Rating Rationale

HRMM Agro Overseas Private Limited

18 April 2018

Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of ₹. 20.00 Crores of
HRMM Agro Overseas Private Limited.

Particulars

Amount (₹ Crs) Rating*

Facility Tenure Previous

Previous Present Present
(March, 2017)

BWR A4+ Reaffirmed at

Short (Pronounced BWR BWR A4+
Fund based 20.00 20.00
Term A Four Plus) (Pronounced BWR A
Four Plus)

Total 20.00 20.00 INR Twenty Crores Only

*Please refer to BWR website ​www.brickworkratings.com/​ for definition of the ratings
Complete details of Bank facilities is provided in Annexure-I
Note:​ Short-term ratings of BWR A4+ has been mapped to long term ratings of BWR BB+ (Outlook: Stable).

Ratings: Reaffirmed

Rationale/Description of Key Rating Drivers/Rating sensitivities:

BWR has essentially relied upon the audited financial results up to FY17, provisional financials
of 9MFY18, projected financials of ​HRMM Agro Overseas Pvt Ltd up to FY19, publicly
available information and information/ clarifications provided by the company’s management.

The rating draws strength from the established track record of the Company, experienced
management, substantial growth in revenues, adequate interest servicing capability and working
capital management. However, the rating is constrained by low profitability margins,
susceptibility to volatility in prices and quantity in supply of grains due to dependency on the
monsoon, regulatory risk pertaining to export of agricultural products and fragmented nature of
industry.

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Description of Key Rating Drivers

Credit Strengths:
● Experienced and qualified promoters:
Mr.Amit Budhraja and Ms.Alka Budhraja are the promoter of the company. Budhraja
family is in the business of Rice milling since, 1951.
● Improved scale of operations:
Net revenues of the company have improved by 27.65% from Rs. 473.55 in FY16 to Rs.
604.48 Crs in FY17. However, in last five financial years, net revenues of the company
have grown from Rs.123.38 Crs in FY13 to Rs.604.48 Crs in FY17.
● Above average financial risk profile:
Gearing of the company is low at 0.24 times in FY17 due to low debt level as on 31st
March, 2017 which provides an additional financial flexibility. Interest coverage ratio of
the company is high at 8.90 times in FY17. The company has a short cash conversion
cycle of 12 days in FY17 which reflects efficient working capital management and
reduces the dependence upon the external working capital requirements.

Credit Risks:
● Thin profit margins:
The company has thin profitability margins due low value addition to its products.
However, profitability margins of the company are flat from past three financial years.
● Highly competitive nature of Industry:
The company is operating in a highly fragmented industry categorized by competition
from organized and unorganized firms/Companies.
● Highly regulated Industry:
Rice milling and trading is a highly regulated sector , and any restrictions on
procurement, movement, export changes in levy guidelines will impact performance of
the firm.

Analytical Approach
For arriving at its ratings, BWR has applied its rating methodology as detailed in the Rating Criteria
detailed below (hyperlinks provided at the end of this rationale).

Rating Outlook: Stable

BWR believes the ​HRMM Agro Overseas Pvt. Ltd. ​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 revenues and profit show sustained

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 improvement. The rating outlook may be revised to 'Negative' if the revenues go down and profit margins
show lower than expected figures.

About the Company

HRMM Agro Overseas Pvt Ltd (HRMM) was incorporated on 8th September, 2010. Company's
registered office is in Saharanpur, Uttar Pradesh. HRMM is involved in export of Rice, Sugar,
wheat, Wheat Flour etc. to Middle East, African and European Countries. The Company is
promoted by Mr. Amit Budhraja and his wife Ms. Alka Budhraja. The facilities are located in
Mithirohar, Gujrat and have an installed capacity of 45 tonnes per hour. The Company is a
government. recognized export house and the revenues are completely from exports.HRMM has
been accorded three Star export house status by the Ministry of Commerce & Trade.

Company Financial Performance

Net revenue of the company has improved from Rs. 473.55 in FY16 to Rs. 604.48 Crs in FY17.
As on 9MFY18, net revenue of the company stood at `Rs. 545.77 Crs.

Rating History for the last three years

Instrument
S.No Current Rating (2018)
/Facility Rating History

Type
Amount
(Long Term/ Rating March, 2017 2016 Dec, 2015
(₹ Crs)
Short Term)

Reaffirmed at BWR A4+

BWR A4+
BWR A4+ (Pronounced Not
1. Fund Based Short Term 20.00 (Pronounced BWR A
(Pronounced BWR BWR A Four Rated
Four Plus)
A Four Plus) Plus)

Not Rating of BWR BB-

2. Fund Based Long Term - - -
Rated has been withdrawn

Total 20.00 INR Twenty Crores Only

Status of non-cooperation with previous CRA (if applicable)- None

Any other information: None

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 Key Financial Indicators

Key Parameters Units 2016 2017

Result Type Audited Audited
Operating Revenue Crores 478.45 611.33
EBITDA Crores 2.69 3.80
PAT Crores 1.47 1.95
Tangible Net worth Crores 8.88 10.82
Total Debt/Tangible Net worth Times 0.01 0.24
Current Ratio Times 1.42 1.24

Hyperlink/Reference to applicable Criteria

● General Criteria

● Approach to Financial Ratios

● Trading Entities

● Short Term Debt

Analytical Contacts Media

Vipula Sharma media@brickworkratings.com

DGM-Ratings
Relationship Contact
analyst@brickworkratings.com bd@brickworkratings.com

Phone: 1-860-425-2742

Annexure –I
Rated bank facilities details

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 Name of the Amount (Rs. Crs)
Name of the Bank Type of facility
facility Previous Present
EPC
5.00 5.00
(Fund Based)
State Bank of India Short Term
PCFC
15.00 15.00
(Fund Based)
Short Term Total 20.00 20.00
Total (Short Term & Long Term) 20.00 20.00
Note: Post shipment Credit of Rs. 5.00 Crs in the sublimit under overall fund based working capital facilities.

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The Rating Rationale is sent to you for the sole purpose of dissemination through your print, digital or electronic media. While it
may be used by you acknowledging credit to BWR, please do not change the wordings in the rationale to avoid conveying a
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rationales for consideration or otherwise through any print or electronic or digital media.

Note on complexity levels of the rated instrument:

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​.

About Brickwork Ratings

Brickwork Ratings (BWR), a SEBI registered Credit Rating Agency, has also been accredited by RBI and empaneled by
NSIC, offers Bank Loan, NCD, Commercial Paper, MSME ratings and grading services. NABARD has empaneled
Brickwork for MFI and NGO grading. BWR is accredited by IREDA & the Ministry of New and Renewable Energy
(MNRE), Government of India. Brickwork Ratings has Canara Bank, a Nationalized Bank, as its promoter and strategic
partner.

BWR has its corporate office in Bengaluru and a country-wide presence with its offices in Ahmedabad, Chandigarh,
Chennai, Guwahati, Hyderabad, Kolkata, Mumbai and New Delhi along with representatives in 150+ locations. BWR has
rated debt instruments/bonds/bank loans, securitized paper of over ₹ 10,00,000 Cr. In addition, BWR has rated over 6300
MSMEs. Also, Fixed Deposits and Commercial Papers etc. worth over ₹24,440 Cr have been rated.
DISCLAIMER

Brickwork Ratings (BWR) has assigned the rating based on the information obtained from the issuer and other reliable sources,
which are deemed to be accurate. BWR has taken considerable steps to avoid any data distortion; however, it does not examine
the precision or completeness of the information obtained. And hence, the information in this report is presented “as is” without
any express or implied warranty of any kind. BWR does not make any representation in respect to the truth or accuracy of any
such information. The rating assigned by BWR should be treated as an opinion rather than a recommendation to buy, sell or
hold the rated instrument and BWR shall not be liable for any losses incurred by users from any use of this report or its contents.
BWR has the right to change, suspend or withdraw the ratings at any time for any reasons.

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