ICRA Reaffirms Long-Term Rating of Kamala Ginning & Oil Industries Private Limited

Strategic Insights -

ICRA Limited has reaffirmed the long-term rating of Kamala Ginning & Oil Industries Private Limited (KGOIPL) at [ICRA]B, following a review of the company's financial risk profile. The rating reflects the company's weak financial position, characterized by low profitability and high gearing. Despite these challenges, the rating agency has favorably considered the promoters' experience and the company's proximity to cotton-growing areas in Andhra Pradesh.

Key Takeaways:

  • ICRA has reaffirmed the long-term rating of KGOIPL at [ICRA]B, following a review of the company's financial risk profile.
  • The rating reflects the company's weak financial position, characterized by low profitability (OPM of 2.70%) and high gearing (5.17 times as on March 31, 2012).
  • The company's operating income declined by 33% in FY12 to Rs. 90.29 crore from Rs. 134.85 crore in FY11, due to the decision to withhold inventory during FY12 due to weak market conditions.
  • The rating agency has favorably considered the promoters' experience, with more than three decades of experience in ginning & lint trading, and the company's proximity to cotton-growing areas in Adilabad district of AP.
  • The company has an established track record of operations since 1983, initially as a partnership firm and later as a private limited company since April 2012.
  • The company's manufacturing facility includes 60 gins, 12 expellers, and 1 press.

Statistics:

  • Long-term rating: [ICRA]B
  • Operating Profit Margin (OPM): 2.70%
  • Gearing: 5.17 times (as on March 31, 2012)
  • Operating Income (FY11): Rs. 134.85 crore
  • Operating Income (FY12): Rs. 90.29 crore
  • Decline in operating income: 33% (FY12 to FY11)

Sources:

  • ICRA Limited: Kamala Ginning & Oil Industries Private Limited Instrument Amount Rating Action In Rs. crore Long term fund based limits (January 2012)
  • ICRA Limited: Company Profile: Kamala Ginning & Oil Industries Private Limited (April 2012)
  • ICRA Limited: General Disclaimer and Terms of Use (Copyright 2012, ICRA Limited)
  • ICRA Limited: Rating Agency Website (http://www.icra.in)