Brickwork Ratings reaffirms the long term rating for the Bank Loan Facilities of Rs. 16.27 Crs. of Lakshmi Flour Mills.
Particulars| Facilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||
|---|---|---|---|---|---|
| Previous | Present | Previous (26 Jun 2020) |
Present | ||
| Fund Based | 23.55 | 16.27 | Long Term |
BWR BB- /Stable
Downgrade |
BWR BB -
/Stable Reaffirmation |
| Grand Total | 23.55 | 16.27 | (Rupees Sixteen Crores and Twenty Seven lakhs Only) | ||
Brickwork Ratings has reaffirmed the long term rating of ‘BWR BB-/Stable’ for the bank loan facilities of Lakshmi Flour Mills.
The rating has factored, inter alia, extensive business experience of partners of more than two decades, long existence of the firm and low gearing in FY21. However, the rating is constrained by declined PAT Margin in FY21, working capital intensive nature of business and intense competition in the industry.
Going forward, ability of the firm to scale up its operations, to improve its profit margins while maintaining its gearing at low in an intensely competitive industry will remain the key rating sensitivities. The rating has been assigned a stable outlook considering the improvement in tangible net worth of the firm while maintaining low gearing. The growth in the business & profitability of the firm is expected to be improved over the medium term.
KEY RATING DRIVERSCredit Strengths:
Two of the partners of the firm are having more than two decades of industry experience in food grain processing industry.
The Firm is in existence for 56 years with a satisfactory business history.
The Total Operating Income of the firm has increased from Rs. 13.67 Crores in FY20 to Rs. 18.54 Crores in FY21.
The Firm has maintained low gearing with Total Debt to Tangible Net Worth of 0.62 times in FY21.
The Tangible Net Worth of the firm was increased from Rs. 38.67 Crores in FY20 to Rs. 41.25 Crores in FY21 due to retained profits.
The Scale of operation of the firm is at modest level considering the long existence of the firm for more than 5 decades.
The Firm is a partnership concern with inherent risks such as capital withdrawal and dissolution, the partnership constitution of an entity restricts its ability to raise capital at competitive terms.
For arriving at Lakshmi Flour Mills's rating, BWR has considered standalone financial and business risk profile of Lakshmi Flour Mills.
RATING SENSITIVITIES
Going forward, the ability of the firm to improve its scale of operations by increasing its revenue growth, maintain its gearing at low, manage working capital efficiency and prompt servicing of debt obligation shall remain key rating sensitivity.
Positive: If the firm manages to achieve its projections and improve the profitability margins would be positive for the ratings.
Negative: Deterioration in Total Operating Income and key financial indicators would be negative for the ratings.
LIQUIDITY INDICATORS - Adequate
The current ratio of the firm was adequate at 7.21 times as on 31 March 2021 as against 8.49 times as on 31 March 2020. The company had a moderate conversion cycle of 53 days in FY21. Net cash accruals to total debt stood at 0.16 times as on 31 March 2021 as against 0.38 times as on 31 March 2020. Cash and cash equivalents of the firm stood at Rs.0.06 Crores as on 31st March 2021.as against Rs.0.10 Crores as on 31 March 2020.
ABOUT THE ENTITYLakshmi Flour Mills is a partnership firm, established in 1965, located in Davanagere, Karnataka.The firm has three partners namely Mr. S.S. Ganesh, Ms. Rekha Ganesh and Mr. Abhijith G. Shamanur. The firm has a flour mill which processes and sells Wheat Flour, Maida, Sooji, Atta & Bran etc. in the domestic market. The production capacity of the unit is 90MT per day
KEY FINANCIAL INDICATORS (Standalone)| Key Parameters | Units |
FY 20-21 (Audited) |
FY 19-20 (Audited) |
|---|---|---|---|
| Operating Revenue | Rs.Crs. | 18.54 | 13.67 |
| EBITDA | Rs.Crs. | -0.62 | -3.13 |
| PAT | Rs.Crs. | 3.91 | 9.64 |
| Tangible Net Worth | Rs.Crs. | 41.25 | 38.67 |
| Total Debt/Tangible Net Worth | Times | 0.62 | 0.67 |
| Current Ratio | Times | 7.21 | 8.49 |
NIL
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 | 16.27 |
BWR BB-/Stable
(Reaffirmation) |
NA |
NA
|
26Jun2020 |
BWR BB- Stable
(Downgrade) |
29Mar2019 |
BWR BB Stable
(Downgrade) |
| Grand Total | 16.27 | (Rupees Sixteen Crores and Twenty Seven 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.
| Analytical Contacts | |
|---|---|
|
Soubhagya Ranjan Kahalsingh Ratings Analyst Board : +91 80 4040 9940 soubhagya.rs@brickworkratings.com |
Nagaraj K Associate Director - Ratings Board : +91 80 4040 9940 nagaraj.ks@brickworkratings.com |
| 1-860-425-2742 | media@brickworkratings.com | |
| SL.No. | Name of the Bank/Lender | Type Of Facilities | Long Term(Rs.Crs.) | Short Term(Rs.Crs.) | Total(Rs.Crs.) | |
|---|---|---|---|---|---|---|
| 1 | Bank of Baroda | Term LoanSanctioned | 9.77 | _ | 9.77 | |
| 2 | Indian Bank | Cash CreditSanctioned | 6.50 | _ | 6.50 | |
| Total | 16.27 | 0.00 | 16.27 | |||
| TOTAL (Rupees Sixteen Crores and Twenty Seven lakhs Only) | ||||||
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