Rating Rationale Brickwork Ratings Revises the long term rating to ‘BWR BB-’ & Reaffirms short term rating of ‘BWR A4’ for the Bank Loan facilities of ₹ 10.65 Cr to Global Dhall Industries Brickwork Ratings (BWR) has revised the following Ratings1for the Bank Loan Facilities of Rs.10.65 Cr of Global Dhall Industries (“GDI” or “the Firm”): Previous Limits (₹ Cr) Limits (₹ Cr) Cash Credit 5.50 10.00 Term Loan 1.26 0.21 Term Loan - 0.06 Term Loan - 0.37 Warehouse Loan 0.75 - Facilities Tenure Previous Rating (Nov, 2014) Rating BWR B+ (Pronounced BWR B Plus) BWR BB(Pronounced BWR Double B Minus) (Outlook: Stable) (Outlook: Stable) BWR A4 (Pronounced BWR A Four) BWR A4 (Pronounced BWR A Four) Fund Based Long Term Non-Fund Based Letter of Credit - 0.01 FLC 0.99 - Total 8.50 10.65 Short Term (INR Ten Crores Sixty Five Lakhs Only) BWR has essentially relied upon the audited financial results of the firm for FY15, provisional financials up to 31st Oct, 2015, projected financials upto FY17, publicly available information and information/clarifications provided by the firm's management. The rating has factored, inter alia, long standing experience of promoters in same line of activity, the locational advantage of the manufacturing unit, gradual increase in production and sales over last year. Current industry seen is also beneficial. However, the ratings are constrained by thin profitability margins achieved previously, inherent risks of volatility in prices and intense competition from organized as well as unorganized players. Background: Global Dhall Industries, a partnership firm, was established in 2007. The firm is engaged in trading and processing of various types of pulses like Urad dal, Toor dal, etc. Its processing unit is located at Gulbarga Industrial Area, Karnataka. 1 Please refer to www.brickworkratings.com for definition of the Ratings www.brickworkratings.com 1 22 Feb 2016 The firm procures raw material from suppliers located in Maharashtra, Karnataka, Andhra Pradesh & Tamil Nadu. The firm sells Dal under the brand names of Dove Sortexed Orid Dhall, Dove Premium Gold Sortexed Orid & Dove Sortexed Gundu Orid Dhall in various bag sizes of 1kg, 5kg, 25kg and 50kg. Products are sold in the states of Karnataka, Tamil Nadu, Kerala and Maharashtra. Ownership & Management: The firm is having a total of thirteen partners, of which five partners are actively involved in managing the day to day affairs in connection with the business of the firm. Mr. S Chandrashekhar, is the main promoter and looks after day to day operations of the firm. He has more than 30 years of experience in the same line of activity. Mr. C Venkatesh, Mr. C Hariharan, Mr. Manikprabhu V Raghoji and Mr. Allamprabhu S Khuba, are the other active partners. Financial Performance: The net revenue from operations were Rs. 54.33 Crs in FY15 (Rs. 42.91 Crs in FY14) and PAT stood at Rs. 0.25 Crs (Rs. 0.18 Crs in FY 14). Tangible net worth was Rs. 2.26 Crs as on March 31, 2015. Credit facilities availed from State Bank of Hyderabad, Kalaburgi, Karnataka, include Cash Credit, Term loans and Letter of Credit limits. Overall ratio of Total Debt : Tangible Networth stood 2.78 : 1. The firm has informed of having achieved turnover of Rs. 36.08 Crs, as on 31st October, 2015. Rating Outlook: Dal prices have risen in India over the last 12–18 months, and hence, Dal mills can be expected to improve their turnover and profits. At the same time, Government is also taking steps to control stock levels, increase imports, etc. Overall, the rating outlook is expected to be stable over the next year. The ability of the firm to achieve the targeted revenue and and efficiently manage its working capital - would be the key rating sensitivities. Analyst Contact Relationship Contact analyst@brickworkratings.com425-24 bd@brickworkratings.com Phone Media Contact 1-860-425-2742 media@brickworkratings.com Disclaimer: Brickwork Ratings (BWR) has assigned the rating based on the information obtained from the issuer and other reliable sources, which are deemed to be accurate. BWR has taken considerable steps to avoid any data distortion; however, it does not examine the precision or completeness of the information obtained. And hence, the information in this report is presented “as is” without any express or implied warranty of any kind. BWR does not make any representation in respect to the truth or accuracy of any such information. The rating assigned by BWR should be treated as an opinion rather than a recommendation to buy, sell or hold the rated instrument and BWR shall not be liable for any losses incurred by users from any use of this report or its contents. BWR has the right to change, suspend or withdraw the ratings at any time for any reasons. www.brickworkratings.com 2 22 Feb 2016