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ICRA Reaffirms Long-Term Rating for Nav Bharat Rice & General Mills

Strategic Insights

— 1 min read

ICRA, a renowned credit rating agency, has reaffirmed its long-term rating of [ICRA]B for Nav Bharat Rice & General Mills (NBRGM), a rice milling and trading company. The rating takes into account the firm's elevated gearing due to large working capital requirements, which have been primarily funded by working capital borrowings. The low value-added nature of operations and intense competition in the rice milling industry have led to low profitability margins, resulting in weak coverage indicators. However, the ratings favorably consider the extensive experience of the promoters, their strong relationships with customers and suppliers, and the mill's proximity to major rice-growing areas.

Key Takeaways:

  • The ICRA reaffirms the long-term rating of [ICRA]B for NBRGM due to elevated gearing and low profitability margins.
  • The firm's low value-added nature of operations and intense competition in the rice milling industry have resulted in weak coverage indicators.
  • Despite these challenges, the ratings favorably consider the promoters' extensive experience and strong relationships with customers and suppliers.
  • NBRGM has a plant at Cheeka (Haryana) with a milling capacity of 4 tonnes per hour.
  • The company has reported a net profit of Rs. 0.01 crore on an operating income of Rs. 17.86 crore in FY 2013-14.
  • ICRA rates the company as [ICRA]B, indicating a relatively higher risk of default.
  • The firm's ratings are subject to a process of surveillance, which may lead to revision in ratings.

Statistics:

  • ICRA rating: [ICRA]B
  • Long-term fund-based limits: Rs. 6.00 crore
  • Interest coverage ratio: 1.29 times (FY 2013-14)
  • Net profit: Rs. 0.01 crore (FY 2013-14)
  • Operating income: Rs. 17.86 crore (FY 2013-14)
  • Milling capacity: 4 tonnes per hour (Cheeka, Haryana)

Sources:

  • ICRA (India) Pvt. Ltd. (formerly Investment Information and Credit Rating Agency of India Ltd.) [ICRA] (2015, March). Rating Action: ICRA Reaffirms Long Term Rating of [ICRA]B for the facility of Nav Bharat Rice & General Mills.
  • ICRA (India) Pvt. Ltd. (formerly Investment Information and Credit Rating Agency of India Ltd.) Website: http://www.icra.in/

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