Press Release January 16, 2025 RADHA WINES Rating Reaffirmed

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
Bank Loan Ratings	130.75	ACUITE BBB | Stable | Reaffirmed	-
Total Outstanding	130.75	-	-
Total Withdrawn	0.00	-	-

Rating Rationale

Acuité has reaffirmed its long-term rating of ‘ACUITE BBB’ (read as ACUITE triple B) on the Rs.130.75 Cr. bank facilities of Radha Wines (RW). The outlook is ‘Stable’. Rationale for rating reaffirmation The rating reaffirmation takes into consideration an improvement in the operating performance of RW. The rating also draws comfort from experienced management and established operational track record of the firm. However, the rating is constrained on account of moderate financial risk profile, working capital intensive operations, risk of capital withdrawal inherent in the partnership firm and high regulatory risk in the industry.

About the Company

Mumbai-based, RW was established as a proprietorship firm in 1992, subsequently, the firm  was converted to partnership firm in 2012 with Mr. Vinod Kishnani and Mrs. Pooja V. Kishanani as partners. The firm is into trading  of Indian Made Foreign Liquor (IMFL). The firm is a sole distributor in the region of Palghar, Thane & Raigad for reputed IMFL players such as United Breweries Limited, Bacardi Martini and Radico Khaitan, among others.

Unsupported Rating

­Not Applicable

Analytical Approach

­Acuité has taken a standalone view of the business and financial risk profile of RW to arrive at the rating.

Key Rating Drivers

Strengths

Established track record of operations and experienced management RW is operating since 1992 and the partners of the firm  Mr. Vinod Kishnani and Mrs. Pooja V. Kishnani, possess an experience of over three decades in the alcoholic beverage industry. The long track record of operations and the experienced management has helped RW build healthy relationship with its customers and suppliers. Acuité believes that the firm will continue to benefit from the partners' established presence in improving its business risk profile over the medium term. Improvement in the operating performance The revenue of the firm improved and stood at Rs. 716.90 crore in FY24 compared to revenue of Rs.685.45 crore in FY23. Further the revenue booked till December 2024 stood at ~Rs. 610.00 Cr. The growth in operating income is driven by the addition of new products to the existing product profile of the firm. The operating profit margin of the firm stood at 4.52 percent in FY24 compared against 3.59 percent in FY23. The PAT margin of the firm stood at 2.94 percent in FY24 compared to 2.25 percent in FY23. The improvement in operating profitability is supported by increased contributions from sale of premium alcohol.   Acuité believes that the operating performance of the firm will continue to improve in medium term on account of continued demand and increase in the product profile.

Weaknesses

Moderate financial risk profile Radha Wines (RW) has a moderate financial risk profile marked by tangible net worth of Rs.55.80 Cr. as on 31 March 2024 as against Rs. 40.18 Cr. as on 31 March 2023. The net worth includes subordinated quasi equity of Rs.3.30 Cr. The improvement in net worth is attributed to retention of profits to some extent. The gearing level of the firm stood high at 2.41 times as on 31 March 2024 as against 3.00 times as on 31 March 2023. The coverage ratios of the firm stood moderate with an Interest Coverage Ratio (ICR) of 2.80 times for FY24 against 2.72 times for FY23.  The total outside liabilities to tangible net worth (TOL/TNW) of the firm stood at 2.92 times for FY24 as against 3.43 times for FY23.  Acuité believes that the financial risk profile of the firm is likely to remain moderate in medium term backed by moderate net worth base and high gearing. Inherent Risk of Capital Withdrawal in a Partnership Firm Being a partnership firm, RW is susceptible to the risk of capital withdrawal which was evident by withdrawal of the capital to the extent of Rs. 5.48 Cr. and Rs. 14.02 Cr. during FY24 and FY23 respectively. The firm has submitted undertaking that the minimum capital of Rs. 52.50 Cr. will be maintained  in the business over the medium term. Acuite believes, any substantial withdrawal of capital by the partners is likely to have an adverse impact on the financial risk profile of the firm and thus would remain a key rating monitorable. Working capital intensive operations The firm’s operations are working capital intensive as evident from Gross Current Asset (GCA) of 105 days as on March 31, 2024, as against 92 days as on March 31, 2023. The inventory levels have improved and stood at 34 days for FY24 compared against 31 days for FY23. Average inventory holding period of the firm is around 30-40 days. The debtor days stood at 50 days for FY24 against 52 days for FY23. The creditor days of the firm stood at 15 days for FY24 as against 9 days for FY23. The average utilization of the bank limits of the firm remains high at ~98 percent in last six months ended Dec’24. Highly regulated business Indian Alcoholic beverage industry is heavily regulated by the government, with regulations ranging from licensing, production, distribution, inter-state exports, raw material availability and advertisements. There have been continuous regulatory changes in terms of state government's policies towards liquor consumption. Any government regulation can have significant impact on their operating income and profitability.

Rating Sensitivities

Consistent growth in revenues with sustainability of the profitability margins. Any deterioration of its financial risk profile leading to deterioration in debt protection metrics. Any elongation of the working capital cycle leading to adverse liquidity position .

Liquidity Position

Adequate

The firm has an adequate liquidity position marked by adequate net cash accruals against its maturing debt obligations. The company generated cash accruals of Rs. 21.33 Cr. in FY24 as against maturing debt obligations of Rs. 3.38 Cr. over the same period.  The cash accruals of the firm are estimated to remain in the range of Rs.25-30 Cr. during 2025-26 period while its maturing debt obligations is estimated to be in the range of Rs. 5.60 – 6.00 Cr. during the same period. The firm maintains cash and bank balances of Rs. 2.51 Cr. as on March 31, 2024. The current ratio stood at 1.33 times as on March 31, 2024.

Outlook: Stable

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Other Factors affecting Rating

­None

Key Financials

Particulars	Unit	FY 24 (Actual)	FY 23 (Actual)
Operating Income	Rs. Cr.	716.90	685.45
PAT	Rs. Cr.	21.10	15.44
PAT Margin	(%)	2.94	2.25
Total Debt/Tangible Net Worth	Times	2.41	3.00
PBDIT/Interest	Times	2.80	2.72

Status of non-cooperation with previous CRA (if applicable)

­Not Applicable

Any other information

­None

Applicable Criteria

• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm • Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm • Trading Entities: https://www.acuite.in/view-rating-criteria-61.htm

Note on complexity levels of the rated instrument

­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.

Rating History

Date Name of Instruments/Facilities Term Amount (Rs. Cr) Rating/Outlook 19 Oct 2023 Cash Credit Long Term 90.00 ACUITE BBB | Stable (Reaffirmed) Cash Credit Long Term 25.00 ACUITE BBB | Stable (Assigned) Term Loan Long Term 15.75 ACUITE BBB | Stable (Assigned) 04 Jan 2023 Cash Credit Long Term 90.00 ACUITE BBB | Stable (Reaffirmed)

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Annexure - Details of instruments rated

Lender’s Name ISIN Facilities Date Of Issuance Coupon Rate Maturity Date Quantum (Rs. Cr.) Complexity Level Rating Punjab National Bank Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 115.00 Simple ACUITE BBB | Stable | Reaffirmed Not Applicable Not avl. / Not appl. Proposed Long Term Bank Facility Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 6.64 Simple ACUITE BBB | Stable | Reaffirmed Punjab National Bank Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 15 Nov 2026 9.11 Simple ACUITE BBB | Stable | Reaffirmed

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Contacts

Mohit Jain Senior Vice President - Rating Operations Anuja Bele Associate Analyst - Rating Operations	Contact details exclusively for investors and lenders Mob: +91 8591310146 Email ID: analyticalsupport@acuite.in

About Acuité Ratings & Research

Acuité is a full-service Credit Rating Agency registered with the Securities & Exchange Board of India (SEBI). The company received RBI Accreditation as an External Credit Assessment Institution (ECAI) for Bank Loan Ratings under BASEL-II norms in the year 2012. Acuité has assigned ratings to various securities, debt instruments and bank facilities of entities spread across the country and across a wide cross section of industries. It has its Registered and Head Office in Kanjurmarg, Mumbai. Disclaimer: An Acuité rating does not constitute an audit of the rated entity and should not be treated as a recommendation or opinion that is intended to substitute for a financial adviser's or investor's independent assessment of whether to buy, sell or hold any security. Ratings assigned by Acuité are based on the data and information provided by the issuer and obtained from other reliable sources. Although reasonable care has been taken to ensure that the data and information is true, Acuité, in particular, makes no representation or warranty, expressed or implied with respect to the adequacy, accuracy or completeness of the information relied upon. Acuité is not responsible for any errors or omissions and especially states that it has no financial liability whatsoever for any direct, indirect or consequential loss of any kind, arising from the use of its ratings. Ratings assigned by Acuité are subject to a process of surveillance which may lead to a revision in ratings as and when the circumstances so warrant. Please visit our website (www.acuite.in) for the latest information on any instrument rated by Acuité. Please visit https://www.acuite.in/faqs.htm to refer FAQs on Credit Rating. Note: None of the Directors on the Board of Acuité Ratings & Research Limited are members of any rating committee and therefore do not participate in discussions regarding the rating of any entity.