B.C. Oils & Fats Pvt. Ltd.

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.16.75 Crs. of B.C. Oils & Fats Pvt. Ltd.

Particulars

Facility**	Amount (Rs.Crs)	Tenure	Rating*
Fund Based
Cash Credit - Sanctioned Cash Credit - Proposed Term Loan - Proposed	01.50 06.00 09.00	Long Term	BWR B + (Stable)
Sub Total	16.50
Non-Fund Based
Bank Guarantee - Sanctioned	00.25	Short Term	BWR A4
Sub Total	00.25
Grand Total	16.75	(Rupees Sixteen Crores and Seventy Five 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 : Stable

Brickwork Ratings has assigned the long term rating of BWR B+/Stable and short term rating of BWR A4 to bank loans of B.C. Oils & Fats Pvt. Ltd. The rating takes into account the experience of promoters, positive market outlook for edible oils, benefit from established operations of Rdesco Agro Foods and well established customer base. However the rating is constrained by weak financial risk profile, low profit margin in the industry due to low value edition and intense competition.

KEY RATING DRIVERS

Credit Strengths:

• Experienced Promoters :

  Mr. Ravinder Kumar Bansal is engaged in the oil business since 1992 and has two decades of experience in edible oil business. The Other Directors, Ms. Sushma Bansal and Mr. Shivji Ram Bansal have an experience of more than a decade into same line of business and have an adequate acumen about various aspects of business which is likely to benefit B.C. Oils & Fats in long run.

• Positive Market Outlook :

  The Indian edible oil market is the world's fourth-largest after the USA, China and Brazil. The long-term outlook of edible oil demand in India is favorable on expectation of increasing population, increase in per capita consumption which in turn would be driven by changing lifestyles, growing urbanization, and increasing proportion of middle-class population and steadily rising affluence levels. India imports substantial amount of edible oils for its domestic consumption. Thus the under-penetrated market coupled with positive macro and demographic fundamentals give the favorable demand growth outlook over the medium to long term.

• Benefit from established operations of Rdesco Agro Foods and well established customer base :

  The Company is planning to acquire Rdesco Agro Foods (which is an edible oil refinery located in Abohar, Punjab). The refinery is in running condition and it will benefit B.C. Oil & Fats to immediately scale up its operations. B.C. Oil & Fats has been engaged in the trading of edible oils since 2009 and it has built a well established customer base over the years which will benefit the company to convert the edible oil processing business into revenue generating business immediately.

Credit Risks:

• Weak Financial Risk Profile :

  The Scale of operations of the company is small represented by total revenue of INR 9.08 Crores in FY19. The Profit margin of the entity is very thin as NPM & OPM stood at 0.27% & 2.57%. Further, the company is highly geared represented by Total Debt/TNW of 19.78x and TOL/TNW of 24.51x in FY19. The debt protection metrics of the company is weak represented by ISCR & DSCR of 1.51x & 0.63x in FY19. The Networth is INR 0.13 crores and Analyzed TNW is INR 0.52 crores in FY19. Recently Company has filed the necessary filings for increasing the authorized share capital up to INR 0.25 crores. The Company has projected to infuse further capital of INR 3.13 crores in the current financial year.

• Low Profit margin in the industry due to low value addition and intense competition :

  The Operating margins of edible oil refiners and traders are generally low owing to low value addition involved in the business and fragmented nature of industry with the presence of large number of small- sized players and few large players in the branded segment.

ANALYTICAL APPROACH AND APPLICABLE RATING CRITERIA

For arriving 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 company to enhance its scale of operations through acquisition of edible refinery of Rdesco Agro Foods, achieve economies of scale in edible oil processing, improve its profitability margin, achieve projected revenue and manage liquidity would be key rating sensitivities.

• Positive :

  The outlook may be revised to positive if there is sustained improvement in scale of operations, good capacity utilization, improvement in profitability margins, achievement of projected results and liquidity is also improved.

• Negative :

  The outlook may be revised to negative if the company fails to achieve projected results, unable to achieve economies of scale, further decline in profitability margins, increase in operating cost and deterioration of liquidity.

LIQUIDITY POSITION

1. The Company has Cash & Bank balance of INR 0.08 crores in FY19.

2. Long term borrowings of INR 0.59 crore in FY19 represents secured borrowings of INR 0.59 crores. Net cash accruals for FY19 is INR 0.06 crores.

3. The CC utilization of last 6 months was around 98%.

4. The Company has a current ratio of 1.14x in FY19 which is below benchmark.

5. Debt protection metrics of the company deteriorated, ISCR & DSCR stood at 1.51x & 0.63x in FY19 against 1.94x & 1.16x in FY18.

6. The Company has a conversion cycle of 60 days in FY19.

The Overall Liquidity appears to be stretched.

PROFILE

B.C. Oils & Fats Pvt. Ltd. was incorporated on 05 November 2009 having registered office in Jalandhar, Punjab. It is having authorized and issued, subscribed & paid up capital of INR 1 Lakh. Mr. Ravinder Kumar Bansal, Ms. Sushma Bansal and Mr. Shivji Ram Bansal are the directors of the company. Company is involved in trading of edible oils and it has established its own brand name in the name of "b-mark" & "Shree" in Mustard Oil and Refined Oil. Currently, Company is in discussion with Rdesco Agro Foods (Which is an edible oil refinery) for the takeover of its land, building, plant & machinery. The Capacity of refinery is 100 tons/day.

KEY FINANCIAL INDICATORS

Key Parameters	Units	FY 18-19 (Audited)	FY 17-18 (Audited)
Operating Revenue	Rs.Crs.	9.08	12.58
EBITDA	Rs.Crs.	0.23	0.15
PAT	Rs.Crs.	0.02	0.04
Tangible Net Worth	Rs.Crs.	0.13	0.11
Total Debt/Tangible Net Worth	Times	19.78	10.42
Current Ratio	Times	1.14	0.97

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	Cash Credit - Sanctioned Cash Credit - Proposed Term Loan - Proposed	Long Term	1.50 6.00 9.00	BWR B+ (Stable)	NA	NA	NA
Non-Fund Based
2	Bank Guarantee - Sanctioned	Short Term	0.25	BWR A4	NA	NA	NA
Total			16.75	(Rupees Sixteen Crores and Seventy Five 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
• Short Term Debt

For More Information Contact:

Analytical Contacts	Investor Contacts
Deepak Kumar Ratings Analyst deepak.k@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	1.50	_	1.50
2	Cash Credit - Proposed	6.00	_	6.00
3	Term Loan - Proposed	9.00	_	9.00
4	Bank Guarantee - Sanctioned	_	0.25	0.25
Total				16.75
TOTAL (Rupees Sixteen Crores and Seventy Five lakhs Only)