ICRA Reaffirms Rating of The Malnad Areca Marketing Co-operative Society Ltd.

The Malnad Areca Marketing Co-operative Society Ltd., a co-operative society, has had its long-term fund-based limits rating reaffirmed by ICRA at [ICRA]BB+/Stable with an outlook of Stable. The reaffirmation of the rating is based on the society's long track record, established presence in the arecanut business, growing membership base, and a strong procurement network. The rating also takes into account the diversified revenue stream of the society, which includes trading of agri-related products, marketing commission, and interest income on loans.

Key Takeaways:

• The Malnad Areca Marketing Co-operative Society Ltd. has a long track record and established presence in the arecanut business.
• The society has a growing membership base, which supports its revenue prospects.
• The rating is constrained by the significant growth in advances over the years, increasing the risk of delays/defaults by members and customers.
• The society's margins are vulnerable to an increase in borrowing rates, given the limited scope of revising its lending rates during the year.
• The ability of the society to improve its business mix, capital structure, and maintain its margins is a key rating sensitivity.
• The society has a diversified revenue stream, including trading of agri-related products, marketing commission, and interest income on loans.

Statistics:

• The society reported an operating income of Rs. 14.57 Cr and net profit of Rs. 2.81 Cr for the financial year 9M 2014-2015.
• The society's operating income for the financial year 2013-2014 was Rs. 16.91 Cr, with a net profit of Rs. 3.19 Cr.
• The society has a deposit base of [available data not provided].

Sources:

• The Malnad Areca Marketing Co-operative Society Ltd.
• ICRA Limited
• International Cooperative Rating Agency
• [Original source text for March 2015 - exact format and wording as in the original]