Brickwork Ratings reaffirms the long term rating for the Bank Loan Facilities of Rs. 9.50 Crs. of Malar Modern Rice Mill
Particulars| Facilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||
|---|---|---|---|---|---|
| Previous | Present | Previous (19 Mar 2021) |
Present | ||
| Fund Based | 12.16 | 9.50 | Long Term |
BWR B+ /Stable
Reaffirmation |
BWR B +
/Stable Reaffirmation |
| Grand Total | 12.16 | 9.50 | (Rupees Nine Crores and Fifty lakhs Only) | ||
The ratings continue to factor the extensive experience of the partners and satisfactory operational track record of the firm. However, the ratings continue to be constrained by average financial risk profile and constitutional risk of being a partnership firm.
The ‘Stable’ outlook indicates a low likelihood of rating change over the medium term. BWR expects that firm’s business risk profile will be maintained over the medium term. The outlook may be revised to 'Positive' if a sustained increase in scale of operations, improvement in profitability & liquidity and better working capital management strengthen the business risk and financial risk profiles of the company. The rating outlook may be revised to 'Negative' if the revenues and profits are lower than expected performance, resulting in lower than estimated coverage indicators and a weaker liquidity position.
KEY RATING DRIVERSCredit Strengths:
Mr.P.L. Padikassu, Mr.P.Balasubramanian, Mr.P.Periasamy, Mr.P.L. Ramaswamy, Mr.V.R.Rajan, and Ms. R.Vijaya are the partners of the firm. It is a family run business. The partners of the firm have more than 20 years of experience in rice milling business.
The firm achieved a total revenue of Rs.47.68 Crs in FY21. It increased by ~38% from Rs.34.52 Crs in FY20. The tangible net worth of the firm stood at Rs.4.24 Crs in FY21. It increased from Rs.3.92 Crs in FY20 on account of which the gearing level improved to 1.99 times in FY21 from 2.71 times in FY20, but still in the higher end. The operating profit margin reduced to 3.48% in FY21 as against 3.93% in FY20 due to the fluctuations in the raw material prices.
Being a partnership firm, it is exposed to inherent risks of capital being withdrawn at a time of personal contingency, risks of dissolution and limited avenues to raise capital which could prove a hindrance to the growth of the firm.
For arriving at its ratings, Brickwork Ratings (BWR) has considered the audited financials of FY19, FY20, and FY21, and projected financials of FY22 and FY23 and information/clarifications provided by the firm’s management. BWR has applied its rating methodology as described 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 revenues, profitability margin and improve their net worth would be the key rating sensitivities.
Positive: The rating outlook may be revised to positive if the firm shows sustained improvement in revenue and profit margins, improvement in net worth.
Negative: The rating may be downgraded if there is a deterioration of liquidity profile or profitability margin.
Liquidity profile of the firm is marked by average debt protection metrics with ISCR and DSCR at 1.78 times and 1.57 times in FY21. The current Ratio has improved from 1.18x in FY20 to 1.70x in FY21 mainly due to reduced utilisation of working capital limits. Also, the average utilisation of working capital limits for the last 6 months stood at ~30-31%. The conversion cycle of the firm improved from 112 days in FY20 to 72 days in FY21 mainly on account of reduced inventory days. The net cash accruals of the firm stood at Rs.0.73 Crs in FY21.
ABOUT THE ENTITYMalar Modern Rice Mill is a partnership firm, established in 2001 at Sivagangai Tamil Nadu. Mr.P.L. Padikassu, Mr.P.Balasubramanian, Mr.P.Periasamy, Mr.P.L. Ramaswamy, Mr.V.R.Rajan, and Ms. R.Vijaya are the partners of the firm. It is a family run business. The partners of the firm have more than 20 years of experience in rice milling business The firm mills and processes paddy into rice, rice bran, broken rice and husk. Firm 's current operating capacity is at 250 tonnes per month. The firm sells rice under the brand name 'Malar', "Mambalam", "Thennai" and "Sudar".
KEY FINANCIAL INDICATORS (Standalone)| Key Parameters | Units |
FY 20-21 (Audited) |
FY 19-20 (Audited) |
|---|---|---|---|
| Operating Revenue | Rs.Crs. | 47.68 | 34.52 |
| EBITDA | Rs.Crs. | 1.66 | 1.36 |
| PAT | Rs.Crs. | 0.31 | 0.01 |
| Tangible Net Worth | Rs.Crs. | 4.24 | 3.92 |
| Total Debt/Tangible Net Worth | Times | 1.99 | 2.71 |
| Current Ratio | Times | 1.70 | 1.18 |
CRISIL B+(Stable) Issuer Not Cooperating; as on 19May2021
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 | 9.50 |
BWR B+/Stable
(Reaffirmation) |
19Mar2021 |
BWR B+ Stable
(Reaffirmation) |
NA |
NA
|
21Nov2019 |
BWR B+ Stable
(Reaffirmation) |
| Grand Total | 9.50 | (Rupees Nine Crores and Fifty 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| Analytical Contacts | |
|---|---|
|
S. Adithya Ratings Analyst adithya.s@brickworkratings.com |
Varadarajan R Associate Director - Ratings Board : +91 044 24663326 varadarajan.r@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 | _ | _ | 0.00 | |
| 2 | Bank of Baroda | Cash CreditSanctioned | 9.50 | _ | 9.50 | |
| 3 | Bank of Baroda | Cash Credit (WHR)Sanctioned | _ | _ | 0.00 | |
| Total | 9.50 | 0.00 | 9.50 | |||
| TOTAL (Rupees Nine Crores and Fifty lakhs Only) | ||||||
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