The company was initially engaged in trading of spices and grains and later since 2000 the company has been engaged in rice milling, thus having a long track record of operations of over two decades in rice milling industry. The company is promoted by Mr. Ashok Kumar and his four brothers Mr. Vijay Kumar Kapoor, Mr. Pradeep Kumar Kapoor, Mr. Rakesh Kumar Kapoor and Mr. Gulshan Kapoor look after the day-to-day operations of the company. The promoter have an experience of almost two decades in the rice milling industry. Acuité believes the company will benefit from its experienced management and its presence for over two decades in the aforesaid industry.

Improved operating revenue:
The company registered revenue of Rs.393.36 Cr. in FY2024, posting ~22 percent growth against the previous year’s revenue of Rs.323.23 Cr. The growth in revenue is primarily driven by the higher price realisations amid some decline in volumes during the year. However, the operating profit margins remained stable at 3.19 percent in FY2024 compared to 3.26 percent in FY2023. due to higher raw material costs. PAT margin also remained stable at 0.90 percent in FY2024 compared to 0.96 percent in FY2023.Additionally, the company registered revenue of Rs.395 Cr. in 11MFY2025 Acuite expects further augmentation in BNFL’s revenue in the near-medium term on account of strong global demand for the rice and increasing exports.

Moderate financial risk profile:
BNFL’s financial risk profile is moderate, marked by moderate net worth, moderate gearing and above average debt protection metrics. The company’s net worth stood at Rs.64.30 Cr. as on March 31, 2024 against Rs.60.77 Cr. as on March 31, 2023. The improvement in net worth is due to accretion of profits to reserves during the period. The gearing and total outside liabilities to tangible net worth (TOL/TNW) levels stood at 1.25 times and 1.98 times as of March 31, 2024 respectively compared to 1.30 times and 1.86 times as on March 31, 2023 respectively. The debt protection metrics stood above average with DSCR and ICR of 1.32 times and 2.15 times respectively as on March 31, 2024. Debt to EBITDA also improved to 5.73 times as on March 31, 2024 from 6.58 times as on March 31, 2023. Acuite believes that the financial risk profile of the company will improve over the medium term backed by steady accruals and absence of major debt-funded capex.

Moderately intensive nature of working capital operations
BNFL’s working capital operations are moderately intensive, as reflected by the gross current assets (GCA) days, which, although improved, remained high at 157 days in FY2024, compared to 175 days in FY2023. The extended GCA days are attributed to high inventory levels necessitated by the seasonal nature of the business. Paddy, being a kharif crop, is harvested in November and December in North India, with raw materials arriving in the market post-December. To mitigate price volatility, the company strategically manages its inventory by placing corresponding orders with suppliers. Typically, inventory levels are elevated during October to March, and is backed by corresponding orders to be dispatched as per the customer cycle, while inventory levels decline from April to October as dispatches occur during this period. This resulted in high inventory days of 71 and debtor days of 75 in FY2024.
Acuité expects BNFL’s working capital operations to remain moderately intensive in the medium term, given the inherent nature of its business.

Commodity price fluctuation risk along with competitive and fragmented nature of rice milling business
Paddy, the main raw material required for rice is a seasonal crop and production of the same is highly dependent upon monsoon season. Environmental factors, sound fertility of soil and seasonal monsoon control the output of the paddy cultivation affecting the demand supply dynamics of basmati rice year-on-year resulting in price flux. Furthermore, paddy price is largely dependent on several external factors like domestic demand outlook, international trade regulations and domestic productions. This exposes the company to the risk related with fluctuation in raw material price. Further, the rice milling is a highly competitive industry due to low entry barriers, which results in intense competition from both the organized as well as unorganized players in the industry.