Rationale

 The reaffirmation of the ratings considers the established position of Ganesh Grains Limited (GGL) as one of the major manufacturers of wheat and chana-based products with a strong presence in West Bengal under the brand, Ganesh. GGL has a significant market share in the packaged wheat and chana products segment in West Bengal. The top line of the company witnessed a sizeable growth over the past two years, primarily driven by an increase in the volume of sales of wheat-based products, along with an improvement in the realisation. The ratings also derive comfort from the favourable financial profile of the company, as reflected by a conservative capital structure and healthy debt coverage indicators. The ratings further consider GGL’s significant price premium over the unorganised players in the B2C segment. Moreover, stable demand from staple food grains market and strong distribution network are likely to support its revenue growth, going forward. The ratings are, however, constrained by the highly competitive business segment, limiting margin expansion and high geographical concentration risk as around 82% of the company’s turnover in 9M FY2024 was derived from West Bengal. ICRA notes that increasing share of revenue from the B2B segment, which fetches much lower margin than the B2C segment, adversely impacted the overall operating margin of the company in FY2023 and is estimated to impact the same in FY2024 as well. The ratings also consider the inherent susceptibility of the company’s operations and margins to the prevailing agroclimatic conditions and changes in Government policies. ICRA also notes the impending exit of the PE investor. ICRA will continue to monitor developments in this regard and will take appropriate rating action, if required, once more clarity emerges on this. The Stable outlook on the long-term rating reflects ICRA’s opinion that GGL will continue to benefit from the established brand presence, particularly in West Bengal, and the planned product diversification and value addition initiatives, which are likely to support revenue growth while sustaining its favourable financial profile in the long run.