| Associated Alcohols and Breweries Limited | ||||||
| Rating outlook revised to 'Positive'; Ratings Reaffirmed | ||||||
| Rating Action | ||||||
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| Note: None of the Directors on Crisil Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||||
| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale Crisil Ratings has revised its outlook on the long-term bank facilities of Associated Alcohols and Breweries Limited (AABL) to ‘Positive’ from ‘Stable’ while reaffirming the rating at 'Crisil A-'. Short term rating has been reaffirmed at 'Crisil A2+'.
The revision in outlook reflects Crisil Rating's belief that the business risk profile of the company will continue to benefit from its strong market position in the liquor industry, with management's focus on diversifying its product portfolio toward more premium offerings, thereby aiding overall business risk profile. Company achieved revenue of Rs 1075 Crore in fiscal 2025 which improved significantly from Rs. 764 crore in fiscal 2024, driven by capacity expansion undertaken for the ethanol plant. The company has also benefited from higher contributions from recently launched prestige brands under its own Indian-made foreign liquor (IMFL) segment, leading to improved volumes and better realizations, which supported growth in revenue and profitability. The company achieved Rs. 266 crores of revenue till June 2025 and is expected to improve to Rs. 1,100–1,200 crores during fiscal 2026.Furthermore, operating profitability has witnessed growth over the past on account of improved realizations in premium brands and is expected to stay steady at 12%–13% over the medium term. Improved penetration of recently launched premium brands, aging of the malt for premiumization of existing brands, and the management's plan to introduce new premium offerings will further aid the revenue growth. Going forward, sustained revenue growth amidst steady operating profitability will remain a key monitorable.
The rating also factors in the company's strong financial risk profile, driven by a sizeable net worth and moderate reliance on external debt. Additionally, a steady increase in operating profitability has resulted in the continuation of healthy debt protection indicators, which are expected to continue over the medium term as well. Liquidity, on the other hand, is expected to remain healthy, backed by sizeable net cash accruals against maturing debt, a cushion in bank lines, and excess reserves available to encounter exigencies (if any).
The rating continues to reflect AABL's established market position in Madhya Pradesh (MP), backed by the extensive experience of its promoters. The rating also factors in the group's healthy financial risk profile, driven by low gearing and healthy debt protection metrics. These strengths are partly offset by the presence in the highly regulated alcoholic beverages industry and moderate scale of operations. |
Analytical Approach Crisil Ratings has evaluated standalone business and financial risk profile of AABL. |
Key Rating Drivers - Strengths Established market position: AABL has an established position in the liquor industry, backed by its longstanding presence and the promoters' extensive experience of over three decades, as well as a strong relationship with suppliers. The company manufactures rectified spirit (RS), extra neutral alcohol (ENA), country liquor (CL), and Indian-made foreign liquor (IMFL). This has given the promoters an understanding of the market dynamics and helped establish relationships with suppliers and customers. The company achieved revenue of Rs. 1,075 crores in fiscal 2025, backed by an improvement in revenue from newly launched brands and the ethanol plant. The company achieved Rs. 266 crores of revenue till June 2025, which is expected to improve to Rs. 1,100–1,200 crores during fiscal 2026. The contribution of premium products is expected to grow over the medium term, driven by consumer preference for branded items, and AABL's strategy to introduce new premium offerings will further strengthen its market position.
Healthy financial risk profile: The financial risk profile has improved, supported by a strong net worth of Rs. 520 crore as of March 31, 2025 (Rs. 422 crore a year earlier), due to healthy accretion to reserves. The lack of any significant term debt, along with prudent working capital management, has further resulted in moderate dependence on external debt, thereby leading to a gearing ratio of 0.2 times as of March 31, 2025. With the repayment of existing loans and no plans for debt-funded capital expenditure, the gearing ratio is expected to remain comfortable over the medium term. The expected improvement in profitability will further enhance the debt protection metrics, with interest coverage and net cash accruals to total debt (NCATD) ratios expected to be above 23 times and 1 time, respectively, over the medium term. The absence of large debt-funded capital expenditure (capex), along with the expected growth in reserves, will contribute positively to the financial risk profile over the medium term. |
Key Rating Drivers - Weaknesses Presence in the highly regulated alcoholic beverages industry: AABL operates in the Indian brewery and distillery industry. Various facets of industry such as production, distribution, raw material availability and advertisements are highly regulated by the state and central governments. The industry operates based on licenses provided by state governments. Sale and distribution of liquor products in both the wholesale and retail sectors are controlled by each state. Thus, government regulations have a significant effect on profitability, particularly in states where the government controls pricing and any significant change in excise policy of respective state and subsequently its impact on the company will be closely monitored.
Moderate scale of operations: Although the revenue has improved to Rs. 1,075 crores in fiscal 2025 from Rs. 764 crores in fiscal 2024, it continues to remain at a moderate level. The revenue is partially constrained since 80% of the revenue is generated from one territory, i.e., Madhya Pradesh (MP), and remains susceptible to regulatory actions by the state or state-specific events. Although the revenue is expected to improve with the company's focus on diversifying its product portfolio and presence, with a gradual improvement in market share outside MP and better acceptability in Kerala, Uttar Pradesh (UP), Maharashtra, and Delhi, this will continue to remain monitorable over the medium term. |
Liquidity Strong Bank limit utilisation was 61% on average for the 12 months through June 2025 . Annual cash accrual is expected at Rs 100-110 crore against yearly term debt obligation of Rs 9-20 crore over the medium term and will cushion liquidity. The current ratio was healthy at 1.7 times as on March 31, 2025. Low gearing and moderate networth support financial flexibility and provide financial cushion in case of any adverse conditions or downturn in the business. |
Outlook Positive Crisil Ratings believes AABL’s credit profile will continue to improve from launch of new premium brands leading to revenue diversity and strong market position though penetration into different geographies leading to decline in dependence on sale from MP will remain a key monitorable. |
Rating sensitivity factors Upward factors:
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About the Company Incorporated in 1989, AABL is the flagship company of the Indore-based Kedia group, promoted by the late Mr Bhagwati Prasad Kedia. The company is managed by Mr. Prasann Kedia supported by a professional board and management. The company produces a variety of alcohol, including rectified spirit, ENA, CL and IMFL, along with bottling for international brands such as Diageo. AABL has a distillery and bottling facility in Khargone, MP, with capacity of 45 MLPA. It is expanding its distillery capacity by 40 MLPA to cater to rising ethanol demand. |
Key Financial Indicators
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Any other information: Not applicable |
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Annexure - Details of Instrument(s)
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| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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* - Issuer did not cooperate; based on best-available information
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| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||||||||||||||||||||||
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Criteria Details
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