Credit Rating Report

M/S. Valuka Feeds

Provisional Ratings

M/S. Valuka Feeds

--

BDT 16.80 million fund based Cash Credit (CC) Outstanding *

BB3 (Lr) **

Remarks
-Please see Appendix-1
for details

Lr- Loan rating

*Due to its revolving nature, CRAB views Cash Credit (CC) as long-term facility.
** The provisional ratings are contingent to the renewal of loan limit by the respective lenders and the position of the
collateral attached to those loans after renewal. The post-renewal rating validity would be adjusted after receiving renewed
sanction advices of respective credit facilities

Date of Rating: 01 November, 2011

Food & Allied

Particulars

Validity: The Provisional ratings are valid up to 03 (three) months from the date of rating i.e. 31 January 2012.
Rating Based on: Management provided information, bankers feedback, and other relevant quantitative and
qualitative information up to the date of rating declaration.
Methodology: CRABs Corporate Rating Methodology (www.crab.com.bd)
Analysts:

The production of Valuka feeds mainly runs for the

Azhar Uddin
azhar@crabrating.com

proprietors own fishery business and the production

occasionally face difficulty due to high geographic

Mavin Ahmed

focus and seasonality. Though, it can produce fish

and poultry feed both, fish feed is higher in its

mavin@crab.com.bd

production ascendancy. The business may suffer

PROFILE

from lack of experience in fish feed business, lack of

technical know-how and quality control and key

Valuka Feeds is a small size feed mill for fish and

poultry. The feed mill, situated in Valuka of Mymensing
district, was established in 2010 by its proprietor Mr.
Saidul Islam. Around 60 percent of its total produced
feed is consumed by proprietors fishery business. Rest
of the products are sold to local fisheries. Average
yearly production of the firm is 2700 MT.

person risk.
Based on management information, the business has
average sale of around BDT 60.00- 65.00 million
with average profit of around BDT 2.5-2.7 million.

RATIONALE
Credit Rating Agency of Bangladesh Limited (CRAB) has
assigned BB3 rating to BDT 16.80 million aggregate
fund-based Cash Credit facilities of the Firm.

BACKGROUND

M/S. Valuka Feeds mainly produces fish feeds since

2010 with average daily production capacity of 12.5
MT per day. The feed mill was established by Mr.
Saidul islam on 47 decimal land. The proprietor has

the Firm; assured purchaser facility and proprietors

fishery of 80 acres (leased area). The feed mill was

established primarily as a backward linkage of his

experience in fishery and fish feed production.

However, the rating is constrained by absence of

fishery (M/S. Mayer Doa Matsho Khamar), which

needs 6-7 MT of fish feed daily. Valuka feeds sells

standard

of

rest of its production (5-6 MT) in Valuka region, the

succession planning, local procurement of raw

materials which is exposed to agro-climate risks to

area which is noted for fisheries. Before the

beginning of the feed mill proprietor generally

some extent and input price movement in both local

and international market.

bought fish feeds from the local market of

Mymensing for his fishery. Valuka feed is totally

The rating considers the size of the business, nature of

accounting

practice

and

MIS,

lack

managed by its proprietor. The mill has 50 workers,

The rating also considers the Firms operating profile
which is almost entirely reliant on proprietors own
fishery. The rating is also adversely affected by the

works 8 hours per day for 6 days/week in 9 months

of peak (summer) season.

inherent risks in the fisheries and related businesses in

terms of sudden disease outbreaks, highly fragmented
nature of the industry with low entry barriers and high
competition.
CRAB I CRAB Ratings on Corporate Credit Digest I December 11, 2011

Page 1 of 2

CRAB Rating Report

decade of experience in fisheries business, owns a

M/S. Valuka Feeds

LONG-TERM RATING: LOANS/FACILITIES FROM BANKS/FIS

(All loans/facilities with original maturity exceeding one year)
RATINGS
AAA (Lr)
(Triple A)
Highest Safety
AA (Lr)*
(Double A)
High Safety
A (Lr)

DEFINITION
Loans/facilities rated AAA (Lr) are judged to offer the highest degree of safety, with regard to timely payment of
financial obligations. Any adverse changes in circumstances are unlikely to affect the payments on the loan facility.
Loans/facilities rated AA (Lr) are judged to offer a high degree of safety, with regard to timely payment of financial
obligations. They differ only marginally in safety from AAA (Lr) rated facilities.
Loan/facilities rated A (Lr) are judged to offer an adequate degree of safety, with regard to timely payment of financial

Adequate Safety

obligations. However, changes in circumstances can adversely affect such issues more than those in the higher rating
categories.

BBB (Lr)
(Triple B)
Moderate Safety

Loans/facilities rated BBB (Lr) are judged to offer moderate safety, with regard to timely payment of financial
obligations for the present; however, changing circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal than for issues in higher rating categories.

BB (Lr)
(Double B) Inadequate

Loans/facilities rated BB (Lr) are judged to carry inadequate safety, with regard to timely payment of financial
obligations; they are less likely to default in the immediate future than instruments in lower rating categories, but an

Safety

adverse change in circumstances could lead to inadequate capacity to make payment on financial obligations.

B (Lr)
High Risk

Loans/facilities rated B (Lr) are judged to have high risk of default; while currently financial obligations are met,
adverse business or economic conditions would lead to lack of ability or willingness to pay interest or principal.

CCC (Lr)
Very High Risk

Loans/facilities rated CCC (Lr) are judged to have factors present that make them very highly vulnerable to default;
timely payment of financial obligations is possible only if favorable circumstances continue.

CC (Lr)
Extremely High Risk

Loans/facilities rated CC (Lr) are judged to be extremely vulnerable to default; timely payment of financial obligations
is possible only through external support.

C (Lr)
Near to Default

Loans/facilities rated C (Lr) are currently highly vulnerable to non-payment, having obligations with payment
arrearages allowed by the terms of the documents, or obligations that are subject of a bankruptcy petition or similar
action but have not experienced a payment default. C is typically in default, with little prospect for recovery of
principal or interest. C (Lr) are typically in default, with little prospect for recovery of principal or interest.

D (Lr)
Default

Loans/facilities rated D (Lr) are in default or are expected to default on scheduled payment dates.

*Note: CRAB appends numerical modifiers 1, 2, and 3 to each generic rating classification from AA through CCC. The modifier 1 indicates that the
obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in
the lower end of that generic rating category.

SHORT-TERM CREDIT RATING: LOANS/FACILITIES OF BANKS/FIS

(All loans/facilities with original maturity within one year)
DEFINITION
ST-1
Highest Grade
ST-2
High Grade
ST-3
Adequate Grade
ST-4
Marginal
ST-5
Inadequate Grade
ST-6
Lowest Grade

This rating indicates that the degree of safety regarding timely payment on the loans/facilities is very strong.
This rating indicates that the degree of safety regarding timely payment on the loans/facilities is strong; however, the
relative degree of safety is lower than that for issues rated higher.
This rating indicates that the degree of safety regarding timely payment on the loans/facilities is adequate; however, the
issues are more vulnerable to the adverse effects of changing circumstances than issues rated in the two higher
categories.
This rating indicates that the degree of safety regarding timely payment on the loans/facilities is marginal; and the
issues are quite vulnerable to the adverse effects of changing circumstances.
This rating indicates that the degree of safety regarding timely payment on the loans/facilities is minimal, and it is likely
to be adversely affected by short-term adversity or less favorable conditions.
This rating indicates that the loans/facilities are expected to be in default on maturity or is in default.

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