in the rice milling business :

  Prior to Ganesh Foods the partners of the firm established Ganpati Foods in 2008 which operates in the same line of business, the partners of Ganesh Foods have an experience of over a decade in this industry and their established relationships with past customer has spawn a baseline for Ganesh Foods. The firm has achieved almost 90% of its projected revenue for HYFY20. The partners bag the capacity of infusing unsecured loans.

Credit Risks:

• Highly competitive and fragmented industry with government regulations affecting profitability :

  Low entry barriers makes the industry highly fragmented and competitive. Further, vagaries of agro industry and high government regulations over fixed Minimum Support Price which in turn is showing increasing trends limits profitability. The firm’s debt profile is dominated by working capital borrowing.

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).

RATING SENSITIVITIES

Going forward, the ability of the entity to improve revenue & profitability margins, manage liquidity, infuse capital, achieve projected financials and timely repay of debt obligations would be key rating sensitivities.

Positive: The rating outlook may be revised to 'Positive' in case the revenues, profit and liquidity position show sustained improvement.

Negative: The rating may be  downgraded  if there is any deterioration in financial position and occupancy rate of the school. 

LIQUIDITY POSITION

GF has liquid investments of Rs. 0.26 crs and the Cash & Bank balances of  Rs. 2.74 Cr as on March 31 2019 which was reduced to Rs. 0.05crs in HYFY20. The long term borrowings stand at Rs. 8.00crs net of CPLTD of Rs. 0.43crs in HYFY20.  The firm has not submitted cash flow statement. Modest working capital utilization for the six months period (April 2019 to September 2019) is 75.02%. The firm’s debt protection metrics are moderate with ISCR at 1.73  times and  adjusted DSCR at 1.13 times as on 30th September 2020.

 Subsidiary/Holding Company: NA

PROFILE

Ganesh Foods ('GF' or 'the Firm') is a partnership firm of Mr. Vijay Kumar, Mr. Vinod Kumar, Mr. Avinash Singla and Mrs. Sneh Lata. The firm is located in Moonak, Punjab. Founded in 2018, the operations of the firm started in April 2019. GF's main line of business is processing of rice mill, the processing unit has a capacity of 10 tonne per hour. The firm processes parboiled basmati rice which is exported via agents under the brand name of Aria, Satya and Akash.

KEY FINANCIAL INDICATORS

Key Parameters	Units	FY 18-19	FY 17-18
Operating Revenue	Rs.Crs.	0.00	0.00
EBITDA	Rs.Crs.	-0.06	0.00
PAT	Rs.Crs.	0.01	0.00
Tangible Net Worth	Rs.Crs.	4.36	0.00
Total Debt/Tangible Net Worth	Times	5.58	0.00
Current Ratio	Times	2.88	0.00

KEY COVENANTS OF THE INSTRUMENT/FACILITY RATED

NA

RATING HISTORY (INCLUDING WITHDRAWAL AND SUSPENSION)

S.No	Current Rating (2019)				Rating History
	Facilities	Amount(Rs.Crs)	Tenure	Rating	2018	2017	2016
1	Fund Based Cash Credit-Sanctioned Term Loan-Sanctioned	10.00 6.00	Long Term	BWR BB- (Pronounced as BWR Double B minus) (Outlook : Stable)	NA	NA	NA
2	Non-Fund Based Sub-Limit (Foreign Letter of Credit)-Sanctioned	(0.89)	Short Term	BWR A4 (Pronounced as BWR A Four)	NA	NA	NA
Total			16.00	(Rupees Sixteen Crores 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
• Short Term Debt

For More Information Contact:

Analytical Contacts	Investor Contacts
Aditi Bhatt Ratings Analyst D : +91 22 6745 6657 B : +91 22 2831 1426, +91 22 2831 1439 aditi.b@brickworkratings.com	Liena Thakur Assistant Vice President - Corporate Communications M : +91 84339 94686 liena.t@brickworkratings.com
Satvinder Kumar Gakhar Associate Director - Ratings B : +91 11 2341 2232 satvinder.g@brickworkratings.com
1-860-425-2742

SL.No.	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)
1	Cash Credit - Sanctioned	10.00	_	10.00
2	Term Loan - Sanctioned	6.00	_	6.00
Sub-Limit (Foreign Letter of Credit) - Sanctioned		(0.89)
Total				16.00
TOTAL (Rupees Sixteen Crores Only)