Nandi Rice and General Mills

Brickwork Ratings revises the long term rating for the Bank Loan Facilities of Rs. 19.20 Crs. of Nandi Rice and General Mills

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (29 Nov 2021)	Present
Fund Based	15.00	19.20	Long Term	BWR B+/Stable Downgrade/ISSUER NOT COOPERATING*	BWR BB - /Stable Upgrade
Grand Total	15.00	19.20	(Rupees Nineteen Crores and Twenty 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

RATING ACTION / OUTLOOK

BWR has upgraded the long term rating to BWR BB- (Stable) for the bank loan facilities of Nandi Rice and General Mills (NRGM) ['the firm'].

The rating draws strength from experienced partners, operational track record, location advantages and moderate financial risk profile. However, the rating is constrained by exposure to agro-climatic risks, inventory price risks, intense competition in the industry and risks associated with the partnership concern.

BWR believes that the business risk profile of “Nandi Rice and General Mills” 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 there is significant improvement in revenues and profit margins of the firm. The rating outlook may be revised to “Negative” if there is any deterioration in the financial risk profile including liquidity of the firm.

KEY RATING DRIVERS

Credit Strengths:

Experienced Partners and Operational track record :
NRGM was established as a proprietorship firm in the year 1992 which was converted to partnership firm in 2006. Thus, there is a long operational track record. The key managerial persons of the firm are widely experienced namely, Mr. Vinod Kumar, Mr Ravinder Kumar and Mr Rajinder Kumar having more than 25 yrs of business experience in the rice industry. Thus, helpful in establishing healthy relations with their customers and suppliers.
Location advantages :
The firm's processing facility is situated at Kaithal, Haryana. Paddy is procured from local commission agents and wholesalers. Hence, the firm benefits in terms of easy access to quality raw material because of its proximity to raw material suppliers and is also in a position to cut on the freight component.
Moderate Financial Risk Profile :
The firm has moderate financial risk profile with total operating income of Rs. 68.09 crs. in FY21 (Aud.). which declined from Rs.84.95 crs. in FY20 (Aud.). The total operating income of the firm stood at Rs. 61.10 crs. in 10MFY22 (Prov.). The operating profit margin of the firm has improved in FY21 (Aud.) to 2.08% from 1.53% in FY20 (Aud.). The net profit margin of the firm has improved in FY21 (Aud.) to 0.30% from 0.24% in FY20 (Aud.). The firm has generated a net profit of Rs. 0.20 cr. in FY21 (Aud.) against net profit of Rs. 0.20 cr. in FY20 (Aud.). The tangible networth of the firm improved to Rs. 1.13 crs. as on March 31, 2021 (Aud.) from Rs. 0.99 cr. as on March 31, 2020 (Aud.). The tangible networth (analyzed) of the firm improved to Rs. 4.06 crs. as on March 31, 2021 (Aud.) from Rs. 3.92 crs. as on March 31, 2020 (Aud.). The Total Debt/TNW ratio stood at 11.50 times as on March 31, 2021 (Aud.) against 10.34 times in as on March 31, 2020 (Aud.). The Total Debt/TNW (analyzed) ratio stood at 2.48 times as on March 31, 2021 (Aud.) against 1.86 times as on March 31, 2020 (Aud.). The Interest Service Coverage Ratio (ISCR) declined marginally to 1.48 times in FY21 (Aud.) from 1.50 times in FY20 (Aud.). The Debt Service Coverage Ratio (DSCR) improved to 0.79 times in FY21 (Aud.) from 0.77 times in FY20 (Aud.).

Credit Risks:

Exposure to agro-climatic risks and inventory price risks :
Given its operations in an agro-based industry which is characterized by its seasonality, the firm is indirectly exposed to agro-climatic risks such as abnormal weather conditions impacting produce, unpredictable demand supply conditions and raw material price fluctuations. Further, any sudden spurt in raw material prices may not be passed on to customers completely owing to the firm’s presence in a highly competitive industry.
Intense competition in the industry :
The rice industry is highly fragmented and is marked by the presence of established market players and a large number of unorganised players in the market limiting the pricing flexibility of the industry participants. Further, paddy prices are regulated by the government to safeguard the interest of farmers which in turn limits the bargaining power of the rice millers and rice processors.
Risks associated with partnership concern :
Given the partnership nature of the NRGM’s constitution, there is an inherent risk of possibility of withdrawal of partner’s capital for any personal contingency that could adversely impact the capital structure of the firm.

ANALYTICAL APPROACH - Standalone

For arriving at its ratings, BWR has considered the standalone performance of Nandi Rice and General Mills. BWR has applied its rating methodology as detailed in the Rating Criteria (hyperlinks provided at the end of this rationale).

RATING SENSITIVITIES

Going forward, the ability of the firm to improve its revenues and financial risk profile would remain the key rating sensitivities.
Positive: Rating may be upgraded in case of substantial improvement in revenues and profitability margins of the firm.
Negative: Rating may be downgraded in case there is deterioration in the financial risk profile and liquidity position of the firm.

LIQUIDITY INDICATORS - Adequate

The firm has cash and bank balances of Rs. 0.01 cr. as on March 31, 2021 (Aud.). The current ratio of the firm stood at 1.87 times as on March 31, 2021 (Aud.). The working capital cycle of the firm stood at 54 days as on March 31, 2021 (Aud.). The firm has long term borrowing of 7.47 cr. as on March 31, 2021 (Aud.) which comprises of term loan of Rs. 1.61 cr., and unsecured loans from of Rs. 5.86 cr. as on March 31, 2021 (Aud.) against which the CPLTD stood at Rs. 0.27 cr. as on March 31, 2021 (Aud.) and cash surplus stood at Rs 0.46 crores. The firm has average utilisation of 35.50% for Jun-2021 to Jan-2022. The firm has Interest service coverage ratio of 1.48 times and debt service coverage ratio of 0.79 times in FY21 (Aud.). There are no direct subsidiaries or associate concerns of NRGM. The firm has one other group concern namely, Nandi International Pvt. Ltd.. However, there are no operational linkages between them. Overall liquidity of the firm remained adequate.

ABOUT THE ENTITY

Established in 2006, Nandi Rice & General Mills (NRGM) is a partnership firm engaged in the rice milling and processing. NRGM was constituted as a proprietorship firm in the year 1992 which was converted to partnership firm in 2006. The firm is managed and controlled by the partners Mr. Vinod Kumar, Mr Ravinder Kumar, Mr Rajinder Kumar and Mrs Nikita Mittal having profit sharing ratio of 23%, 33%, 34% and 10% respectively. The firm’s milling unit is located in Kaithal, Haryana which has an installed capacity of 4 MT per hour. The processed rice such as Rice Desawar, Rice Superfine and Rice Basmati are sold under brand name ‘White Gift’ , ‘Nandi’ etc

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 20-21 (Audited)	FY 19-20 (Audited)
Operating Revenue	Rs.Crs.	68.09	84.95
EBITDA	Rs.Crs.	1.42	1.30
PAT	Rs.Crs.	0.20	0.20
Tangible Net Worth	Rs.Crs.	1.13	0.99
Total Debt/Tangible Net Worth	Times	11.50	10.34
Current Ratio	Times	1.87	1.58

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)

Facilities	Current Rating (2022)			2021		2020		2019
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	19.20	BWR BB-/Stable (Upgrade)	29Nov2021	BWR B+Stable (Downgrade/ISSUER NOT COOPERATING*)	01Sep2020	BWR BB-Stable (Reaffirmation)	25Sep2019	BWR BB-Stable (Upgrade)
Grand Total		19.20	(Rupees Nineteen Crores and Twenty lakhs Only)

COMPLEXITY LEVELS OF THE INSTRUMENTS - NA

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
Adhiraj Singh Ratings Analyst adhiraj.s@brickworkratings.com	V.K.Kukreja Associate Director - Ratings Board : +91 11 2341 2232 kukreja.vk@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

Nandi Rice and General Mills

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	Indian Bank	Cash Credit - Sanctioned	19.20	_	19.20
Total			19.20	0.00	19.20
TOTAL (Rupees Nineteen Crores and Twenty lakhs Only)

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