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Bhavesh Oil Industries

Rating History
Instrument

Amount

Amount
Outstanding

Rating

In
Crore

In
Crore

As on
December 2010

Cash Credit Facility (Long Term Scale)

4.00

N.A.

LB+

Warehouse Loan (Short Term Scale)

7.00

N.A.

A4

ICRA has assigned an LB+ (pronounced L B plus) rating to the Rs. 4.00 crore1 cash credit facility of
Bhavesh Oil Industries (BOI) †. ICRA has also assigned an A4 (pronounced A four) rating to the Rs.
7.00 crore, short-term fund based warehouse loan facility of BOI.
The ratings are constrained by the relatively modest size of operations of the firm compared to
organized players in cottonseed oil industry; weak financial profile as reflected by high gearing levels
and weak profitability levels. The margins are expected to remain low given the limited value addition
in the business, in absence of refining operations and the highly competitive fragmented industry
structure. ICRA notes that the firm is also at a disadvantage given the lack of diversification in the
product profile for manufacturing operations, vulnerability of profitability to raw material prices which
are subject to weather conditions, seasonality & crop harvest as well as to movements in other crude
oils. ICRA also notes that BOI being a partnership firm, any significant withdrawals from the capital
account would affect its capital structure.
The ratings however favourably consider the long experience of the promoters in the cotton ginning
and cottonseed crushing industry, advantage by virtue of being located in Gujarat giving it easy access
to cottonseeds, castor seeds with Gujarat also being one of the biggest consumer for cottonseed oil in
India, and a clientele consisting of organized edible oil players having strong market position in refined
cottonseed oil segment.
Company Profile
Bhavesh Oil Industries (BOI) was established in 1996 and is engaged in crushing of cotton seeds to
produce crude cotton seed oil, sale of cotton seed cake and trading of Cotton and Castor seeds. The
firm has its production facility located at Harij, Gujarat. The firm has seed crushing capacity of 120 tons
per day.
Recent Results
During FY 2010, the firm reported a profit after tax of Rs. 0.11 Cr on an operating income of Rs. 50.37
Cr.

December 2010

1

100 lakh = 1 crore = 10 million
For complete rating scale and definitions, please refer to ICRA’s website www.icra.in or other ICRA
Rating Publications.

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