‘CRISIL A-’ to ‘CRISIL A’ on the long-term bank facilities of LT Foods Limited
- ‘CRISIL A2+’ to ‘CRISIL A1’ on short-term rating bank facilities of LT Foods Limited
by Priya J
New Delhi, 3rd March, 2021: LT Foods Limited today received up-gradation of credit rating by CRISIL Ratings. It has upgraded its rating on the long-term bank facilities of LT Foods Limited from ‘CRISIL A-’ to ‘CRISIL A’. The short-term rating bank facilities of LT Foods Limited has also been upgraded from ‘CRISIL A2+’ to ‘CRISIL A1’.
The upgrade reflects continuous improvement in group’s business and financial risk profiles. Group achieved operating income of Rs 3499 Crore in first nine months of fiscal 2021 compared to Rs 2948 Crore in first nine months of fiscal 2020, which was aided by higher volumes achieved in both rice and organic business despite the impact of the Covid-19-induced lockdowns on the HORECA segment esp. in first half of fiscal 2021. Operating margin (earnings before income, depreciation, tax and amortisation [EBIDTA] margin) was also higher at 12.4% for the first nine months of fiscal 2021 compared to 11.5% for the corresponding period of the previous fiscal, aided by higher realisations in the rice business, especially in the first quarter of fiscal 2021 and change of product mix towards high-margin products. Going ahead, CRISIL Ratings expects business risk profile to continue to improve over the medium term. The financial risk profile has also improved as is reflected in debt-to-EBIDTA of 2.2 times as on December 31, 2020 which is well below CRISIL Ratings’ expectations of maintaining the aforementioned ratio of 3 times over the medium term. CRISIL Ratings expects the ratio to remain below 2.5 times over the medium term despite increase in revenues.
The ratings continue to reflect the LT Foods strong market position in its segment i.e. Specialty Basmati Rice and Consumer Food Business, resulting in sales growth, margin expansion and strengthening of financial metrics. The ratings also factor in the group's diversified geographical reach through strong leading brands (Daawat in the Indian market and Royal in the US market), established marketing and distribution network and strengthened financial profile.
About LT Foods Limited:LT Foods Ltd. [NSE: DAAWAT, BSE: 532783] is a 70-year-old Consumer Food Company that is a leading player in the specialty rice business across the globe, delivering the finest quality and taste experiences in more than 60 countries. The Company portfolio includes a range of power brands that include Daawat- one of India’s most loved and consumed Basmati brands, Royal- North America’s no. 1 Basmati player and other regional leading brands. The Company is also proudly expanding its organic play by supplying organic food ingredients to leading businesses as well as offering organic staples to consumers in markets across the globe. The Company’s integrated operations cover a global footprint with procurement, milling and processing for Basmati Rice centered in India whereas further value addition and marketing – distribution are available worldwide. The Company has 5 processing facilities in India, 2 packaging units and one Ready-to-Heat facility in the US and 1 processing facility in Rotterdam. Key markets for LT Foods’ brands besides India cover the U.S., the U.K., Europe, Middle East and Far East. The rice portfolio comprises brown, white, steamed, parboiled, organic, quick cooking brown Rice, value added and flavored Rice. In Rice, the Company’s brands include DAAWAT, Royal, Heritage, Gold Seal Indus Valley, 817 Elephant, Devaaya and Rozana. The organic food product range includes Rice, Soya meal, Pulses, Oil seeds, Cereal grains, Spices and Nuts. The Company is also into rice- based convenience products that include sauté sauces, cuppa rice, rice based premium snacks and staples.