Bansal Rice Mills

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.5.74 Crs. of Bansal Rice Mills

Particulars

Facility**	Amount (Rs.Crs)	Tenure	Rating*
Fund Based
Cash Credit - Out-standing Term Loan - Out-standing	05.50 00.24	Long Term	BWR B + (Stable)
Sub Total	05.74
Grand Total	05.74	(Rupees Five Crores and Seventy Four lakhs Only)

*Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank facilities are provided in Annexure-I
Note: Term Loan Outstanding as on 31.12.2019 RATING ACTION / OUTLOOK : Stable

BWR assigns rating of BWR B+ with 'Stable' outlook for the long term bank loan facilities of Bansal Rice Mills (The firm). The ratings takes into consideration the experience of the partners and increasing scale of operations. The ratings are however constrained by the average financial risk profile of the firm, intense competition in the line of business, constitution and customer concentration risk.

BWR believes that Bansal Rice Mills 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 revised to 'Negative' if there is no improvement in financial risk profile.

KEY RATING DRIVERS

Credit Strengths:

• Experienced Partners :

  The partners have more than 2 decades of experience in the rice milling business. BWR believes that the extensive experience of partners will help the firm in maintaining healthy relations with the stakeholders in medium term.

• Increasing Revenue from Operations :

  Revenue from operations has been increasing on YoY basis from last 3 years. The firm clocked revenues of Rs.32.28 Cr in FY17, Rs. 34.91 Cr in FY18 and Rs. 50.74 Cr in FY19.

Credit Risks:

• Average Financial Risk Profile :

  The firm had Tangible Net worth of Rs.3.13 Cr as on 31.03.19. Gearing remains high with TD/TNW at 5.70 Times and TOL/TNW at 8.91 Cr as on 31.03.19. Current Ratio for FY19 stood at 1.24 times.

• Intense Competition and Susceptibility to Raw material Prices :

  Competition remains intense in the Rice Milling industry marked by multiple players and low pricing power. Paddy being a seasonal crop is also exposed to unfavourable monsoon risk and Minimum Support Prices decided by the government.

• Constitution :

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

• Customer Concentration Risk :

  Since 80-85% of the revenue is derived from top 5 customers, the firm is exposed to customer concentration risk.

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 increase its revenue and profit margins along with improvement in Financial Risk Profile would be key rating sensitives.

Positive: The ratings may be upgraded in future if the firm is able to increase its revenue and profit margins in medium term.

Negative: The ratings may be downgraded if the firm is not able to improve its financial risk profile and there is any withdrawal of capital by the partners from the firm. 

LIQUIDITY POSITION

STRETCHED

• The firm had Cash & Bank Balance of Rs. 0.28 Cr as on 31.03.19.
• Long Term Loans of Rs. 5.44 Cr includes Interest Bearing Unsecured Loans of Rs. 4.81 Cr & Loans from Banks of Rs. 0.63 Cr.
• Current Ratio as on 31.03.19 was 1.24 times.
• The limits remained almost fully utilized for the last 6 months.
• Coverage Ratio was low with ISCR at 1.09 times in FY19.
• Conversion cycle of the firm improved from 229 days in FY18 to 123 days in FY19 with Inventory days at 197 days and receivable days at 44 days.
• The firm had purchased raw materials of Rs. 2.56 Cr from sister concern (on account of common partners) namely M/s Bansal Cotton Mills during FY19. However as on date there is no related between M/s Bansal Rice Mills & M/s Bansal Cotton Mills.

PROFILE

Bansal Rice Mills is a partnership firm having its operations at Bhutal Kalan, Lehra Gaga, Dist. Sangrur, Punjab, being managed by Mr. Sandeep Kumar and other partners. The firm is engaged in processing of Paddy and has installed capacity of 6 Tonne per hr for Paddy and 4 Tonne per hr for rice(1121, Basmati, Sela, Parmal). The other products obtained during processing of paddy and sold by the firm are Rice Bran, Rice Broken,and husk.The firm sells the Basmati Rice and other products to various traders and export houses based in Amritsar, Karnal,Dhuri, Gandhidham, Ferozepur, Taraori  and other locations in Punjab and Haryana.

KEY FINANCIAL INDICATORS

Key Parameters	Units	FY 18-19 (Audited)	FY 17-18 (Audited)
Operating Revenue	Rs.Crs.	50.74	34.91
EBITDA	Rs.Crs.	3.96	4.35
PAT	Rs.Crs.	0.26	0.17
Tangible Net Worth	Rs.Crs.	3.13	3.61
Total Debt/Tangible Net Worth	Times	5.70	5.63
Current Ratio	Times	1.24	1.29

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 - Out-standing Term Loan - Out-standing	Long Term	05.50 00.24	BWR B+ (Stable)	NA	NA	NA
Total			05.74	(Rupees Five Crores and Seventy Four 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
Gunsahib Singh Ratings Analyst B : +91 172 5032 295 / 6 Ext : 104 gunsahib.s@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 - Out-standing	5.50	_	5.50
2	Term Loan - Out-standing	0.24	_	0.24
Total				5.74
TOTAL (Rupees Five Crores and Seventy Four lakhs Only)

Note: Term Loan Outstanding as on 31.12.2019