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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 4.50 | ACUITE B | Stable | Assigned | - |
| Bank Loan Ratings | 15.00 | ACUITE B | Stable | Reaffirmed | - |
| Total Outstanding Quantum (Rs. Cr) | 19.50 | - | - |
| Total Withdrawn Quantum (Rs. Cr) | 0.00 | - | - |
| Rating Rationale |
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Acuité has reaffirmed its long-term rating of ‘ACUITE B’ (read as ACUITE B) on the Rs.15.00 crore bank facilities of NEELKANTH POULTRY FARMS PRIVATE LIMITED (ERSTWHILE NEELKANTH APPLIANCES PRIVATE LIMITED) (NPFPL). The outlook is ‘Stable’.
Further Acuite has assigned a long-term rating of ‘ACUITE B’ (read as ACUITE B) on the Rs. 4.50 crore bank facilities of NEELKANTH POULTRY FARMS PRIVATE LIMITED (ERSTWHILE NEELKANTH APPLIANCES PRIVATE LIMITED) . The outlook is ‘Stable'. Rationale for rating reaffirmation The rating reaffirmation consider the comforts drawn from experience of management. Acuite expects that the business profile and scale of operations is likely to improve over the medium term. However, the rating remains constrained on account of intensive working capital operations, below average financial risk profile, modest scale of operations and stretched liquidity position |
| About the Company |
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The company is a Delhi based company incorporated in 1997 and started its business into wholesale trading in RO purifiers in 2004. Due to internal reasons, the company shutdown that business in 2017. In 2018-19, the company entered into the business of layer poultry farming and is engaged into hatching and selling of eggs. The company started it's commercial operation from July-2020. The company is promoted by Mr. Manish Khandelwal.
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| Analytical Approach |
| Acuité has considered the standalone business and financial risk profile of NPFPL to arrive at the rating. |
Key Rating Drivers
| Strengths |
| Experienced management
The promoter of the company Mr. Manish Khandelwal have a past experience of 2 decades in various industry. The promoter have past experience in the business of layer poultry farming and wholesale trading of egg and a vast range of technical expertise. Acuite believes that experienced management would help the company to generate healthy growth in revenue in the near medium term
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| Weaknesses |
| Revenue and Profitability
The company has recorded an operating income of Rs. 14.93 crore in FY2022 in comparison to Rs. 4.73 crores in FY 21. The commercial operation of the company started from July 2020. The operating margin of the company stood at 16.80 percent in FY2022 in comparison to 21.98 percent in FY 21.The Company incurred a net loss in FY 21 as the business was in the nascent stage. Currently, the company has recorded a revenue of around Rs.8.27 crore till September 2022 and the company is expected to record a revenue of around Rs.~18 crore till FY2023. Financial risk profile The financial risk profile of the company stood weak marked by low tangible net worth of Rs.0.30 Cr. as on 31 March, 2022 as against Rs.0.00 crore as on 31 March, 2021. The Improvement in net worth is due to profits incurred during the year. The total debt of the company as on 31st March, 2022 stood at Rs.16.56 crore, which includes long term debt of Rs.12.51 crore, unsecured loan of Rs.2.24 crore and short term debt of Rs.1.81 crore Further, the interest coverage ratio stood at 2.07 times for FY2022 as against 0.92 times in FY2021. Debt Service coverage ratio stood moderate at 2.09 times for FY2022 as against 0.87 times in FY2021.Total outside liabilities to total net worth (TOL/TNW) stood at 58.89 times as on FY2022 vis-à-vis 6842 times as on FY2021. However, Debt-EBITA stood at 5.45 times as on 31st March 2022 as against 15.43 times as on 31st March 2021. Susceptibility of revenue and profitability to bird diseases Bird flu and other diseases are critical risks in the poultry business, which can affect the demand and supply of the products, which ultimately can cause a prolonged impact on prices and profitability. |
| Rating Sensitivities |
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Improvement in the scale of operations along with stable profitability margins.
Stretch in the working capital management leading to any negative impact on the liquidity profile. |
| Material covenants |
| None |
| Liquidity Position |
| Stretched |
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The company has stretched liquidity marked by net cash accruals against maturing debt obligation. The company has an average bank limit utilization of around at ~75 percent during the last 6 months period ended September 2022. The company has maintained unencumbered cash and bank balances of Rs.0.30 crore as on March 31, 2022. The current ratio of the company stood moderate at 1.06 times as on March 31, 2022. Further debtors of Rs 0.11 crores are doubtful in nature (aging more than 3 years, total debtors as on 30.09.2022- Rs 0.78 crores)
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| Outlook: Stable |
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Acuité believes that the company will maintain a ‘Stable’ outlook over the medium term owing to its experienced management. The outlook may be revised to 'Positive' if there is a substantial and sustained improvement in company’s operating income or profitability while maintaining its working capital cycle. Conversely, the outlook may be revised to 'Negative' in case of further deterioration in working capital or weakening of its capital structure and debt protection metrics.
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 22 (Actual) | FY 21 (Actual) |
| Operating Income | Rs. Cr. | 14.93 | 4.73 |
| PAT | Rs. Cr. | 0.30 | (1.09) |
| PAT Margin | (%) | 1.98 | (22.94) |
| Total Debt/Tangible Net Worth | Times | 55.58 | 6616.65 |
| PBDIT/Interest | Times | 2.07 | 0.92 |
| Status of non-cooperation with previous CRA (if applicable) |
| None |
| Any other information |
| None |
| Applicable Criteria |
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• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm • Entities In Manufacturing Sector:- https://www.acuite.in/view-rating-criteria-59.htm • Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm |
| Note on complexity levels of the rated instrument |
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In order to inform the investors about complexity of instruments, Acuité has categorized such instruments in three levels: Simple, Complex and Highly Complex. Acuite’ s categorisation of the instruments across the three categories is based on factors like variability of the returns to the investors, uncertainty in cash flow patterns, number of counterparties and general understanding of the instrument by the market. It has to be understood that complexity is different from credit risk and even an instrument categorized as 'Simple' can carry high levels of risk. For more details, please refer Rating Criteria “Complexity Level Of Financial Instruments” on www.acuite.in
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