RATING RATIONALE

​8 April 2020
CRD Foods Pvt Ltd

Brickwork Ratings reaffirms ratings for the Bank Loan Facilities of ₹ 32.85
Crores of CRD Foods Pvt Ltd

Particulars
Amount (₹ Crs) Rating*
Facility Previous Present Tenure Previous (July, 2018) Present

BWR BB+
BWR BB+
Fund based 28.50 32.85 Long Term (Stable)
Stable
(Reaffirmed)
Total 28.50 32.85 INR Thirty Two Crores and Eight Five Lakhs Only
*Please refer to BWR website ​www.brickworkratings.com/​ for definition of the ratings
**​ Details of Bank facilities in Annexure-I

RATING ACTION / OUTLOOK

Brickwork rating has reaffirmed the long-term rating of CRD Foods Pvt Ltd at BWR BB+ with a
Stable Outlook on account of wide geographical presence, established distribution and
procurement network, moderate gearing, healthy profitability and uptrend in revenue.

The ‘stable’ outlook indicates a low likelihood of a rating change in the medium term. BWR
expects that the company’s performance is likely to be maintained in the medium term..

The rating, however, is constrained by working capital intensive operations, inherent risk
associated with Agri Industry, limited track record of the company in the cold storage business,
intense competition and fragmented nature of the industry.

KEY RATING DRIVERS

Credit Strengths :
● Wide geographical presence and established distribution network : CRD products are
distributed PAN India. The company has a wide geographical reach with presence in
Delhi, UP, Kerala, Hyderabad, and Tamil Nadu. The company gets 40% of its revenue
from Delhi, 40% from Up and 20% from rest of the states. However, the company
operates cold storage and warehousing facilities in UP only. Distribution of the produce
is done through Cold or Refrigerated Vans. Some of the Vans are outsourced and some

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 are under tie up with the temperature controlled logistic service provider like Mr Kool
Logistics, Gati Kausar etc.
● Established Procurement Network : ​CRD has been procuring fruits and vegetables
from Kashmir, Himachal Pradesh, UP and Maharashtra. Company procures directly from
farmers and farmers’ co -operatives. The procurement depends upon the market rates,
quantity and quality of the product. The company procures apples from Kashmir and
Himachal Pradesh, oranges from Nagpur, Maharashtra, carrots from Karnataka. CRD
procures cauliflower, cabbage , lemons, garlic, onion, peas and eggs from UP itself.
● Moderate Financial Risk Profile : CSPL has reported moderate capital structure with
Tangible Net Worth (Analysed) of Rs.19.58 Cr and outstanding interest bearing debt
(CC, TL) at Rs.36.66 Cr. in FY19, owing to which gearing is moderate at 1.87X in FY19.
Debt Protection Metrics are above the benchmark i.e. ISCR and DSCR are at 2.44X and
1.67X in FY19. ISCR has declined marginally from 2.50X in FY18. Profitability Margins
are healthy i.e. Operating Profit Margin and Net Profit Margin are at 15.34% and 2.64%
in FY19.
● Uptrend in Revenue : ​The company reported Total Operating Income amounting
Rs.30.24 Cr. and Rs.49.74 Cr. in FY18 and FY19 respectively, registering a growth of
almost 66% in FY19. According to the information provided by the management the
company has achieved a Revenue of Rs.67.95 till 24/03/20 (certified by CA). And the
company projects to achieve Rs.70.00 Cr. in the current financial year. There is further
scope of an increase in revenue as the unutilized capacity of 25% is still available.

Credit Risks :
● Working Capital Intensive operations ​: The company’s operations are highly working
capital intensive in nature as marked by 100% of the utilization of the bank facilities
(CC) in the peak season and 90-95% of the utilization in Non-peak season. Conversion
cycle had also been elongated in FY19 i.e. 227 Days. due to higher inventory days of the
company. Higher inventory days owes to seasonality of business operations.
● Inherent risk associated with Agri industry ​: The company is engaged in processing
and storage of agri based products thus exposed to risk associated with the fluctuation in
production levels, uncertain weather conditions and limited shelf life of the products.
● Limited track record of the company in the cold storage business : The company got
established in 2010 but became operational in 2016. Prior experience of the Directors is
in the business of trading of metals like gold and silver. The Directors have a limited
track record of the company in the cold storage business.
● Intense Competition and fragmented nature of the industry ​- The cold storage
industry is dominated by numerous independent, small-scale enterprises. High degree of
fragmentation due to the presence of large numbers of unorganized players has led to
high competitive intensity in the processing segment.

ANALYTICAL APPROACH AND APPLICABLE RATING CRITERIA

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BWR has factored in the standalone business parameters and financial risk profile of the
company to arrive at the rating. Reference may be made to the Rating Criteria hyperlinked
detailed below (hyperlinks provided at the end of this rationale).

RATING SENSITIVITIES

Going forward, the company's ability to increase the scale of the business would be key
sensitivity over short to medium term.

Positive : The rating outlook may be revised to positive if the company improves the topline.

Negative : The rating may be downgraded if there is deterioration of profitability and gearing
levels.

LIQUIDITY POSITION (Adequate)

The liquidity position of the company is adequate, marked by healthy Cash and Cash
equivalents, which have increased significantly to Rs.3.60 Cr. in FY19 from Rs.0.43 Cr. in
FY18. Net Cash Accruals have also increased from Rs.4.31 Cr. to Rs.4.40 Cr. The same are
against CPLTD of Rs.2.06 Cr. in FY19. Other Liquidity indicators are stretched marked by
100% of the utilization of the bank facilities (CC) in the peak season and 90-95% of the
utilization in Non-peak seasons. Current Ratio in FY19 is at 1.33X which is considered
moderate.

COMPANY PROFILE

CRD FOODS Pvt. Ltd. was established in 2010 by Mr. Ashok Kumar Agarwal, who is currently
MD of the company. The company has an Integrated Controlled Atmosphere Cold Store certified
from FSSAI for long-term storage of fruits and vegetables with capacity of 5500 MT and
located in Mathura, U.P. As per company, Sale of produce is done through its brand name CRD
FRESH. Directors are Mr. Ashok Agrawal, Mr. Chaitanya Agarwal, Mr. Rajat Agarwal & Mr.
Devesh Agarwal, who are all graduates. Presently the company has an installed capacity of 5500
MT which has been utilized upto 75% in FY20.

KEY FINANCIAL INDICATORS ​(in INR Cr)

The company reported Total Operating Income amounting Rs.30.24 Cr. and Rs.49.74 Cr. in
FY18 and FY19 respectively, registering a growth of almost 66% in FY19. According to the
information provided by the management the company has achieved a Revenue of Rs.67.95 Cr.
till 24/03/20. And the company projects to achieve Rs.70.00 Cr. in the current financial year.

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Key Parameters Units 2019 2018
Result Type Audited Audited
Operating Revenue ₹ Cr 49.74 30.24

EBITDA ₹ Cr 7.63 7.21

PAT ₹ Cr 1.31 0.65
Tangible Net worth (Analysed) ₹ Cr 19.58 12.63

Total Debt/Tangible Net worth (Analysed) Times 1.87 2.47

Current Ratio Times 1.33 1.32

KEY COVENANTS OF THE INSTRUMENT/FACILITY RATED : NIL

NON-COOPERATION WITH PREVIOUS RATING AGENCY : NA

RATING HISTORY

Instrument
Current Rating (March, 2020)
/Facility Rating History

Type
Amount
(Long Term/ Rating 2019 July, 2018 2017
(₹ Crs)
Short Term)

BWR BB+
BWR BB+
Fund Based Long Term 32.85 Stable - -
Stable
(Reaffirm)

Total 32.85 ₹ Thirty Two Crores and Eighty Five Lakhs Only

COMPLEXITY LEVELS OF THE INSTRUMENTS

For more information, visit ​www.brickworkratings.com/download/ComplexityLevels.pdf

Hyperlink/Reference to applicable Criteria

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 Analytical Contacts Investor Contacts

Satvinder Kumar Gakhar

Associate Director - Ratings
B :+91 11 2341 2232 Liena Thakur
satvinder.g@brickworkratings.com Assistant Vice President - Corporate Communications
+91 84339 94686
Aayush Verma liena.t@brickworkratings.com
Ratings Analyst
B :+91 11 2341 2232
aayush.v@brickworkratings.com
1-860-425-2742

CRD Foods Pvt Ltd

ANNEXURE I
Details of Bank Facilities rated by BWR
Sl. No. Name of the Type of Long Term ShortTerm Total
Bank Facilities (₹ Cr) (₹ Cr) (₹ Cr)

1 Punjab Cash Credit 20.00 - 20.00

National Bank
2 Term Loan 12.85 - 12.85

TOTAL 32.85

Total Rupees Thirty Two Crores and Eighty Five Lakhs only.

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data distortion; however, it does not examine the precision or completeness of the information obtained. And hence,
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