Company Background: Our client, a leader in the milling and processing of both Basmati and non-Basmati rice, operates from a state-of-the-art facility in Balia, Uttar Pradesh. The company’s products are sold exclusively under its 18 brands, underscoring its strong foothold in the domestic market.
Problem:
In July 2023, we helped the company secure an upgrade from BBB to BBB+. However, later, the company went for a mid-term review in April 2024, wherein the ratings were only reaffirmed at BBB+, falling short of the company’s goal of achieving an A- rating, which was vital for accessing lower interest rates, improved banking facilities, and higher-margin customer deals.
Solution:
To meet the company’s rating needs, we initiated a new rating assessment with a different agency in July 2024. We conducted a detailed review of its performance for FY24 and Q1FY25, highlighting improved volumes, pricing strategies, and inventory aging. Our key insight was that the longer inventory holding period, typically seen as a negative, actually boosted profit margins and operations, turning it into a strategic advantage. This, along with the company’s solid liquidity, strengthened the case for a higher rating.
Impact:
Our efforts led to the company receiving an A- rating in August 2024, marking a two notch upgrade in under two years. This achievement validated the company’s improved performance and opened doors to better financial terms and growth opportunities, showcasing our strategic approach in turning challenges into advantages.
