| Deccan Sugar Private Limited | ||||
| Rating Reaffirmed | ||||
| Rating Action | ||||
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| 1 crore = 10 million | ||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has reaffirmed its ‘CRISIL BBB/Stable’ rating to the long-term bank facilities of Deccan Sugar Private Limited (DSPL; part of the Deccan group).
On September 29, 2022, CRISIL Ratings had assigned its ‘CRISIL BBB/Stable’ rating to the long-term bank facilities of DSPL.
The rating reflects the Deccan group’s integrated operations and favorable location ensuring cane and water availability, established regional position, extensive industry experience of the promoters and above average financial risk profile. These strengths are partially offset by its cyclicality associated with sugar business; risks get amplified by dependence on monsoon, susceptibility of profitability to volatility in material prices and working capital intensity, regulatory risk in the distillery industry. |
Analytical Approach CRISIL Ratings has combined the business and financial risk profiles of DSPL, Sanjay Enterprises (SE) and Victoria Agro Food Processing Pvt Ltd (VAFPL). This is because these entities, collectively referred to as the Deccan group, have a common management and have significant business and financial linkages.
The unsecured loan of Rs 73.47 crore as on March 31, 2022, have been treated as neither debt nor equity (NDNE) as they are likely to remain in the business over the medium term.
Please refer Annexure - List of entities consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers & Detailed Description Strengths:
It procures cane from Yavatmal District and Omarkher region which has high availability of cane. It is within 50 km to 70 km vicinity to DSPL’s manufacturing facility. They have tie-up with Goki Dam for ensuring the water requirements are met. They have a 55 lac liter reservoir in the factory to fulfill the water requirement at the time of crushing.
Weaknesses:
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Liquidity: Adequate Bank limit utilisation is moderate at around 74.89 percent for the past eight months ended Aug-22. Cash accruals are expected to be over Rs 17.60-24.74 crore which are sufficient against term debt obligation of Rs 3.5 crore over the medium term. In addition, it will act as cushion to the liquidity of the company.
Current ratio is moderate at 1.16 times on March 31, 2022. The promoters are likely to extend support in the form of equity and unsecured loans to meet its working capital requirements and repayment obligations. |
Outlook: Stable CRISIL Ratings believe the group will continue to benefit from the extensive experience of its promoter, and established relationships with clients. |
Rating Sensitivity factors Upward factors
Downward factors
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About the Group Incorporated in 1997 as Sagar Wine Manufacturing and Marketing Private Limited. Subsequently in 2010, it was renamed to its present name as DSPL.
DSPL manufactures sugar and has its plant located at Yavatmal, Maharashtra with installed capacity of 3500 tonnes crushed per day (TCD). Also, sugar mill has a 5MW out of which 3.5MW captive power generation capacity, which it fuels using bagasse generated in the sugar production and 60 KLPD Molasses based ethanol plant. Further, DSPL also manufactures country liquor with capacity of 4,80,000 cases. It sells country liquor through its group firm SE.
VAFPL was incorporated in 2008, however, it commenced its full year of operations from 2022. It has food grain-based distillery of 60 KLPD located at Aurangabad.
SE is engaged in trading of country liquor. It purchases country liquor from DSPL and sell it to the retailers. DSPL sells 82% country liquor produced to this firm and rest 18% is being sold other players through institutional sales. This firm has two units, located at Yamatmal and Aurangabad.
The group is owned & managed by Shri Sadhuram Wadhwani and family. |
Key Financial Indicators
*Provisional numbers |
| Note on complexity levels of the rated instrument: CRISIL Ratings' complexity levels are assigned to various types of financial instruments. The CRISIL Ratings' complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL Ratings' 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)
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Annexure – List of entities consolidated
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| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | |||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||
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This Annexure has been updated on 06-Oct-22 in line with the lender-wise facility details as on 28-Sep-22 received from the rated entity.
Criteria Details
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