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CRISIL has assigned its bank loan ratings of ‘BBB-/Stable/P3’ to the various bank facilities of Amrit Banaspati Company Ltd (ABCL; formerly Amrit Enterprises Ltd). The ratings reflect ABCL’s established presence in the refined edible oil and vanaspati market in North India, and its average operating efficiencies, supported by efficient working capital management. These rating strengths are partially offset by the company’s weak financial risk profile and low operating margins, high competition, and the highly regulated nature of the industry in which it operates.
Outlook: Stable
CRISIL believes that ABCL will be able to maintain its current strong market position over the medium term. However, the company’s financial risk profile will continue to be constrained by high gearing due to incremental working capital requirements. The outlook may be revised to ‘Positive’ in case of a significant improvement in ABCL’s capital structure and profitability. Conversely, it may be revised to ‘Negative’ in case of further deterioration in the company’s capital structure.
About the Company
ABCL manufactures and markets vanaspati, refined oils, and mustard oil under brand names Gagan, Amrit, and Ginni, respectively. The company was originally incorporated in 1985 as Amrit Enterprises Ltd, which set up its edible oil manufacturing plant at Abohar in Punjab in 1995.
Amrit Corp.Ltd a group company had four separate business segments including the edible oil business at Rajpura (Punjab). During 2006-07, under the scheme of arrangement under Section 391-394 of the Companies Act, 1956, the different businesses were demerged into separate legal entities and, as an integral part of the scheme, the edible oil business, which had its manufacturing location at Rajpura since 1969, was merged with ABCL. ABCL now has a combined manufacturing capacity of around 400 tonnes per day for vanaspati and refined oils.
ABCL has a leadership position in these commodities in Haryana, Punjab, Himachal Pradesh and Jammu & Kashmir and has a presence in around 14 states. Its group companies are into real estate development, dairy business, and manufacture and sale of writing and printing paper. ABCL posted a profit after tax (PAT) of Rs.13.9 million on net sales of Rs.7.59 billion in 2007-08, as against a PAT of Rs.25.3 million on net sales of Rs.6.3 billion in the previous year.
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Media Contact
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Analytical Contacts
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CRISIL Rating Desk
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Ramya Krishnan Anil
Head, Market Development & Communications
CRISIL
Tel: +91-22-6758-8051
Mobile: +91 98203 42671
Facsimile: +91-22-6758-8088
Email: RamyaKA@crisil.com
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Gurpreet S Chhatwal
Head, Corporate and Government Ratings - CRISIL Ratings
Tel: +91-11-4250 5100
Email: gchhatwal@crisil.com
Manish Kumar Gupta
Senior Manager, Corporate and Government Ratings - CRISIL Ratings
Tel: +91-11-4250 5100
Email: mkgupta@crisil.com
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Email: CRISILratingdesk@crisil.com
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