| Empee Distilleries Limited | ||||
| Rating upgraded to 'CRISIL A/Stable' | ||||
| Rating Action | ||||
| ||||
| 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 Empee Distilleries Limited (EDL; part of the SNJ Group) to ‘CRISIL A/Stable’ from ‘CRISIL A-/Positive’.
The rating action is driven by the sustained improvement in the credit risk profile of the company’s parent, SNJ Distillers Pvt Ltd (SNJD) (ratings upgraded to 'CRISIL A/Stable' from ‘CRISIL A-/Positive), from which EDL derives strong operational and financial support.
The rating action also factors in sustained improvement in business risk profile of EDL. The revenue has grown at an estimated Compound Annual Growth Rate (CAGR) of 45% to Rs. 830 crore for last 2 years through fiscal 2024, supported by increased volume through steady ramp up of operations in enhanced capacities that were added in a phased manner. Revenue growth is expected to sustain over the medium term with healthy volume growth and a recent price revision across products. With price revision and moderation in input costs, profitability is expected to be improved over the medium term. Healthy business performance also aids a strong financial risk profile evidenced by a gearing of 1,45 times estimated as on March 31, 2024 and interest coverage of 3 times for fiscal 2024.
The rating reflects the strong operational and financial support received by EDL from the SNJ group, SNJ group’s established market position in the liquor industry in Tamil Nadu (TN), and comfortable financial risk profile. These strengths are partially offset by the Exposure to high regulatory risk, geographic concentration in revenue, Volatile input prices and limited pricing power. |
Analytical Approach For arriving at EDL’s ratings, CRISIL Ratings has applied the parent notch-up framework to factor in the intensity of financial support available to EDL from its parent, SNJD. This is because EDL is critical to the SNJ group for its operations with capacities in distillery. |
Key Rating Drivers & Detailed Description Strengths:
Weaknesses:
|
Liquidity: Adequate Bank limit utilisation is moderate at around 46 percent for the past twelve months ended February 2024. Cash accruals are expected to be over Rs.35 crore in fiscal 2023 and Rs.45 crore in next fiscal against term debt obligation of Rs.29.7 crore per annum over the medium term. The promoters are likely to extend support in the form of equity and unsecured loans to meet its working capital requirements and repayment obligations in case of any requirement. Moreover, the liquidity profile is bolstered by the financial flexibility and ability of the parent to support in case of exigencies. Low gearing and moderate net worth support its financial flexibility and provides the financial cushion available in case of any adverse conditions or downturn in the business. |
CRISIL Ratings believes that EDL will continue to benefit from the strong parent support and its healthy financial risk profile. |
Rating Sensitivity factors Upward factors
Downward factors
|
About the Company EDL was established over 4 decades back by Mr.M. P. Purushottaman was into manufacturing of IMFL in TN, Kerala, Karnataka and Telangana. The company was acquired by the SNJ group in 2020. EDL is subsidiary of SNJD. |
SNJD, set up in 2007, manufactures IMFL in TN and beer in AP. Glass unit is being set up in TN.
About the Group SNJD, set up in 2007, manufactures IMFL in TN and beer in AP. Glass unit is being set up in TN.
SNJB, set up in 2009, operates a brewery in Kancheepuram (TN).
Set up in 1994, SNJS manufactures sugar. It also has a facility for distilling extra-neutral alcohol (ENA) and operates a co-generation power plant. The company was acquired by the SNJ group in 2014.
EDL was established over 4 decades back by Mr.M. P. Purushottaman was into manufacturing of IMFL in TN, Kerala, Karnataka and Telangana. The company was acquired by the SNJ group in 2020. EDL is subsidiary of SNJD.
SASL, set up in 1988, manufactures sugar, ENA and operates a co-generation power plant. The company was acquired by the SNJ group in 2024.
PIL, set up in 2005, has brewery unit and distillery unit comprising of grain based distillery, a malt spirit plant, IMFL and country liquor. SNJ group is in the process of acquisition of PIL. Operations of all the companies are overseen by the managing director, Mr S N Jayamurugan. He is being supported by his wife and three daughters. |
Key Financial Indicators
|
Any other information: Not Applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
|
| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||
|
|||||||||||||||||||||||||||||||||||||||
| All amounts are in Rs.Cr. | |||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||
|
Criteria Details
|