Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 125.00 Crs. of Loknete Baburao Patil Agro Industries Ltd.
Particulars| Facilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||
|---|---|---|---|---|---|
| Previous | Present | Previous (13 Oct 2021) |
Present | ||
| Fund Based | 125.00 | 125.00 | Long Term |
BWR BB /Stable
Reaffirmation |
BWR BB
/Stable Reaffirmation |
| Grand Total | 125.00 | 125.00 | (Rupees One Hundred Twenty Five Crores Only) | ||
Brickwork Ratings reaffirms the rating at BWR BB Stable for the Bank Loan Facilities of Rs.125.00 Crore of Loknete Baburao Patil Agro Industries Limited.
BWR believes that Loknete Baburao Patil Agro Industries Limited business risk profile will be maintained over the medium term. The 'Stable' outlook indicates a low likelihood of rating change over the medium term.
BWR has essentially relied upon the audited financial statements of Loknete Baburao Patil Agro Industries Limited for FY20, FY21, FY22 and Key figures (sales) for 8MFY23 and projections of FY23 and FY24 and publicly available information and information/clarifications provided by the company's management.
The rating reaffirmations continue to take into account the experience of promoters, Integrated operations and location advantage, moderate capital structure, and debt coverage indicators. The rating is constrained by modest Scale of operations and fluctuating profitability margins, working Capital intensive nature of operations and susceptibility to regulatory changes, and inherent cyclicality in the sugar industry.
KEY RATING DRIVERSCredit Strengths:
The main promoter of the Company Mr. Rajan Baburao patil has 27 years of experience in operating a sugar factory. He is assisted by Mr. Vikran Patil who has also gained 17 years of experience in a similar line of business. Further with average experience for more than two decades in the sugar industry has benefited to the company.
LBPAIL has a fully integrated manufacturing set up at Mahol for sugar manufacturing, whose by-products are used for electricity generation and distillery division for manufacturing ethanol and other spirits. It requires only Sugarcane a a raw material which is available from the farmers having field in nearby region of the Plant as Solapur is one of the high yield region for Sugarcane production. This reduces logistic cost for the Company.
The company’s capital structure continues to remain comfortable and the same has improved and stood at 0.61 times as on March 31, 2022 ( 0.99 times as on March 31, 2021) owing to y-o-y increase in tangible net worth base to Rs.66.78 Crs as on March 31, 2022, as against Rs.49.52 Crs as on March 31, 2021, on back of accretion of profits although with decline in total debt profile as on balance sheet date. Debt protection metrics i.e. ISCR and DSCR stood at 3.72x and 2.28x as of March 2022 (2.31x and 0.64x as on March 2021).
The scale of operations continued to remain modest with fluctuating total operating income (TOI) in the range of Rs.132.37 crore to Rs.329.65 crore during FY20 to FY22. During FY22, The TOI of company has improved and stood at Rs.329.65 crore as against Rs.134.37 crore in FY21 owing to increase in demand from its customers. Further, during 8MFY22 the company has achieved TOI of Rs.150 crore. Profitability margin i.e. PBILDT and PAT stood at 10.53% and 5.24% (vis-a-vis 11.10% and 0.48% in FY21).
Due to seasonality of sugar crop, the Company is required to maintain high inventory of Sugar resulting in high inventory days of 171 days as on March 31, 2022 as against 323 days as on March 31, 2020 with leads to high level of Gross current assets days at 185 days as on March 2022.
Sugarcane production and availability is highly dependent on monsoons, cane prices and prices of alternative crops. The sugar industry is cyclical and highly fragmented. Government regulates domestic demand-supply scenario by restricting imports and exports Domestic players are susceptible to volatility in sugar prices, which depend on domestic and international production and demand scenario while the cane procurement prices are regulated by government thus impacting players' profitability.
BWR has essentially relied upon the audited financial statements for FY20, FY21, FY22 and Key figures (sales) for 8MFY23 and projections of FY23 and FY24 and publicly available information and information/clarifications provided by the company's management.
RATING SENSITIVITIES
Positive: The rating will be upgraded if the company is able to achieve significant growth in revenue and improvement in profitability and its capital structure backed by a favorable industry scenario.
Negative: Any further decline in scale of operation, deterioration in profit margins and debt coverage indicators would be negative for the ratings.
LIQUIDITY INDICATORS - Stretched
The cash and bank balance stood at Rs.0.25 Crore as on 8MFY22. The current ratio stood moderate at 0.94 times as on March 31, 2022. The average fund-based working capital utilization stood at ~30-35% for the past 6 months ended November 2022. Moreover, the company's net accruals stood at Rs.25.44 Crore as on March 2022.
ABOUT THE ENTITYLoknete Baburao Patil Agro Industries Limited (LBPAIL) was established in 1999 by Mr Rajan Baburao Patil. The company is currently managed by Mr Vikrant Rajan Patil along with an elected board of directors. LBPAIL, is an integrated project complex comprising 5500 TCD sugar factory, 17.40 MW co-gen plant and 30 KLPD distillery unit. Sugar factory at Mohol is located in rural area in Angar Village.
KEY FINANCIAL INDICATORS (Standalone)| Key Parameters | Units |
FY 21-22 (Audited) |
FY 20-21 (Audited) |
|---|---|---|---|
| Operating Revenue | Rs.Crs. | 329.65 | 134.37 |
| EBITDA | Rs.Crs. | 34.73 | 14.91 |
| PAT | Rs.Crs. | 17.26 | 0.65 |
| Tangible Net Worth | Rs.Crs. | 66.78 | 49.52 |
| Total Debt/TNW | Times | 0.61 | 0.99 |
| Current Ratio | Times | 0.94 | 0.91 |
The terms of sanction include standard covenants normally stipulated for such facilities.
CRISIL B-/Stable; ISSUER NOT COOPERATING through its press release dated December 14, 2022 as the company has not provided the requisite information to monitor the performance despite repeated requests by CRISIL.
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 | 125.00 |
BWR BB/Stable
(Reaffirmation) |
13Oct2021 |
BWR BB Stable
(Reaffirmation) |
26Jun2020 |
BWR BBStable
(Assignment) |
NA |
NA
|
| Fund Based | ST | 0.00 |
NA
|
13Oct2021 |
BWR A4
(Withdrawal) |
26Jun2020 |
BWR A4
(Assignment) |
NA |
NA
|
| Grand Total | 125.00 | (Rupees One Hundred Twenty Five Crores 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 | |
|---|---|
|
Durga Lalit Purohit Ratings Analyst durga.lp@brickworkratings.com |
Bal Krishna Piparaiya Principal Director - Ratings Board : +91 22 2831 1426, +91 22 2831 1439 piparaiya.bk@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 | Cosmos Bank | Cash CreditSanctioned | 50.00 | _ | 50.00 | |
| 2 | Dombivili Nagaril Shakari Bank | Cash CreditSanctioned | 35.00 | _ | 35.00 | |
| 3 | State Bank Of India (SBI) | Warehouse Receipts (WHR)Sanctioned | 40.00 | _ | 40.00 | |
| Total | 125.00 | 0.00 | 125.00 | |||
| TOTAL (Rupees One Hundred Twenty Five Crores Only) | ||||||
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