Rating Rationale
July 10, 2018 | Mumbai
Coastal Corporation Limited
Rated amount enhanced
Rating Action
Total Bank Loan Facilities Rated Rs.105 Crore (Enhanced from Rs.85 Crore)
Long Term Rating CRISIL BBB/Stable (Reaffirmed)
1 crore = 10 million
Refer to annexure for Details of Instruments & Bank Facilities
Detailed Rationale

CRISIL's rating on the long-term bank facilities of Coastal Corporation Limited (CCL; part of Coastal group) continue to reflect CCL's established position in the seafood industry, comfortable financial risk profile and the extensive experience of its promoters. These strengths are partially offset by the company's exposure to regulatory changes, intense competition and volatility in shrimp prices and foreign exchange (forex) rates.

Analytical Approach

For arriving at its ratings, CRISIL has combined the business and financial risk profiles of CCL and its wholly-owned subsidiaries Seacrest Seafoods Inc (SSI) and Continental Fisheries India Pvt Ltd (CFIPL), collectively referred to as the Coastal group, as they are engaged in similar line of business.

Key Rating Drivers & Detailed Description
* Extensive experience of the promoters
Benefits from the promoters' experience of over three decades, their in-depth understanding of the industry and diversified customer base should support the business.
* Comfortable financial risk profile
Networth is healthy, at Rs 76.39 crore as on March 31, 2018. Gearing improved to 1.17 times as on March 31, 2018 from 2.13 times as on March 31, 2015. Debt protection metrics are adequate with interest coverage and net cash accrual to total debt ratios of 4.95 times and 0.3 time, respectively for fiscal 2018.
* Exposure to regulatory changes
The seafood export segment is marked by stringent regulations and quality requirements. Regulatory changes, such as the levy of anti-dumping duties by importing countries, can have an adverse impact on the profitability of the entire industry. Apart from several small domestic players, Indian seafood exporters have to face intense competition from exporters in countries such as Bangladesh, Thailand, and Indonesia.
* Exposure to volatility in shrimp prices and forex rates
Shrimp prices are dependent on availability and demand during a particular period, and the company's revenues and profitability are exposed to volatility in the prices of shrimps. Moreover, given that majority of sales are through exports, margins are also exposed to volatility in exchange rates.
Outlook: Stable
CRISIL believes that CCL will continue to benefit from the extensive experience of its promoters. The outlook may be revised to 'Positive' if revenue and profitability increase and capital structure remains comfortable. The outlook may be revised to 'Negative' if decline in revenue or profitability, or any large debt-funded capital expenditure or stretch in working capital cycle weakens capital structure.
About the Company

Established in 1981, CCL processes and exports frozen marine food products, primarily shrimps. The company has two processing facilities in Andhra Pradesh. Mr T Valsaraj, managing director and Mr G V V Satyanarayana, director, manage the operations.
US-based SSI is a wholly-owned subsidiary of CCL and undertakes trading of processed shrimp.
CFIPL is a wholly-owned subsidiary of CCL and is engaged in processing and sale of shrimp.

Key Financial Indicators
Particulars - Consolidated Unit 2018 2017
Revenue Rs crore 616.2 477.6
Profit after tax (PAT) Rs crore 23.9 9.7
PAT margin % 3.9 2.0
Adjusted debt/adjusted net worth Times 4.95 3.41
Interest coverage Times 1.17 1.5

Status of non cooperation with previous CRA
CCL has not cooperated with CARE, which has classified it as issuer not cooperative vide release dated December 27, 2017. The reason provided by CARE is non-furnishing of information for monitoring of ratings.

Any other information: Not applicable

Note on complexity levels of the rated instrument:
CRISIL complexity levels are assigned to various types of financial instruments. The CRISIL complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL complexity levels for instruments that they consider for investment. 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) Rating assigned with outlook
NA Foreign Bill Purchase NA NA NA 40 CRISIL BBB/Stable
NA Export Packing Credit NA NA NA 65 CRISIL BBB/Stable
Annexure - Rating History for last 3 Years
  Current 2018 (History) 2017  2016  2015  Start of 2015
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Fund-based Bank Facilities  LT/ST  105.00  CRISIL BBB/Stable  06-07-18  CRISIL BBB/Stable  26-10-17  CRISIL BBB/Stable/ CRISIL A3+  04-07-16  CRISIL BBB-/Stable/ CRISIL A3  13-08-15  CRISIL BBB-/Stable/ CRISIL A3  CRISIL BBB-/Stable/ CRISIL A3 
All amounts are in Rs.Cr.
Annexure - Details of various bank facilities
Current facilities Previous facilities
Facility Amount (Rs.Crore) Rating Facility Amount (Rs.Crore) Rating
Export Packing Credit 65 CRISIL BBB/Stable Export Packing Credit 65 CRISIL BBB/Stable
Foreign Bill Purchase 40 CRISIL BBB/Stable Foreign Bill Purchase 20 CRISIL BBB/Stable
Total 105 -- Total 85 --
Links to related criteria
CRISILs Approach to Financial Ratios
CRISILs Bank Loan Ratings - process, scale and default recognition
Rating criteria for manufaturing and service sector companies
Rating Criteria for Fast Moving Consumer Goods Industry
CRISILs Criteria for rating short term debt

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