Agarwal Roller Flour Mill

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.15.00 Crs. of Agarwal Roller Flour Mill

Particulars

Facility**	Amount (Rs.Crs)	Tenure	Rating*
Fund Based
Cash Credit - Sanctioned Cash Credit - Proposed	04.50 10.50	Long Term	BWR B + (Stable)
Sub Total	15.00
Grand Total	15.00	(Rupees Fifteen 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 assigns the Long Term Rating to Agarwal Roller Flour Mill as BWR B+ with Stable Outlook.

The rating draws strength from the extensive experience of the management of the firm in the same line of business. The rating of the firm is constrained by competition in the industry, weak financial profile and constitution of the firm.

BWR believes that the business risk profile of the “Agarwal Roller Flour Mill” will be maintained over the medium term. The Stable outlook indicates a low likelihood of rating change over the medium term. The Rating rating outlook may be revised to “Positive” in case the revenues and profit show sustained improvement. The rating outlook may be revised to “ Negative” if there is any deterioration in the financial risk profile, including withdrawal of capital, if any.

KEY RATING DRIVERS

Credit Strengths:

• Firm existence, Management experience and trade relations :

  The firm is in existence for about 15 years and all the 5 partners have more than a decade of experience in the same line of business. The firm has more than 10 years of trade relations with its suppliers and customers.

Credit Risks:

• 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.

• Weak Financial Profile :

  The financial profile of the firm is weak as the operating profit margin has deteriorated from 1.47% in FY18 to 1.25% in FY19. The net profit margin is less than 1 at 0.25% in FY19. The DSCR of the firm stands at just 0.79X in FY19 whereas ISCR stands at 3.34X in FY19. The Total Debt/Networth Stands at 4.85X whereas Total Debt/Networth (analysed) stands at 0.71X in FY19.

• Constitution of the firm :

  Withdrawal of capital by the Partners for any personal contingency would adversely affect the capital structure of the firm.

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 Firm to scale up its operations, profit and improve its financial risk profile would remain the key rating sensitivities.

Positive: Rating may be upgraded in case of substantial improvement in revenues and profits going forward.

Negative: Rating may be downgraded in case there is deterioration in financial risk profile including the networth of the firm including the gearing levels of the firm. 

LIQUIDITY POSITION

ADEQUATE

The firm has cash and bank balance of INR 0.55 Crores in FY19. The current ratio is at 17.32x times in FY19. ISCR and DSCR is at 3.34x and 0.79x in FY19. Long Term Borrowings of INR 7.13 Crores in FY19 includes Unsecured loans from Friends/Family of same amount. The working capital facility i.e. Cash Credit facility has been utilised upto 18.60% from July'19 to December'19. Conversion cycle for FY19 is 31 Days.
Holding/subsidiary: 1) Agarwal Dall and Basen Mills: No operational linkage between the two firms. 2) Shri Bohra Ganeshji Tradelink Pvt. Ltd. (Ahmedabad): No operational linkage between the two firms. 

PROFILE

Agarwal Roller Flour Mill, established in year 2005 as a trader and stockist, set up their manufacturing unit in Udaipur, Rajasthan in year 2016. The firm is managed jointly by 5 partners namely, Mr. Vipul Agarwal, Mr. G.K. Agarwal, Mr. Deepak Agarwal, Ms. Karishma Agarwal and Ms. Pushpa Rani Agarwal. The other unit of the firm namely Agarwal Dall and Basen Mill is also managed by the same partners. The installed capacity of the unit is 200MT per day which is utilised for manufacturing of wheat products such as Wheat Flour, Maida, Sooji, Wheat Chapad, Sortex Wheat. The products are sold by the firm under the brand name of "Golden Crown". *Other CRA Details: Not Applicable

KEY FINANCIAL INDICATORS

Key Parameters	Units	FY 18-19 (Audited)	FY 17-18 (Audited)
Operating Revenue	Rs.Crs.	54.30	43.04
EBITDA	Rs.Crs.	0.68	0.63
PAT	Rs.Crs.	0.14	0.09
Tangible Net Worth	Rs.Crs.	1.47	0.91
Total Debt/Tangible Net Worth	Times	4.85	7.02
Current Ratio	Times	17.32	2.41

RATING HISTORY (INCLUDING WITHDRAWAL AND SUSPENSION)

S.No	Current Rating (2020)				Rating History
	Facilities	Tenure	Amount (Rs.Crs)	Rating	2019	2018	2017
Fund Based
1	Cash Credit - Sanctioned Cash Credit - Proposed	Long Term	04.50 10.50	BWR B+ (Stable)	NA	NA	NA
Total			15.00	(Rupees Fifteen 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

For More Information Contact:

Analytical Contacts	Investor Contacts
Arushi Jain Ratings Analyst B : +91 11 2341 2232 Ext : 111 arushi.j@brickworkratings.com	Liena Thakur Assistant Vice President - Corporate Communications M : +91 84339 94686 liena.t@brickworkratings.com
V.K.Kukreja Associate Director - Ratings B : +91 11 2341 2232 kukreja.vk@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	4.50	_	4.50
2	Cash Credit - Proposed	10.50	_	10.50
Total				15.00
TOTAL (Rupees Fifteen Crores Only)