Rating Rationale
August 05, 2025 | Mumbai
Chaman Lal Setia Exports Limited
Rating upgraded to 'Crisil A+/Stable'
 
Rating Action
Total Bank Loan Facilities RatedRs.350 Crore
Long Term RatingCrisil A+/Stable (Upgraded from 'Crisil A/Positive')
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 upgraded its rating on the long-term bank facilities of Chaman Lal Setia Exports Ltd (CLSEL) to ‘Crisil A+/Stable’ from ‘Crisil A/Positive’.

 

The upgrade reflects the strong business risk profile of CLSEL, which is expected to continue to improve over the medium term. Despite declining realization (in-line with the industry trend), the company reported 11% year-on-year growth in operating income to Rs 1,495 crore in fiscal 2025 supported by healthy progress of around 14% in volume underpinned by the addition of customers and demand growth from existing customers. The company’s operations are diversified across the client base, geography and product portfolio. It has a customer presence in more than 90 countries and caters to more than 300 private label brands. The operating income is expected to improve by 10-15% in fiscal 2026, driven by the ramp up of operations post commencement of enhanced capacity.  The company’s business risk profile is expected to improve further with the company’s focus on branded sales, which will continue to support its healthy market position in both domestic and export markets. 

 

The operating margin moderated from 12% in fiscal 2024 to around 9.5% in fiscal 2025 owing to an increase in freight cost. Even though the operating margin moderated, it remains healthy and is expected at 11-12%, driven by better absorption of fixed cost and stabilization of freight costs. Despite the moderation in operating margin, interest coverage ratio remained comfortable at 14.6 times in fiscal 2025 (16.5 times in fiscal 2024).

 

The rating reflects the company’s strong market position and track record in the Basmati rice industry and strong financial risk profile. These strengths are partially offset by susceptibility to volatility in raw material prices and regulatory changes, and low brand penetration.

Analytical approach

Crisil Ratings has evaluated the standalone business and financial risk profiles of CLSEL.

 

The unsecured loan of Rs 62 crore as on March 31, 2025, from the promoters has been treated as 75% equity and 25% debt as this is expected to remain in the business over the medium term.

Key rating drivers and detailed description

Strengths:

  • Strong market position and track record in the basmati rice industry: The promoters have more than 45 years of experience in the basmati rice business. This has enabled them to establish a strong market position across domestic and global markets and healthy relationships with international customers. The same is reflected in revenue growing at a compounded annual growth rate of 17% over the past three fiscals through 2025. In fiscal 2025, exports contributed around 87% to the overall sales. Moreover, the company caters to private label businesses but 20-25% sales come from its own brands: Mithas, Begum and Maharani. CLSEL deals in basmati rice, which contributes 90-95% to the sales. It has established healthy relationships with suppliers in Haryana and Punjab. Because of high dependence on them for milling of rice, suppliers are rarely changed to maintain quality standards. Strong relationships with suppliers enable the procurement of rice at a comfortable price. The company is also increasing its presence in the domestic market through online retail stores such as Amazon and Big Basket.

 

  • Strong financial risk profile: Net worth is expected at Rs 830-840 crore as on March 31, 2026 (Rs 712 crore a year earlier) driven by healthy accretion to reserve. The company has a healthy capital structure as reflected in expected gearing of below 0.2 times as on March 31, 2026 (0.11 time). Interest coverage ratio is expected at 18-19 times in fiscal 2026 (14.6 times in fiscal 2025), driven by sustained profitability and improving scale of operations. The company has maintained its financial discipline even with increasing scale and the same is evident from healthy return on capital employed (ROCE) expected at 21-22% in fiscal 2026 (18.3% in fiscal 2025). The financial risk profile is likely to remain strong, driven by an expected improvement in operating profitability, leading to healthy accretion of reserve.

 

Weaknesses:

  • Susceptibility to volatility in raw material prices and regulatory changes: Cost of raw material (paddy) accounts for 75-80% of revenue and hence prices tend to directly impact profitability. Paddy, being a kharif crop, is harvested from September to December. The water requirement for basmati is high, and though the rice-growing states (Haryana, Uttar Pradesh, Uttarakhand and Punjab) have good irrigation systems, there is high dependence on monsoon. Hence, the company remains exposed to the risk of limited availability of raw material during a weak monsoon. Moreover, government regulations directly impact raw material availability through minimum support price and procurement policies. The operating margin moderated from 12% in fiscal 2024 to around 9.5% in fiscal 2025 owing to an increase in freight cost, as the gross margin remained stable. The operating margin is expected to remain at 11-12%, driven by better absorption of fixed cost and stabilization of freight costs. In the event of a further increase in freight cost, CLSEL has the flexibility to revise its prices to safeguard its operating margin on account of its strong market position in the overseas market.

 

  • Low brand penetration: Majority of the export is under brands of customers (private label business). To maintain quality, customers continue to procure their requirement from CLSEL, which helps in maintaining the operating margin. In the domestic market, the company sells rice under its own brands. Overall, branded sales were modest at 23% in fiscal 2025 and should improve over the medium term, driven by company’s healthy brand recall for ‘Maharani’ brand. A significant increase in brand penetration should strengthen the market position and operating margin and will be a key rating sensitivity factor.

Liquidity: Strong

The expected annual net cash accrual of Rs 120-140 crore is sufficient to meet the incremental working capital requirement and cater to its yearly debt obligation of Rs 1-2 crore over the medium term. Sizeable cash and bank balance of Rs 226 crore as on June 30, 2025, supports liquidity. Bank limit utilisation averaged at 13% for the 12 months ended June 30, 2025. The current ratio is expected at 7-8 times as on March 31, 2026.

Outlook: Stable

Crisil Ratings believes the business risk profile of CLSEL will continue to improve over the medium term, driven by strong presence in the overseas market.

Rating sensitivity factors

Upward factors:

  • Improvement in the business risk profile, driven by an increase in volume growth and high contribution from own brand sales while maintaining the operating margins at 11-12%
  • Sustenance of the strong financial risk profile

 

Downward factors:

  • Substantial decline in revenue or operating margin falling below 7%, leading to lower-than-anticipated net cash accrual
  • Large, debt-funded capex or acquisition or substantial increase in working capital cycle, weakening the financial risk profile

About the company

CLSEL was set up as a partnership firm in 1983 by Chamanlal Setia, Vijay Setia and Rajeev Setia in Amritsar, Punjab. It was reconstituted as a public limited company in 1994 and was listed on the Bombay Stock Exchange in 1995. It undertakes milling, sorting and packaging of basmati rice for the domestic and global markets. It has its own brands in India such as Mithas, Begum and Maharani.


It has milling, sorting and packaging plants in Karnal, Haryana and Amritsar. In Karnal, the company has milling capacity of 12 tonne per annum (TPA) and sorting capacity of 40 TPA. In Amritsar, however, the plant is currently shut for remodeling.

Key financial indicators*

As on / for the period ended March 31

Unit

2025

2024

Operating income

Rs crore

1495

1356

Reported profit after tax (PAT)

Rs crore

103

106

PAT margin

%

6.9

7.8

Adjusted debt/adjusted networth

Times

0.1

0.2

Interest coverage

Times

14.6

16.5

*Crisil Ratings-adjusted financials

Any other information: Not applicable

Note on complexity levels of the rated instrument:
Crisil Ratings` complexity levels are assigned to various types of financial instruments and are included (where applicable) in the 'Annexure - Details of Instrument' in this Rating Rationale.

Crisil Ratings will disclose complexity level for all securities - including those that are yet to be placed - based on available information. The complexity level for instruments may be updated, where required, in the rating rationale published subsequent to the issuance of the instrument when details on such features are available.

For more details on the Crisil Ratings` complexity levels please visit www.crisilratings.com. Users may also call the Customer Service Helpdesk with queries on specific instruments.

Annexure - Details of Instrument(s)

ISIN Name Of Instrument Date Of Allotment Coupon Rate (%) Maturity Date Issue Size (Rs. Crore) Complexity Levels Rating Outstanding with Outlook
NA Export Packing Credit NA NA NA 165.00 NA Crisil A+/Stable
NA Packing Credit NA NA NA 50.00 NA Crisil A+/Stable
NA Pre Shipment Credit NA NA NA 135.00 NA Crisil A+/Stable
Annexure - Rating History for last 3 Years
  Current 2025 (History) 2024  2023  2022  Start of 2022
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Fund Based Facilities LT 350.0 Crisil A+/Stable   -- 07-05-24 Crisil A/Positive 05-04-23 Crisil A/Stable 17-11-22 Crisil A/Stable Crisil A-/Positive
All amounts are in Rs.Cr.
Annexure - Details of Bank Lenders & Facilities
Facility Amount (Rs.Crore) Name of Lender Rating
Export Packing Credit 40 HDFC Bank Limited Crisil A+/Stable
Export Packing Credit 125 HDFC Bank Limited Crisil A+/Stable
Packing Credit 50 Punjab National Bank Crisil A+/Stable
Pre Shipment Credit 135 HDFC Bank Limited Crisil A+/Stable
Criteria Details
Links to related criteria
Basics of Ratings (including default recognition, assessing information adequacy)
Criteria for manufacturing, trading and corporate services sector (including approach for financial ratios)

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