Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 45.50 Crs. of Mahant Overseas
Particulars| Facilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||
|---|---|---|---|---|---|
| Previous | Present | Previous (04 Nov 2022) |
Present | ||
| Fund Based | 40.00 | 40.00 | Long Term |
BWR BB- /Stable
Reaffirmation/ISSUER NOT COOPERATING* |
BWR BB -
/Stable Reaffirmation |
| 5.50 | 5.50 | Short Term |
BWR A4
Reaffirmation/ISSUER NOT COOPERATING* |
BWR A4
Reaffirmation |
|
| (27.50) | (27.50) | ||||
| (27.50) | (27.50) | ||||
| Grand Total | 45.50 | 45.50 | (Rupees Forty Five Crores and Fifty lakhs Only) | ||
BWR reaffirmed the long-term ratings as BWR BB- with “Stable” outlook and short-term rating as BWR A4 for the bank loan facilities of Mahant Overseas.
The rating draws strength from the Extensive experience of the promoters and Moderate financial risk profile. However, the rating is constrained on account of Intense competition, Debt protection metrics and working capital-intensive nature of operations.
BWR believes that Mahant Overseas business risk profile of 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 profit show sustained improvement. The rating outlook may be revised to 'Negative' if there is deterioration in the financial risk profile.
KEY RATING DRIVERSCredit Strengths:
Benefits derived from the partners' experience of more than 40 years in rice milling industry and healthy relations with customers and suppliers should continue to support the business.
The Total Operating Income of the company stood at Rs. 71.75 cr. in FY21 (Aud.) and deteriorated 3.01% y-o-y to Rs. 69.41 cr. in FY22 (Aud.). The PAT of the company stood at Rs. 0.43 cr. in FY21 (Aud.). It further decreased to Rs.0.41 cr. in FY22 (Aud.). The net worth stood Rs. 7.06 cr. as at 31 March 2021 (Aud.) and Rs. 6.53 cr. as at 31 March 2022 (Aud.). The analyzed net worth also improved from Rs.9.46crs in FY21(A) to Rs.9.20crs in FY22(A). The firm Operating Profit Margin of the company stood at 5.90% in FY21 (Aud.) and deteriorated to 5.03% y-o-y in FY22 (Aud.), whereas the Net Profit margin of the company stood at 0.59% in FY21 (Aud.) and remained the same to 0.59% in FY22 (Aud.). ISCR improved from 1.29 times in FY21 (Aud.) to 1.05 times in FY22 (Aud.) and 1.02 times for FY21 (Aud.) and deteriorated to 0.76 times in FY22 (Aud.).
Debt/Equity ratio of the firm is deteriorated from 8.27 times as at 31 Mar 2021 (Aud.) to 9.63 times as at 31 Mar 2022 (Aud.) and the analyzed Debt/Equity ratio of the firm is deteriorated from 5.92x in FY21(A) to 6.54 FY22(A), which is still on the higher side.
The business activity is working capital intensive operation, which is evident from higher conversion cycle.
Markets for an agricultural products like rice resemble perfectly competitive markets because there are a large number of producers, free entry and exit and products are identical.
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
Positive: The rating may be upgraded if, firm is able to generate profits, or on account of any favourable factor.
Negative: The rating may be downgraded if, there is any deterioration in financial risk profile, fail to maintain adequate liquidity or on account of any unforeseen unfavourable events.
LIQUIDITY INDICATORS - Adequate
The company has Cash & Bank Balance Rs 0.80 Cr in FY 22 (A). The current ratio is 1.37 times in FY 22 (A). Average CC utilization from June 2022 to November 2022 is 58.99%. The conversion cycle is 351 days in FY 22 (A), ISCR is 1.05 times in FY 22 (A). DSCR is 0.73 times in FY 22(A). Long term borrowings of Rs 17.63 Cr in FY22(A) includes bank borrowing of Rs. 12.28 Cr and loan from friends/family of Rs. 5.34 Cr.
There is no associate concern of the entity.
Mahant Overseas was established on 1966. The firm is operating a rice sheller with an installed capacity of 12 MTPH at Tarn Taran Road, Amritsar. It is Marketing its rice under the ‘‘Sadhu’, ‘Crystal Horse’ and ‘111’.’ brands in domestic and international markets and is exporting to around 15 countries like the US, Canada, Saudi Arabia, South Africa, UAE, Oman, Yemen, etc. The company is also doing domestic sales and has received good acceptance from markets like Bhavnagar, Ahmedabad, Jamnagar, Pune, Jalgaon, Nasik, Solapur, Chennai, Kolkata, Mumbai, Hyderabad, etc. Mahant overseas has three separate manufacturing lines in the plant and can manufacture all varieties of basmati rice like steam, Sella, and raw, as per the demand of the buyers.
KEY FINANCIAL INDICATORS (Standalone)| Key Parameters | Units |
FY 21-22 (Audited) |
FY 20-21 (Audited) |
|---|---|---|---|
| Operating Revenue | Rs.Crs. | 69.41 | 71.75 |
| EBITDA | Rs.Crs. | 3.49 | 4.23 |
| PAT | Rs.Crs. | 0.41 | 0.43 |
| Tangible Net Worth | Rs.Crs. | 6.53 | 7.06 |
| Total Debt/TNW | Times | 9.63 | 8.27 |
| Current Ratio | Times | 1.37 | 1.40 |
NA
NA
RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)| Facilities | Current Rating (2022) | 2022 (History) | 2021 | 2020 | 2019 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Type | Tenure | Amount (Rs.Crs.) |
Rating | Date | Rating | Date | Rating | Date | Rating | Date | Rating |
| Fund Based | LT | 40.00 |
BWR BB-/Stable
(Reaffirmation) |
04Nov2022 |
BWR BB- Stable
(Reaffirmation/ISSUER NOT COOPERATING*) |
23Jul2021 |
BWR BB- Stable
(Reaffirmation) |
31Mar2020 |
BWR BB- Stable
(Reaffirmation) |
25Jan2019 |
BWR BB- Stable
(Assignment) |
| 0.00 |
NA
|
NA |
NA
|
NA |
NA
|
22Apr2020 |
BWR BB- Stable
(Reaffirmation) |
NA |
NA
|
||
| FB SubLimit | LT | NA |
NA
|
04Nov2022 |
BWR A4
(Reaffirmation/ISSUER NOT COOPERATING*) |
NA |
NA
|
22Apr2020 |
BWR A4
(Assignment) |
NA |
NA
|
| Fund Based | ST | 5.50 |
BWR A4
(Reaffirmation) |
04Nov2022 |
BWR A4
(Reaffirmation/ISSUER NOT COOPERATING*) |
23Jul2021 |
BWR A4
(Reaffirmation) |
31Mar2020 |
BWR A4
(Reaffirmation) |
25Jan2019 |
BWR A4
(Assignment) |
| 0.00 |
NA
|
NA |
NA
|
NA |
NA
|
22Apr2020 |
BWR A4
(Reaffirmation) |
NA |
NA
|
||
| FB SubLimit | ST | (27.50) |
BWR A4
(Reaffirmation) |
04Nov2022 |
BWR A4
(Reaffirmation/ISSUER NOT COOPERATING*) |
23Jul2021 |
BWR A4
(Reaffirmation) |
31Mar2020 |
BWR A4
(Reaffirmation) |
25Jan2019 |
BWR A4
(Assignment) |
| (27.50) |
BWR A4
(Reaffirmation) |
NA |
NA
|
23Jul2021 |
BWR A4
(Reaffirmation) |
22Apr2020 |
BWR A4
(Reaffirmation) |
NA |
NA
|
||
| Grand Total | 45.50 | (Rupees Forty Five 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 | |
|---|---|
|
Harshit S Ratings Analyst harshit.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 | |
| SL.No. | Name of the Bank/Lender | Type Of Facilities | Long Term(Rs.Crs.) | Short Term(Rs.Crs.) | Total(Rs.Crs.) | |
|---|---|---|---|---|---|---|
| 1 | Punjab National Bank | Cash CreditSanctioned | 40.00 | _ | 40.00 | |
| Sub-Limit (FOBP/FOUBP) Sanctioned | (27.50) | |||||
| Sub-Limit (PC) Sanctioned | (27.50) | |||||
| 2 | Punjab National Bank | Gold CardSanctioned | _ | 5.50 | 5.50 | |
| Total | 40.00 | 5.50 | 45.50 | |||
| TOTAL (Rupees Forty Five Crores and Fifty lakhs Only) | ||||||
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 RatingsBrickwork 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.