CRISIL has assigned its rating of ‘BB/Stable/P4’ to the various bank facilities of Ram Dev Rice Private Ltd (RDRPL). The rating reflects RDRPL’s weak financial risk profile because of highly working capital-intensive nature of rice industry, small scale of operations, and exposure to risks relating to raw material prices and changes in government policy. These rating weaknesses are, however, partly offset by the healthy growth prospects of the rice industry.

Outlook: Stable
CRISIL expects RDRPL’s financial risk profile to remain weak over the medium term on account of highly working capital intensive operations. The outlook may be revised to ‘Positive’ if RDRPL’s capital structure improves considerably from current levels. Conversely, the outlook may be revised to ‘Negative ‘if the capital structure deteriorates any further.

About RDRPL
Set up in 1999 by Mr. Naresh Singla and Mr. Suresh Singla, RDRPL is engaged in milling, processing and selling of basmati rice in India and abroad. Exports accounted around 60 per cent of the company’s revenues in 2007-08 (refers to financial year, April 1 to March 31). RDRPL is also engaged in trading activity: it procures unsorted rice from other small mills, and sorts it at its plant before exporting it. Its plant, at Daha, Karnal District, Haryana, has milling and sorting capacities of 12 tons per hour (tph) and 18 tph, respectively. To meet excess orders, the company also engages other plants in the region on job work basis. RDRPL proposes to commission one more plant with 6 tph each, of milling and sorting capacity. RDRPL reported a profit after tax (PAT) of Rs.22 million on net sales of Rs.829 million in 2007-08, as against a PAT of Rs.12 million on net sales of Rs.602 million for the previous year.