RATING RATIONALE

14Oct2025

H.R. Overseas

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs. 54.12 Crs. of H.R. Overseas.

Particulars

Facilities**	Amount(Rs.Crs.)	Tenure	Rating#
Fund Based	54.12	Long Term	BWR BB - /Stable Assignment
Grand Total	54.12	(Rupees Fifty Four Crores and Twelve 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

Brickwork Ratings has assigned a long-term rating of BWR BB-/Stable for the bank loan facilities of H.R. Overseas Firm.

The rating factors in the firm’s strong revenue growth and the partners' extensive experience in the rice processing industry. However, it remains constrained by exposure to intense competition, low profit margins of the firm, and the inherent risk of capital withdrawal in a partnership firm structure, particularly if a partner faces personal financial requirements. Going forward, the ability of the firm to improve its scale of operations, the operating margin, and prudently manage its debt and inventory would be the key rating sensitivities.

The rating outlook has been assigned as "Stable" as BWR believes that H.R Overseas Firm's business risk profile 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 revenue and profitability margins show sustained improvement. The rating outlook may be revised to 'Negative' if the financial risk profile goes down.

KEY RATING DRIVERS

Credit Strengths:

Partners' vast experience: :
The firm benefits from the strong industry experience of its partenrs Mr. Hans Raj brings over 25 years of expertise in rice processing, while Mr. Navjot Garg has around 10 years of operational experience. Their combined knowledge has helped the firm navigate market challenges effectively. This long-standing involvement supports business stability and operational efficiency.
Location Advantage: :
The firm's base in Patran, Patiala, part of Punjab’s well-established rice belt, gives it a strategic edge in sourcing quality paddy. This location advantage helps maintain raw material availability, supports smoother operations, and enhances overall competitiveness.

Credit Risks:

Constitution(For Proprietorships and Partnership cases) :
Being a partnership firm, there is a risk of capital withdrawal if a partner faces personal financial needs. Such firms also have limited access to large-scale funding since they cannot raise capital from the public. This may affect the firm's ability to grow or invest in new opportunities. Additionally, shared decision-making among partners can sometimes lead to conflicts due to differing goals or management styles.
Limited Operational track record: :
Although the firm’s profits have improved slightly, the decline in profit margins shows low operational efficiency. Since the firm started operations only in 2023, its short track record adds to the uncertainty. The business also depends heavily on debt, which increases financial risk and may affect its ability to manage future challenges.
Competition risk: :
The rice processing industry in Punjab faces significant competition risk due to the high concentration of rice mills operating in the region. With an estimated 40–50 rice processing firms in certain areas alone, the market is highly saturated. This leads to intense price competition.

ANALYTICAL APPROACH - Standalone

BWR has taken a standalone approach for the bank loan rating review of the company. BWR has applied its rating methodology as detailed in the rating criteria.

RATING SENSITIVITIES

Going forward, the ability of the company to improve its scale of operations, the operating margin, and prudently manage its debt and inventory would be the key rating sensitivities.

Upward:

The rating may be revised upward if the company demonstrates a 20% improvement in operating income and an operating margin of 7%, along with enhanced cash accruals and a stronger cash and cash equivalents position.
Increase in Tangible Net Worth (TNW) to Rs. 12 Cr and an improvement in net profit by 2%.

Downward:

A decline of 10% or more in revenue due to adverse market conditions or operational inefficiencies.
Deterioration in debt protection metrics, such as the ISCR is falling below 1.28 or DSCR is falling below 1.

LIQUIDITY INDICATORS - Stretched

The company's liquidity position is defined as stretched, with tightly matched accruals to repayment obligations, with highly utilized bank limits and modest cash reserves. The firm has Rs.1.28 Cr of net cash accruals as against the CPLTD of Rs.0.78 Cr in FY2025, and the current ratio of the firm stands at 2.88 times in FY2025, indicating a strong short-term liquidity position and adequate funds to cover its short-term obligations. The TNW of the firm has increased from Rs.7.70 Cr in FY2024 to Rs.8.11 Cr in FY2025. The firm has Rs.0.24 Cr of Cash and balance and Rs.0.72 Cr of short-term advances in FY2025. However, the liquidity profile is expected to weaken in FY2026, with the current ratio projected to decline to 1.27 times. The ISCR and DSCR ratios are expected to stand at 1.29 times and 1.08 times, respectively in FY2026, reflecting tight liquidity coverage and limited cushion for debt servicing.

ABOUT THE ENTITY

Macro Economic Indicator	Sector	Industry	Basic Industry
Fast Moving Consumer Goods	Fast Moving Consumer Goods	Agricultural Food & other Products	Other Agricultural Products

H.R. Overseas is a partnership firm involved in the rice processing business. It was established in the year 2022 and is located in Patran, in the Patiala district of Punjab. Mr. Navjot Garg and Mr.Hans Raj are the partners of the firm. The main business activity of the firm is to buy good-quality paddy (unprocessed rice) from the open market through an auction process. After procurement, the paddy is processed into rice using modern milling machines, and subsequently sold to customers across various markets.

The firm has a processing unit with a capacity to process 8 tons of rice per hour. To support its operations, the firm has large storage facilities where it can store up to 2 lakh tons of paddy rice and 1 lakh tons of processed rice at a time. The firm sells both Basmati and Non-Basmati rice. Basmati rice is the main product, making up about 80% of total sales, while Non-Basmati rice contributes the remaining 20%.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 22 - 23 (Audited - Annual)	FY 23 - 24 (Audited - Annual)	FY 24 - 25 (Provisional - Annual)
Operating Revenue	Rs.Crs.	Not Available	85.57	120.08
EBITDA	Rs.Crs.	Not Available	4.03	5.15
PAT	Rs.Crs.	Not Available	0.27	0.33
Tangible Net Worth	Rs.Crs.	2.22	7.70	8.11
Total Debt / Tangible Net Worth	Times	0.02	5.76	4.73
Current Ratio	Times	Not Available	5.41	2.88

KEY COVENANTS OF THE FACILITY RATED

The terms of sanction include covenants normally stipulated for such facilities.

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

Not Applicable

ANY OTHER INFORMATION

Nil

RATING HISTORY FOR LAST THREE YEARS (including withdrawal and suspended)

Facilities	Current Rating (2025)			2024		2023		2022
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	54.12	BWR BB-/Stable (Assignment)	NA	NA	NA	NA	NA	NA
Grand Total		54.12	(Rupees Fifty Four Crores and Twelve lakhs Only)

Hyperlink/Reference to applicable Criteria

Analytical Contacts
Krishnappa Murugesh Ratings Analyst krishnappa.m@brickworkratings.com	Sabitha M Nayak Associate Director-Ratings sabitha.nayak@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com	Customer Support \| CustSupport@brickwrokratings.com

H.R. Overseas

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.)	Complexity of the Instrument
1	ICICI Bank	Working Capital Demand Loan - Sanctioned	20.00	_	20.00	Simple##
2	State Bank Of India (SBI)	Term Loan - Sanctioned	4.12	_	4.12	Simple##
3	State Bank Of India (SBI)	Cash Credit - Sanctioned	15.00	_	15.00	Simple##
4	State Bank Of India (SBI)	Warehouse Receipts (WHR) - Sanctioned	15.00	_	15.00	Simple##
Total			54.12	0.00	54.12
TOTAL (Rupees Fifty Four Crores and Twelve 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.

ANNEXURE-II

INSTRUMENT DETAILS

Instrument	Issue Date	Amount (Rs.Crs)	Coupon Rate (%)	Maturity Date	ISIN Particulars	Complexity of the Instrument
Nil	Nil	Nil	Nil	Nil	Nil	Nil

ANNEXURE-III

List of entities consolidated

Name of Entity	% Ownership	Extent of consolidation	Rationale for consolidation
Nil	Nil	Nil	Nil

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