Rating Rationale
July 03, 2023 | Mumbai
Prime Fresh Limited
'CRISIL BBB-/Stable' assigned to Bank Debt
 
Rating Action
Total Bank Loan Facilities RatedRs.10 Crore
Long Term RatingCRISIL BBB-/Stable (Assigned)
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 assigned ‘CRISIL BBB-/Stable’ rating to long term bank facilities of Prime Fresh Limited (PFL).

 

The rating reflects the extensive experience of the promoters in the fruit and vegetables (F&V) industry, healthy risk management practices with wide a customer and supplier base, and a moderate financial risk profile. These strengths are partially offset by a moderate, though improving, scale of operations, and susceptibility to climatic conditions and to the performance of the agricultural sector.

Key Rating Drivers & Detailed Description

Strengths:

  • Extensive industry experience of the promoters

The promoters have an experience of over two decades in the agricultural products procurement and distribution business. This has given them a keen understanding of the dynamics of the market, and enabled them to establish relationships with suppliers and customers.

 

  • Healthy risk management practices with a wide customer and supplier base

Customers are spread across country with more than 75 districts and over 15 states. This lowers the reliance on any particular customer for sales and reduces debtor risk. Further, products are sourced from more than 100,000 farmers registered with the company. Additionally, inventory risk is well managed as only F&V which meet quality norms are procured and inventory is only against orders in hand.

 

  • Moderate financial profile

The gearing was healthy at 0.15 time as on March 31, 2023. Debt protection metrics were comfortable, with interest coverage and net cash accrual to total debt ratios at 22.7 times and 1.15 time, respectively, in fiscal 2023.

 

Weaknesses:

  • Moderate, though improving, scale of operation

Despite a widespread presence across regions and a variety of products, revenue remained moderate at around Rs 95 crore in fiscal 2023. This results in less bargaining power with clients and lower competitiveness, and also restricts economies of scale and operating flexibility.

 

  • Susceptibility to climatic conditions and performance of the agricultural sector

The crop yield of agricultural commodities is dependent on adequate and timely monsoon. Thus, the company is exposed to the risk of limited availability of its key raw material during a weak monsoon. Also, production may be impacted by pests or crop infection, leading to higher unpredictability in production and pricing of agricultural commodities and derived products.

Liquidity: Adequate

Cash accrual is expected at Rs 5.5-7 crore per fiscal over the medium term against no term debt obligation currently. Average utilisation of bank lines remains 39% during the 12 months through April 2023.  The current ratio was healthy at 4.66 times as on March 31, 2023.

Outlook: Stable

CRISIL Ratings believes PFL will continue to benefit from its promoters' extensive experience and financial risk profile.

Rating Sensitivity factors

Upward factors

  • Considerable rise in revenue along with operating margin over 7%
  • Sustained financial risk profile

 

Downward factors

  • Sharp decline in operating margin or further weakening of capital structure
  • Stretch in working capital cycle with gross current assets (net of cash and bank balance/FDs) increasing to 200 days

About the Company

PFL, incorporated in 2007, is owned and managed by Mr Jinen Ghelani, Mrs Neha Ghelani, Mr Hardik Ghelani, and Mr Hiren Ghelani. The company, based in Ahmedabad, Gujarat, procures and distributes F&V and also provides 3PL solution services. The core competency lies in sourcing, handling, sorting, grading, warehousing, ripening, packing, branding, and delivery of F&V, and manpower management.

Key Financial Indicators

Particulars

Unit

2023

2022

Revenue

Rs crore

95.26

75.59

Profit after tax (PAT)

Rs crore

4.94

3.19

PAT margin

%

5.19

4.21

Adjusted debt/adjusted networth

Times

0.15

0.18

Interest coverage

Times

22.74

10.53

 

Any other information: Not applicable

Note on complexity levels of the rated instrument:
CRISIL Ratings` complexity levels are assigned to various types of financial instruments and are included (where applicable) in the 'Annexure - Details of Instrument' in this Rating Rationale.

CRISIL Ratings will disclose complexity level for all securities - including those that are yet to be placed - based on available information. The complexity level for instruments may be updated, where required, in the rating rationale published subsequent to the issuance of the instrument when details on such features are available.

For more details on the CRISIL Ratings` complexity levels please visit www.crisilratings.com. Users may also call the Customer Service Helpdesk with queries on specific instruments.

Annexure - Details of Instrument(s)

ISIN

Name of instrument

Date of allotment

Coupon
rate (%)

Maturity

date

Issue size
(Rs crore)

Complexity

level

Rating assigned

and outlook

NA

Cash Credit^

NA

NA

NA

4.48

NA

CRISIL BBB-/Stable

NA

Term Loan

NA

NA

Sep-24

0.35

NA

CRISIL BBB-/Stable

NA

Proposed Fund-Based Bank Limits

NA

NA

NA

5.17

NA

CRISIL BBB-/Stable

^Includes sublimit of EPC of Rs 1.5 crore

Annexure - Rating History for last 3 Years
  Current 2023 (History) 2022  2021  2020  Start of 2020
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Fund Based Facilities LT 10.0 CRISIL BBB-/Stable 31-03-23 Withdrawn (Issuer Not Cooperating)* 31-01-22 CRISIL B /Stable(Issuer Not Cooperating)*   -- 30-11-20 CRISIL BB+ /Stable(Issuer Not Cooperating)* CRISIL BB+/Stable
All amounts are in Rs.Cr.
* - Issuer did not cooperate; based on best-available information
Annexure - Details of Bank Lenders & Facilities
Facility Amount (Rs.Crore) Name of Lender Rating
Cash Credit^ 4.48 Axis Bank Limited CRISIL BBB-/Stable
Proposed Fund-Based Bank Limits 5.17 Not Applicable CRISIL BBB-/Stable
Term Loan 0.35 Axis Bank Limited CRISIL BBB-/Stable
^Includes sublimit of EPC of Rs 1.5 crore
Criteria Details
Links to related criteria
CRISILs Approach to Financial Ratios
Rating criteria for manufaturing and service sector companies
CRISILs Bank Loan Ratings - process, scale and default recognition

Media Relations
Analytical Contacts
Customer Service Helpdesk

Aveek Datta
Media Relations
CRISIL Limited
M: +91 99204 93912
B: +91 22 3342 3000
AVEEK.DATTA@crisil.com

Prakruti Jani
Media Relations
CRISIL Limited
M: +91 98678 68976
B: +91 22 3342 3000
PRAKRUTI.JANI@crisil.com

Rutuja Gaikwad 
Media Relations
CRISIL Limited
B: +91 22 3342 3000
Rutuja.Gaikwad@ext-crisil.com


Nitin Kansal
Director
CRISIL Ratings Limited
B:+91 124 672 2000
nitin.kansal@crisil.com


Nilesh Agarwal
Associate Director
CRISIL Ratings Limited
B:+91 124 672 2100
nilesh.agarwal1@crisil.com


Vicky Modi
Manager
CRISIL Ratings Limited
B:+91 124 672 2100
vicky.modi@crisil.com
Timings: 10.00 am to 7.00 pm
Toll free Number:1800 267 1301

For a copy of Rationales / Rating Reports:
CRISILratingdesk@crisil.com
 
For Analytical queries:
ratingsinvestordesk@crisil.com


 

Note for Media:
This rating rationale is transmitted to you for the sole purpose of dissemination through your newspaper/magazine/agency. The rating rationale may be used by you in full or in part without changing the meaning or context thereof but with due credit to CRISIL Ratings. However, CRISIL Ratings alone has the sole right of distribution (whether directly or indirectly) of its rationales for consideration or otherwise through any media including websites and portals.


About CRISIL Ratings Limited (A subsidiary of CRISIL Limited, an S&P Global Company)

CRISIL Ratings pioneered the concept of credit rating in India in 1987. With a tradition of independence, analytical rigour and innovation, we set the standards in the credit rating business. We rate the entire range of debt instruments, such as bank loans, certificates of deposit, commercial paper, non-convertible/convertible/partially convertible bonds and debentures, perpetual bonds, bank hybrid capital instruments, asset-backed and mortgage-backed securities, partial guarantees and other structured debt instruments. We have rated over 33,000 large and mid-scale corporates and financial institutions. We have also instituted several innovations in India in the rating business, including ratings for municipal bonds, partially guaranteed instruments and infrastructure investment trusts (InvITs).
 
CRISIL Ratings Limited ('CRISIL Ratings') is a wholly-owned subsidiary of CRISIL Limited ('CRISIL'). CRISIL Ratings Limited is registered in India as a credit rating agency with the Securities and Exchange Board of India ("SEBI").
 
For more information, visit www.crisilratings.com 

 



About CRISIL Limited

CRISIL is a leading, agile and innovative global analytics company driven by its mission of making markets function better. 

It is India’s foremost provider of ratings, data, research, analytics and solutions with a strong track record of growth, culture of innovation, and global footprint.

It has delivered independent opinions, actionable insights, and efficient solutions to over 100,000 customers through businesses that operate from India, the US, the UK, Argentina, Poland, China, Hong Kong and Singapore.

It is majority owned by S&P Global Inc, a leading provider of transparent and independent ratings, benchmarks, analytics and data to the capital and commodity markets worldwide.

For more information, visit www.crisil.com

Connect with us: TWITTER | LINKEDIN | YOUTUBE | FACEBOOK


CRISIL PRIVACY NOTICE
 
CRISIL respects your privacy. We may use your contact information, such as your name, address and email id to fulfil your request and service your account and to provide you with additional information from CRISIL. For further information on CRISIL's privacy policy please visit www.crisil.com.



DISCLAIMER

This disclaimer is part of and applies to each credit rating report and/or credit rating rationale ('report') that is provided by CRISIL Ratings Limited ('CRISIL Ratings'). To avoid doubt, the term 'report' includes the information, ratings and other content forming part of the report. The report is intended for the jurisdiction of India only. This report does not constitute an offer of services. Without limiting the generality of the foregoing, nothing in the report is to be construed as CRISIL Ratings providing or intending to provide any services in jurisdictions where CRISIL Ratings does not have the necessary licenses and/or registration to carry out its business activities referred to above. Access or use of this report does not create a client relationship between CRISIL Ratings and the user.

We are not aware that any user intends to rely on the report or of the manner in which a user intends to use the report. In preparing our report we have not taken into consideration the objectives or particular needs of any particular user. It is made abundantly clear that the report is not intended to and does not constitute an investment advice. The report is not an offer to sell or an offer to purchase or subscribe for any investment in any securities, instruments, facilities or solicitation of any kind to enter into any deal or transaction with the entity to which the report pertains. The report should not be the sole or primary basis for any investment decision within the meaning of any law or regulation (including the laws and regulations applicable in the US).

Ratings from CRISIL Ratings are statements of opinion as of the date they are expressed and not statements of fact or recommendations to purchase, hold or sell any securities/instruments or to make any investment decisions. Any opinions expressed here are in good faith, are subject to change without notice, and are only current as of the stated date of their issue. CRISIL Ratings assumes no obligation to update its opinions following publication in any form or format although CRISIL Ratings may disseminate its opinions and analysis. The rating contained in the report is not a substitute for the skill, judgment and experience of the user, its management, employees, advisors and/or clients when making investment or other business decisions. The recipients of the report should rely on their own judgment and take their own professional advice before acting on the report in any way. CRISIL Ratings or its associates may have other commercial transactions with the entity to which the report pertains.

Neither CRISIL Ratings nor its affiliates, third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively, 'CRISIL Ratings Parties') guarantee the accuracy, completeness or adequacy of the report, and no CRISIL Ratings Party shall have any liability for any errors, omissions or interruptions therein, regardless of the cause, or for the results obtained from the use of any part of the report. EACH CRISIL RATINGS PARTY DISCLAIMS ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING BUT NOT LIMITED TO ANY WARRANTIES OF MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE. In no event shall any CRISIL Ratings Party be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of any part of the report even if advised of the possibility of such damages.

CRISIL Ratings may receive compensation for its ratings and certain credit-related analyses, normally from issuers or underwriters of the instruments, facilities, securities or from obligors. Public ratings and analysis by CRISIL Ratings, as are required to be disclosed under the regulations of the Securities and Exchange Board of India (and other applicable regulations, if any), are made available on its website, www.crisilratings.com (free of charge). Reports with more detail and additional information may be available for subscription at a fee - more details about ratings by CRISIL Ratings are available here: www.crisilratings.com.

CRISIL Ratings and its affiliates do not act as a fiduciary. While CRISIL Ratings has obtained information from sources it believes to be reliable, CRISIL Ratings does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives and/or relies on in its reports. CRISIL Ratings has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with each analytical process. CRISIL Ratings has in place a ratings code of conduct and policies for managing conflict of interest. For details please refer to:
https://www.crisil.com/en/home/our-businesses/ratings/regulatory-disclosures/highlighted-policies.html.

Rating criteria by CRISIL Ratings are generally available without charge to the public on the CRISIL Ratings public website, www.crisilratings.com. For latest rating information on any instrument of any company rated by CRISIL Ratings, you may contact the CRISIL Ratings desk at crisilratingdesk@crisil.com, or at (0091) 1800 267 1301.

This report should not be reproduced or redistributed to any other person or in any form without prior written consent from CRISIL Ratings.

All rights reserved @ CRISIL Ratings Limited. CRISIL Ratings is a wholly owned subsidiary of CRISIL Limited.

 

 

CRISIL Ratings uses the prefix 'PP-MLD' for the ratings of principal-protected market-linked debentures (PPMLD) with effect from November 1, 2011, to comply with the SEBI circular, "Guidelines for Issue and Listing of Structured Products/Market Linked Debentures". The revision in rating symbols for PPMLDs should not be construed as a change in the rating of the subject instrument. For details on CRISIL Ratings' use of 'PP-MLD' please refer to the notes to Rating scale for Debt Instruments and Structured Finance Instruments at the following link: https://www.crisil.com/en/home/our-businesses/ratings/credit-ratings-scale.html