| M lakhamsi industries limited | ||||||
| Ratings Reaffirmed | ||||||
| Rating Action | ||||||
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| Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||||
| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has reaffirmed its 'CRISIL BB-/Stable/CRISIL A4+' ratings on the bank facilities of M Lakhamsi Industries limited (MLIL; erstwhile M.Lakhamsi and Co.).
The rating continues to reflect the extensive experience of the Promoters in the agricultural (agro) commodities trading and moderate financial risk profile of MLIL These strengths are partially offset by susceptibility of operating performance to volatile agro commodity prices and changes in regulation, and large working capital requirement. |
Analytical Approach Unsecured loan of Rs 5.6 crore as on March 31, 2022, extended by the promoters, has been treated as debt. |
Key Rating Drivers & Detailed Description Strengths: Extensive experience of promoters: Company's business risk profile will continue to benefit over the medium term from the extensive experience of its promoters, who have been engaged in the in domestic and international agro commodity markets as a trader for more than 4 decades. Over the years, the company has established strong relationship with its customers and suppliers.
Moderate financial risk profile: Financial risk profile is expected to remain supported by the absence of any large, debt-funded capital expenditure (capex) and no further large capital withdrawal by the promoters. Despite estimated modest networth of Rs 6.35 crore as on March 31, 2022, total outside liabilities to tangible networth ratio is estimated to be comfortable at 2.59 times. Furthermore, Debt protection metrics is estimated with interest coverage ratio of 1.72 times in fiscal 2022.
Weakness: Susceptibility of operating performance to changes in regulation and volatile agro commodity prices: As an agro commodities trader, MLIL is exposed to risks relating to volatility in commodity prices. Moreover, the domestic agro commodity industry is highly regulated in terms of minimum selling price, export/import policies and other relevant policies, all of which will continue to affect operating performance of the Company.
Working capital intensive nature of operations: Operations are expected to remain working capital intensive as reflected in estimated Gross Current Assets (GCA) of around 112 days as on March 31, 2022 primarily on account of estimated inventory and debtors of 72 days and 16 days respectively. |
Liquidity: Stretched Bank limit utilisation is at around 93 percent for period ended March 2022. Cash accruals are expected to be over Rs1.5 crore which are sufficient against term debt obligation of Rs 0.3-0.5 crore over the medium term. In addition, it will act as cushion to the liquidity of the company. |
Outlook: Stable CRISIL Ratings believes that MLIL will continue to benefit from the extensive experience of the promoters. |
Rating Sensitivity Factors Upward Factors
Downward Factors
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About the Company Incorporated in 1985, MLIL is a public limited company engaged in trading of agro commodities such as peanuts, sesame seeds, spices, and vegetable oils, both edible and non-edible while other products include chickpeas, raisins, wheat flour, oil cakes, maize, coarse grains and cereals. Mr Sanjiv Sawla currently manages the business. |
Key Financial Indicators
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Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
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| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | |||
| Facility | Amount (Rs.Crore) | Name of Lender | Rating |
| Foreign Documentary Bills Purchase | 2.5 | Union Bank of India | CRISIL A4+ |
| Inland/Import Letter of Credit | 1 | Union Bank of India | CRISIL A4+ |
| Letter Of Guarantee | 1 | Union Bank of India | CRISIL A4+ |
| Packing Credit | 6 | Union Bank of India | CRISIL BB-/Stable |
| Term Loan | 1 | Union Bank of India | CRISIL BB-/Stable |
This Annexure has been updated on 12-May-2023 in line with the lender-wise facility details as on 05-May-2023 received from the rated entity.
Criteria Details
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