Rating Rationale

December 08, 2014

Mumbai

Parag Milk Foods Private Limited

Rating Suspended

Total Bank Loan Facilities Rated	Rs.3700 Million
Long Term Rating	Suspended

(Refer to Annexure 1 for Facility-wise details)

CRISIL has suspended its ratings on the bank facilities of Parag Milk Foods Pvt Ltd (Parag Milk; part of the Parag Milk group). The suspension of ratings is on account of non-cooperation by Parag Milk with CRISIL's efforts to undertake a review of the ratings outstanding. Despite repeated requests by CRISIL, Parag Milk is yet to provide adequate information to enable CRISIL to assess Parag Milk's ability to service its debt. The suspension reflects CRISIL's inability to maintain a valid rating in the absence of adequate information. CRISIL considers information availability risk as a key credit factor in its rating process and non-sharing of information as a first signal of possible credit distress, as outlined in its criteria 'Information Availability Risk in Credit Ratings'

About the Group

For arriving at its rating, CRISIL has combined the business and financial risk profiles of Parag Milk and its wholly owned subsidiary, Bhagyalaxmi Dairy Farms Pvt Ltd (Bhagyalaxmi), together referred to as the Parag Milk group. This is because the two companies are in the same line of business and have strong business linkages.

Parag Milk was incorporated in 1992 as Parag Milk & Milk Products Pvt Ltd, promoted by members of the Shah family, who have been in the dairy business for more than 15 years. The name of the company was changed to the present on in 2008. Parag Milk, based in Manchar (Pune, Maharashtra), has milk processing capacity of around 12 million litres per day. The company's plant utilises cow milk to produce various value-added products such as processed cheese, skimmed milk powder, ghee, and butter. It has received Rs.550 million from the Motilal Oswal group and Rs.750 million from IDFC PE against zero per cent compulsorily convertible debentures with a put option.

Annexure 1 - Details of various bank facilities

Current facilities			Previous facilities
Facility	Amount (Rs.Million)	Rating	Facility	Amount (Rs.Million)	Rating
Cash Credit *	2000	Suspended	Cash Credit *	2000	CRISIL BB+/Positive
Foreign Currency Term Loan	179	Suspended	Foreign Currency Term Loan	179	CRISIL BB+/Positive
Proposed Long Term Bank Loan Facility	870.5	Suspended	Proposed Long Term Bank Loan Facility	870.5	CRISIL BB+/Positive
Term Loan	650.5	Suspended	Term Loan	650.5	CRISIL BB+/Positive
Total	3700	--	Total	3700	--

* interchangeable with packing credit

Media Contacts	Analytical Contacts	Customer Service Helpdesk
Tanuja Abhinandan Communications and Brand Management CRISIL Limited Phone: +91 22 3342 1818 Email:tanuja.abhinandan@crisil.com Jyoti Parmar Communications and Brand Management CRISIL Limited Phone: +91 22 3342 1835 E-mail: jyoti.parmar@crisil.com	Arvind Rao Director - CRISIL Ratings Phone:+91 22 4097 8278 Email: arvind.rao@crisil.com Aditya Munshi Associate Director - CRISIL Ratings Phone:+91 22 4097 8105 Email: aditya.munshi@crisil.com	Timings: 10.00 am TO 7.00 pm Toll free Number:1800 267 1301 Email: CRISILratingdesk@crisil.com

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Last updated: August, 2014

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December 08, 2014	http://www.crisil.com