April 02, 2024
Holy-Land Marketing Pvt. Ltd.: Rating reaffirmed
Summary of rating action
Previous Rated Amount Current Rated Amount
Instrument* Rating Action
(Rs. crore) (Rs. crore)
Issuer Rating - - [ICRA]BBB(Stable); reaffirmed
*Instrument details are provided in Annexure-I
Rationale
The reaffirmation of rating factors in ICRA’s expectations that Holy-Land Marketing Pvt. Ltd. (HMPL) will witness moderate
revenue growth in the current fiscal led by its diverse product portfolio and growing distribution network. The expected
revenue growth is in continuation to the healthy revenue growth of ~49% to Rs. 443 crore in FY2023 from Rs. 297 crore in
FY2022. HMPL offers a wide basket of canned fruits, vegetables and other food products under its flagship brand, Golden
Crown, which enjoys moderate visibility. The rating takes into account the extensive experience of HMPL’s promoters in the
processed food industry, coupled with HMPL’s established track record and diversified end-customer base. Moreover, HMPL’s
coverage metrics are expected to remain comfortable in the near to medium term owing to its limited capital intensity, which
results in lower debt dependence. ICRA also notes the company’s focus on optimising its product mix by continuously adding
new products and other dimensions, including varying stock-keeping units (SKUs).
The rating is, however, constrained by the highly fragmented nature of the industry with the presence of many unorganised
players. It is further affected by the limited value addition undertaken by the company, which constrains the earnings and,
thus, reserve accretion of the company. The volatility in the food prices also constrains the profitability; however, this is
compensated to an extent by the company’s ability to partly pass on the price increases. Maintaining an optimum product mix
to augment profitability also remains critical. The rating also factors in the company’s vulnerability to risks associated with
foreign exchange (forex) rate fluctuations as it imports some of its raw materials, in the absence of any hedging mechanism.
The Stable outlook on the [ICRA]BBB rating reflects ICRA’s opinion that HMPL will continue to benefit from the growing market
penetration through the expansion of its distribution network and product portfolio.
Key rating drivers and their description
Credit strengths
Experienced promoters with established track record in the industry – The promoters of HMPL have more than two decades
of experience in the industry. The company offers canned fruits and vegetables under its flagship brand Golden Crown, with
more than 300 products such as table sauces, juices, jams, pulps and purees, pasta, noodles, ready-to-eat snacks and food
additives. With an established track record, HMPL has forged strong relationships with end customers, most of whom are
reputed names in the hotel/restaurant/café (HoReCa) segment.
High customer and geographical diversification – The company has a large distribution network for its retail sales along with
a portfolio of reputed institutional customers. HMPL exhibits healthy customer and geographic diversification. In 8M FY2024,
its top 10 customers contributed ~22% to its total sales. Further, it has multiple customers across the states in India. The
company operates through twelve depots spread across the country and has a well-spread dealer distribution network of more
than 3000, which has been expanding over the last few years. Going forward, the company intends to open depots in tier-2
and tier- 3 cities, which will enhance its visibility across the vast domestic market.
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Expanding product portfolio - The company always strives to achieve an optimum product mix for enhancing sales and
improving profitability. Therefore, the company continues adding certain products and exiting some of the non-performing
items. The company is predominantly a B2B player supplying food ingredients for the rapidly growing food service industry.
However, in some segments particularly in its breakfast cereals vertical, the company has also launched SKUs for the retail
markets. This is attributed to leveraging the strength in the product category due to the demands from its B2B clients. In
continuation of the same strategy, HMPL is planning to foray into vegetarian frozen foods while partnering with one of the
major players in the market.
Comfortable financial risk profile – In FY2023, the company achieved revenue of Rs. 443 crore, resulting in ~49% growth in
comparison to revenue of ~Rs. 297 crore in FY2022. In the current fiscal, the company’s revenue is expected to grow at a
moderate pace on a high base on the back of stable demand, enhancing product mix and repeat orders from its clients. Until
9M FY2024, the company already achieved revenues of ~Rs. 372 crore. Improving but moderate margins are expected to result
in moderate cash accruals. Limited fixed and working-capital intensity has also resulted in low indebtedness, which is entirely
skewed towards working capital borrowing. The overall quantum of net worth remains moderate at ~Rs. 72 crore as on
December 31, 2023, however, comfort is drawn from low indebtedness. The coverage indicators stood comfortable with
interest coverage ratio of 7.7 times and DSCR of 2.2 times as on March 31, 2023. In the absence of any major debt raising
plans, HMPL’s coverage metrics are expected to be comfortable in the medium term.
Credit challenges
Highly competitive and fragmented industry; susceptible to competition from renowned brands - The company faces stiff
competition in a highly fragmented industry. The competition comes from other reputed brands as well as unorganised players
in the industry. However, the Golden Crown brand also has moderate visibility, lending pricing flexibility and bargaining power
with customers to a certain extent.
Limited value addition resulting in moderate margins and accretion in net worth – There is a limited value addition in the
company’s overall business operations reflected in the modest and range-bound profit margin levels, which can be attributed
to the trading nature of operations. However, the value addition to some extent comes in the form of making available a vast
range of products that require domestic sourcing as well as imports and also making available seasonal products round the
year. Reserve accretion in the net worth of the company remains moderate every year. However, going forward, the company
is expanding into new geographies and enhancing the product mix, which would support profit scale-up.
Exposure to forex risks as some raw materials are imported – HMPL is exposed to forex risks because it imports a portion of
its raw materials. The company imports certain raw materials from China, Malaysia, Thailand and others. In the absence of a
hedging mechanism, any adverse movement in exchange rates could impact its margins. The company’s profitability is also
exposed to increasing raw material prices, as it is not feasible to pass on the entire increased cost to its clients.
Liquidity position: Adequate
The liquidity position is adequate, supported by moderate operational cashflows. Given the growth in operations, the
company’s limit utilisation has increased (~77% of the total limits on an average in the last 12 months ending February 2024),
resulting in moderate buffers in the limit. HMPL maintains limited free cash balances, however, does not have any major capex
or debt-raising plans and neither any major long-term repayment commitments, which lends comfort to its liquidity profile.
Rating sensitivities
Positive factors – The rating could be upgraded in case of a significant scale-up in revenues and profitability, leading to
improvement in liquidity and material increase in net worth on a sustained basis. Further, TOL/TNW below than 1.5 times on
a sustained basis, may also result in an upgrade.
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Negative factors – ICRA could downgrade HMPL’s ratings in the event of a significant deterioration in scale and profitability.
Any material deterioration in liquidity may also warrant a downgrade. Interest coverage less than 2.8 times, on a sustained
basis, could result in a rating downgrade.
Analytical approach
Analytical Approach Comments
Corporate Credit Rating Methodology
Applicable rating methodologies
Rating Methodology on FMCG
Parent/Group support Not Applicable
Consolidation/Standalone Standalone
About the company
HMPL, incorporated in 1995, is based out of New Delhi with its main corporate office located in Gurgaon, Haryana. The
company’s current operations and business activities include branding, distribution and marketing of canned fruits and
vegetables along with a large basket of other processed foods. This is facilitated through its 12 company-owned depots in
Delhi, Mumbai, Bangalore, Ahmedabad, Punjab, Chennai, Pune, Kolkata, Hyderabad, Guwahati, Indore and Sonipat, supported
by a 3,000-plus strong dealer-distribution network. The company has recently opened depots in Guwahati, Indore and Sonipat,
and intends to expand in tier-2 towns, which will further enhance the company’s visibility and scale of operations. HMPL also
keeps on augmenting its product basket with new and consistent additions.
Key financial indicators (audited/provisional)
HMPL Standalone FY2022 FY2023 9M FY2024*
Operating income 297.1 443.4 372.6
PAT 9.9 15.4 14.9
OPBDIT/OI 5.1% 5.3% 5.9%
PAT/OI 3.3% 3.5% 4.0%
Total outside liabilities/Tangible net worth (times) 1.3 1.4 -
Total debt/OPBDIT (times) 2.0 1.9 -
Interest coverage (times) 7.0 7.7 -
PAT: Profit after tax; OPBDIT: Operating profit before depreciation, interest, taxes and amortisation; Amount in Rs. crore, *Provisional
Status of non-cooperation with previous CRA: Not applicable
Any other information: None
Rating history for past three years
Chronology of rating history
Current rating (FY2025)
for the past 3 years
Instrument Amount Amount outstanding as Date & rating in Date & rating Date & rating in Date & rating in
Type rated on Dec 31,2023 FY2025 in FY2024 FY2023 FY2022
(Rs. crore) (Rs. crore)
Apr 02, 2024 - Mar 23, 2023 Mar 04, 2022
Issuer Long [ICRA]BBB [ICRA]BBB [ICRA]BBB
1 - - -
Rating term (Stable) (Stable) (Stable)
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Complexity level of the rated instruments
Instrument Complexity Indicator
Issuer Rating Not applicable
The Complexity Indicator refers to the ease with which the returns associated with the rated instrument could be estimated.
It does not indicate the risk related to the timely payments on the instrument, which is rather indicated by the instrument's
credit rating. It also does not indicate the complexity associated with analysing an entity's financial, business, industry risks or
complexity related to the structural, transactional or legal aspects. Details on the complexity levels of the instruments are
available on ICRA’s website: Click Here.
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Annexure I: Instrument details
Coupon Amount Rated
ISIN Instrument Name Date of Issuance Maturity Current Rating and Outlook
Rate (Rs. crore)
NA Issuer Rating NA NA NA - [ICRA]BBB(Stable)
Source: Company
Annexure II: List of entities considered for consolidated analysis - Not applicable
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ANALYST CONTACTS
Shamsher Dewan Kinjal Shah
+91 124 4545328 +91 022 61143400
shamsherd@icraindia.com kinjal.shah@icraindia.com
Sheetal Sharad Nishant Misra
+91 124 4545374 +91 124 4545862
sheetal.sharad@icraindia.com nishant.misra@icraindia.com
RELATIONSHIP CONTACT
L. Shivakumar
+91 22 6114 3406
shivakumar@icraindia.com
MEDIA AND PUBLIC RELATIONS CONTACT
Ms. Naznin Prodhani
Tel: +91 124 4545 860
communications@icraindia.com
Helpline for business queries
+91-9354738909 (open Monday to Friday, from 9:30 am to 6 pm)
info@icraindia.com
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