RATING RATIONALE
04Jan2023

Fair Food Overseas Pvt. Ltd.

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs. 51.19 Crs. of Fair Food Overseas Pvt. Ltd.

Particulars
Facilities** Amount(Rs.Crs.) Tenure Rating#
Fund Based 51.19 Long Term BWR BBB - /Stable
Assignment
Grand Total 51.19 (Rupees Fifty One Crores and Nineteen lakhs Only)
#Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank Loan facilities,consolidation or instruments are provided in Annexure
Note: This rating pertains to an existing assignment received prior to 6 October 2022.
RATING ACTION / OUTLOOK

Brickwork Ratings (BWR) has assigned the long-term rating of BWR BBB- with a Stable outlook for the fund based facilities of Rs. 51.19 Crs of Fair Food Overseas Pvt. Ltd. (FFOPL or the company).

The rating factors in the extensive experience of promoters of the company in the agro industry and favourable location of the milling unit, fair financial profile, moderate capital structure and adequate liquidity position. The rating is however constrained by thin profitability with susceptibility to volatility in raw material prices, stiff competition in a highly fragmented industry, inherent risks associated with Government regulatory changes and agro climatic risks.

BWR believes that FFOPL's business risk profile will be maintained over the medium term. The Stable outlook indicates a low likelihood of a rating change over the medium term.

KEY RATING DRIVERS

Credit Strengths:


Credit Risks:

ANALYTICAL APPROACH - Standalone

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). BWR has essentially relied on the audited financials from FY20 to FY22, along with projections till FY24, publicly available information and information/clarification provided by the management.

RATING SENSITIVITIES

Positive: The rating may be upgraded if the company demonstrates the significant improvement in overall financial performance and credit profile.

Negative: The rating may be downgraded if there is decline in revenue, profitability, weakening of capital structure, stretched working capital  will be a credit negative.

LIQUIDITY INDICATORS - Adequate

The company is expected to generate cash accruals in the range of Rs.6.50 crore to Rs.7.24 crore against term loan debt obligation of 3.50-3.76 crore  in FY23 & FY24. FFOPL has a sanctioned Cash credit (CC) limit of Rs.40 crore to meet the requirement of which, the utilization level has remained high on an average 97% for the past six months ended November 2022. Moreover the company does not have any major capacity expansion plans in the medium term, the liquidity profile is expected to remain adequate.

 

ABOUT THE ENTITY

 Fair Food Overseas Private Limited (FFOPL) is a private limited company incorporated in 1993 by Late Mr. Danvendra Mehani. Currently, the company is being managed by Mr. Daulat Ram Mehani, Mr. Shanker Mehani, Mr. Kamal Kumar Mehani and Mr. Kishore Mehani.The company is engaged into rice milling, processing and trading of rice at its own brand named ‘’Fairy’’ and its processing unit is located at Katni, Madhya Pradesh.The company is an ISO 9001:22000 certified, HACCP accredited and having license for SFDA (Saudi Food and Drug Authority). The  company  has  eight  production  lines  which have a total capacity of 28 MT per hour (20MT for Paddy to rice and 8 MT for Rice to Rice). In addition, the company has a 20,000 MT warehouse facility which is used for storing raw material.  

KEY FINANCIAL INDICATORS (Standalone)
Key Parameters Units FY 21-22
(Audited)
FY 20-21
(Audited)
FY 22-23
(Provisional - Others(8MFY23))
Operating Revenue Rs.Crs. 333.36 310.92 232.51
EBITDA Rs.Crs. 10.14 9.44 7.04
PAT Rs.Crs. 3.78 3.75 3.48
Tangible Net Worth Rs.Crs. 43.49 39.71 46.97
Total Debt/TNW Times 1.31 1.39 1.45
Current Ratio Times 1.91 1.87 1.84
KEY COVENANTS OF THE FACILITY RATED

The terms of sanction include standard covenants normally stipulated for such facilities.


STATUS OF NON-COOPERATION WITH PREVIOUS CRA

IVR BB+/Stable  ISSUER NOT COOPERATING vide press release dated November 2, 2022.

ANY OTHER INFORMATION

NA

RATING HISTORY FOR LAST THREE YEARS (including withdrawal and suspended)
Facilities Current Rating  (2023) 2022 2021 2020
Type Tenure Amount
(Rs.Crs.)
Rating Date Rating Date Rating Date Rating
Fund Based LT 51.19
BWR BBB-/Stable
(Assignment)
NA
NA
NA
NA
NA
NA
Grand Total 51.19 (Rupees Fifty One Crores and Nineteen lakhs Only)
COMPLEXITY LEVELS OF THE INSTRUMENTS - Simple

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
Analytical Contacts

Roma Gupta

Ratings Analyst roma.g@brickworkratings.com

Bal Krishna Piparaiya

Principal Director - Ratings Board : +91 22 2831 1426, +91 22 2831 1439 piparaiya.bk@brickworkratings.com
1-860-425-2742 | media@brickworkratings.com
Fair Food Overseas Pvt. Ltd.
ANNEXURE-I
Details of Bank Facilities rated by BWR
SL.No. Name of the Bank/Lender Type Of Facilities Long Term(Rs.Crs.) Short Term(Rs.Crs.) Total(Rs.Crs.)
1 Axis Bank Ltd. Term LoanSanctioned 1.22 _ 1.22
2 Axis Bank Ltd. Cash CreditSanctioned 15.00 _ 15.00
3 Axis Bank Ltd. Emergency Credit Line Guarantee Scheme (ECLGS)Sanctioned 2.77 _ 2.77
4 Central Bank of India GECLSanctioned 3.20 _ 3.20
5 Central Bank of India Emergency Credit Line Guarantee Scheme (ECLGS)Sanctioned 4.00 _ 4.00
6 Central Bank of India Cash CreditSanctioned 25.00 _ 25.00
Total 51.19 0.00 51.19
TOTAL (Rupees Fifty One Crores and Nineteen lakhs Only)
Print and Digital Media

The Rating Rationale is sent to you for the sole purpose of dissemination through your print, digital or electronic media. While it may be used by you acknowledging credit to BWR, please do not change the wordings in the rationale to avoid conveying a meaning different from what was intended by BWR. BWR alone has the sole right of sharing (both direct and indirect) its rationales for consideration or otherwise through any print or electronic or digital media.

About Brickwork Ratings

Brickwork Ratings (BWR), a Securities and Exchange Board of India [SEBI] registered Credit Rating Agency and accredited by Reserve Bank of India [RBI], offers credit ratings of Bank Loan, Non- convertible / convertible / partially convertible debentures and other capital market instruments and bonds, Commercial Paper, perpetual bonds, asset-backed and mortgage-backed securities, partial guarantees and other structured / credit enhanced debt instruments, Security Receipts, Securitization Products, Municipal Bonds, etc. BWR has rated over 12,000 medium and large corporates and financial institutions’ instruments. BWR has also rated NGOs, Educational Institutions, Hospitals, Real Estate Developers, Urban Local Bodies and Municipal Corporations. BWR has Canara Bank, a leading public sector bank, as one of the promoters and strategic partner. BWR has its corporate office in Bengaluru and a country-wide presence with its offices in Ahmedabad, Chandigarh, Chennai, Hyderabad, Kolkata, Mumbai and New Delhi along with representatives in 150+ locations.

Disclaimer

Brickwork Ratings India Pvt. Ltd. (BWR), a Securities and Exchange Board of India [SEBI] registered Credit Rating Agency and accredited by the Reserve Bank of India [RBI], offers credit ratings of Bank Loan facilities, Non- convertible / convertible / partially convertible debentures and other capital market instruments and bonds, Commercial Paper, perpetual bonds, asset-backed and mortgage-backed securities, partial guarantees and other structured / credit enhanced debt instruments, Security Receipts, Securitization Products, Municipal Bonds, etc. [ hereafter referred to as "Instruments"]. BWR also rates NGOs, Educational Institutions, Hospitals, Real Estate Developers, Urban Local Bodies and Municipal Corporations.

BWR wishes to inform all persons who may come across Rating Rationales and Rating Reports provided by BWR that the ratings assigned by BWR are based on information obtained from the issuer of the instrument and other reliable sources, which in BWR"s best judgment are considered reliable. The Rating Rationale / Rating Report & other rating communications are intended for the jurisdiction of India only. The reports should not be the sole or primary basis for any investment decision within the meaning of any law or regulation (including the laws and regulations applicable in Europe and also the USA).

BWR also wishes to inform that access or use of the said documents does not create a client relationship between the user and BWR.

The ratings assigned by BWR are only an expression of BWR"s opinion on the entity / instrument and should not in any manner be construed as being a recommendation to either, purchase, hold or sell the instrument.

BWR also wishes to abundantly clarify that these ratings are not to be considered as an investment advice in any jurisdiction nor are they to be used as a basis for or as an alternative to independent financial advice and judgment obtained from the user"s financial advisors. BWR shall not be liable to any losses incurred by the users of these Rating Rationales, Rating Reports or its contents. BWR reserves the right to vary, modify, suspend or withdraw the ratings at any time without assigning reasons for the same.

BWR"s ratings reflect BWR"s opinion on the day the ratings are published and are not reflective of factual circumstances that may have arisen on a later date. BWR is not obliged to update its opinion based on any public notification, in any form or format although BWR may disseminate its opinion and analysis when deemed fit.

Neither BWR nor its affiliates, third party providers, as well as the directors, officers, shareholders, employees or agents (collectively, "BWR Party") guarantee the accuracy, completeness or adequacy of the Ratings, and no BWR Party shall have any liability for any errors, omissions, or interruptions therein, regardless of the cause, or for the results obtained from the use of any part of the Rating Rationales or Rating Reports. Each BWR Party disclaims all express or implied warranties, including, but not limited to, any warranties of merchantability, suitability or fitness for a particular purpose or use. In no event shall any BWR Party be liable to any one for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of any part of the Rating Rationales and/or Rating Reports even if advised of the possibility of such damages. However, BWR or its associates may have other commercial transactions with the company/entity. BWR and its affiliates do not act as a fiduciary.

BWR keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of the respective activity. As a result, certain business units of BWR may have information that is not available to other BWR business units. BWR has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with each analytical process.

BWR clarifies that it may have been paid a fee by the issuers or underwriters of the instruments, facilities, securities etc., or from obligors. BWR"s public ratings and analysis are made available on its web site, www.brickworkratings.com. More detailed information may be provided for a fee. BWR"s rating criteria are also generally made available without charge on BWR"s website.

This disclaimer forms an integral part of the Ratings Rationales / Rating Reports or other press releases, advisories, communications issued by BWR and circulation of the ratings without this disclaimer is prohibited.

BWR is bound by the Code of Conduct for Credit Rating Agencies issued by the Securities and Exchange Board of India and is governed by the applicable regulations issued by the Securities and Exchange Board of India as amended from time to time.