RATING RATIONALE
29 Apr 2021
Nokha Agro Tech Pvt. Ltd.
Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.35.11 Crs. of Nokha Agro Tech Pvt. Ltd.
Particulars| Facility** | Amount (Rs.Crs) | Tenure | Rating* |
|---|---|---|---|
| Fund Based | |||
|
Term Loan
Out-standing
Term Loan Sanctioned Term Loan Sanctioned Cash Credit Sanctioned GECL Sanctioned |
09.39
02.24 00.68 10.00 02.80 |
Long Term | BWR BB + (Stable) |
| Sub Total | 25.11 | ||
| Non-Fund Based | |||
| Bank Guarantee Sanctioned | 10.00 | Short Term | BWR A4 + |
| Sub Total | 10.00 | ||
| Grand Total | 35.11 | (Rupees Thirty Five Crores and Eleven lakhs Only) | |
**Details of Bank facilities are provided in Annexure-I
Note: TL-I of Rs.9.39 is an outstanding amount as on 28.02.2021. RATING ACTION / OUTLOOK : Stable
BWR has assigned the long term rating “BWR BB+ (Stable)'' and short term rating "BWR A4+" for the bank loan facilities of Nokha Agro Tech Pvt. Ltd. ('NAPL' or ‘the company’).
The rating drives strength from the widely experienced directors, continuous funding support from its promoters, moderate scale of operations and moderate financial risk parameters. However, the rating is constrained on account of low profitability margins, intense competition in cold storage industry and the agro trading and processing industry and inherent risks associated with the agro based industries.
The rating outlook has been assigned as "Stable" as BWR believes that Nokha Agro Tech Pvt. Ltd. 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 profits show sustained improvement, along with the other financial parameters. The rating outlook may be revised to 'Negative' if there is any deterioration in financial risk profile or liquidity issues.
KEY RATING DRIVERS
Credit Strengths:
- Group support and widely experienced directors :
NAPL is a part of Nokha Group, promoted by the Jhanwar family which is involved in diverse manufacturing and trading activities from the last 35 years. NAPL has a continuous funding support from the group. The company is being managed by the widely experienced directors namely, Mr. Rameshwar Lal Jhanwar and Mr. Inder Chand Jhanwar having extensive experience of more than 4 decades in the field of service providing and trading of food grains and pulses. They are further assisted by their family members and a team of well experienced professionals in technical/operations,financial, marketing, legal and other key areas.
- Diversified Product Portfolio :
The company has a multi commodity cleaning/sorting/grading/packaging unit of all grains, pulses, seeds, all kind of spices etc. and is also running an integrated cold storage facility for fruits, vegetables, spices and other agro products produced under PMKSY scheme of the Ministry of Food Processing.
- Scale Of Operations and Moderate Financial Risk Parameters :
Company's scale of operations has grown substantially booking total operating income of Rs. 623.75 cr in FY21 as against Rs. 13.56 cr in FY20. Company started its commercial productions from Aug'2019. TNW has increased from Rs. 25.04 cr in FY20 to Rs. 57.14 cr (includes revaluation reserve of Rs. 34.32 cr) in FY21. Debt Equity is moderate and stood at 1.09x as on 31.03.2021 as against 0.58x as on 31.03.2020. Though ISCR has declined from 4.88x in FY20 to 3.96X in FY21 due to increase in interest & finance charges, but ISCR still stood at moderate level in FY21. Interest & finance charges increased in FY21 due to new loans taken corresponding to expanding scale of operations.[Note- Provisional FS for FY21 are CA certified]
Credit Risks:
- Low Profitability Margins :
A part of the revenue being derived from a low value additive nature of the business; profitability margins of the company are low. The company booked OPM and NPM at 1.32% and 2.92% respectively in FY21.
- Intense competition :
The integrated cold storage industry and the agro trading and processing industry is highly fragmented and is marked by the presence of a large number of large players and small players in the market. This intensifies competition and limits the pricing flexibility of the industry participants resulting in low profitability.
- Inherent Risk of the industry :
The company is engaged in providing processing and storage of agro based products, thus it is exposed to risk associated with the fluctuation in production levels, uncertain weather conditions and limited shelf life of the products.
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 maintain its scale of operations, improve its financial risk profile and maintaining adequate liquidity will remain the key rating sensitivities.
Positive: The rating may be upgraded if the firm, interalia, is able to sustain its scale of operations and further improve its topline, improve its profitability margins, maintain gearing, debt coverage metrics or on account of any other favourable factor.
Negative: The rating may be downgraded if inter alia, there is decline in scale of operations, any deterioration in financial risk profile, fails to maintain adequate liquidity or on account of any unforeseen unfavourable events.
LIQUIDITY POSITION
Adequate: The company had cash and cash equivalents balance of Rs. 0.16 cr as on 31.03.2020. Current ratio of the company stood at 1.43x as on 31.03.2020. The company generated net cash accruals of around Rs. 10.52 cr in FY21 against CPLTD of Rs. 2.10 cr as on 31.03.2020. ISCR of the company stood at 4.88x in FY20. Overall liquidity of the company is adequate with average utilization of cash credit limit around 84.03% for the six months period ending Mar’ 21.
Any Other Information : The company has group concerns namely, CR Commtrade Pvt. Ltd., Nokha Timber Store (NTS), M/s Chunnilal Ramchandra (CR) and Nokha Cold Store Private Limited (NCS). The five entities, together referred to as the NG, have common promoters and management, and are engaged in similar lines of business. Group support has been taken into the consideration while arriving at the rating.
PROFILEIncorporated in Apr’2011; Nokha Agrotech Pvt. Ltd.(NAPL) is a part of Nokha Group (based in Bikaner (Rajasthan)), promoted by the Jhanwar family which is involved in diverse manufacturing and trading activities from the last 35 years. Mr. Rameshwar Lal Jhanwar and Mr. Inder Chand Jhanwar are the key promoters.The group’s businesses include running integrated cold chain units and warehouses, manufacturing of Gwar refined dal churi and korma, trading of foodgrains, pulses, online trading of commodities, etc. NAPL is an approved supplier of government towards supply of agro commodities through NAFED/NECOF, Kendriya Bhandar, NCCF & Civil supply. The company has a multi commodity cleaning/sorting/grading/packaging unit of all grains, pulses, seeds, all kind of spices etc. and is also running an integrated cold storage facility for fruits, vegetables, spices and other agro products produced under PMKSY scheme of the Ministry of Food Processing. The commercial operations of the company commenced from Aug’ 2019.
KEY FINANCIAL INDICATORS| Key Parameters | Units |
FY 20-21 (Provisional) |
FY 19-20 (Audited) |
|---|---|---|---|
| Operating Revenue | Rs.Crs. | 623.75 | 13.56 |
| EBITDA | Rs.Crs. | 18.19 | 4.01 |
| PAT | Rs.Crs. | 8.26 | 0.65 |
| Tangible Net Worth | Rs.Crs. | 57.14 | 25.04 |
| Total Debt/Tangible Net Worth | Times | 1.09 | 0.58 |
| Current Ratio | Times | 1.21 | 1.43 |
NON-COOPERATION WITH PREVIOUS RATING AGENCY ,IF ANY
| CRA Name | Date | Amount | Rating |
|---|---|---|---|
| CRISIL | 28 Nov 2020 | 19.00 | CRISIL BB-/Stable |
| S.No | Current Rating (2021) | Rating History | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Facilities | Tenure | Amount (Rs.Crs) | Rating | 2020 | 2019 | 2018 | ||||
| Fund Based | ||||||||||
| 1 | Term Loan - Out-standingTerm Loan - SanctionedTerm Loan - SanctionedCash Credit - SanctionedGECL - Sanctioned | Long Term | 09.3902.2400.6810.0002.80 | BWR BB+(Stable) | NA | NA | NA | |||
| Non-Fund Based | ||||||||||
| 2 | Bank Guarantee - Sanctioned | Short Term | 10.00 | BWR A4+ | NA | NA | NA | |||
| Total | 35.11 | (Rupees Thirty Five Crores and Eleven lakhs Only) | ||||||||
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 : For More Information Contact:| Analytical Contacts | |
|---|---|
|
Rashi Arora Rating Analyst B : +91 172 5032 295 / 6 Ext : 104 rashi.a@brickworkratings.com |
V.K.Kukreja Associate Director - Ratings B : +91 11 2341 2232 kukreja.vk@brickworkratings.com |
| 1-860-425-2742 | media@brickworkratings.com | |
| SL.No. | Type Of Facilities | Long Term(Rs.Crs.) | Short Term(Rs.Crs.) | Total(Rs.Crs.) |
|---|---|---|---|---|
| 1 | Term LoanOut-standing | 9.39 | _ | 9.39 |
| 2 | Term LoanSanctioned | 2.24 | _ | 2.24 |
| 3 | Term LoanSanctioned | 0.68 | _ | 0.68 |
| 4 | Cash CreditSanctioned | 10.00 | _ | 10.00 |
| 5 | GECLSanctioned | 2.80 | _ | 2.80 |
| 6 | Bank GuaranteeSanctioned | _ | 10.00 | 10.00 |
| Total | 25.11 | 10.00 | 35.11 | |
| TOTAL (Rupees Thirty Five Crores and Eleven lakhs Only) | ||||
Note: TL-I of Rs.9.39 is an outstanding amount as on 28.02.2021.
| Instrument | Issue Date | Amount (Rs.Crs) | Coupon Rate | Maturity Date | ISIN Particulars |
|---|---|---|---|---|---|
| NA | NA | NA | NA | NA | NA |
| Name of Entity | % Ownership | Extent of consolidation | Rationale for consolidation |
|---|---|---|---|
| NA | NA | NA | NA |
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