| Roquette India Private Limited | ||||||
| Rating outlook revised to ‘Stable’; 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 rating outlook on the long-term bank facilities of Roquette India Private Limited (RIPL; formerly, Roquette Riddhi Siddhi Pvt Ltd) to ‘Stable’ from ‘Positive’ and reaffirmed the rating at ‘CRISIL AA-‘. The short-term rating has been reaffirmed at ‘CRISIL A1+’.
The change in outlook from positive to stable reflects lower than expected operating performance in fiscal 2023. The operating margins moderated to 5.3% in fiscal 2023 as against earlier expectations of 8-9% (and 14.7% in the previous year) due to inventory losses, as the maize prices started declining in second half of fiscal 2023. Operating margins are expected to sustain at 5 -6% over medium term. Historically, the profitability has remained volatile and sustained improvement as well as stability in the same will remain key monitorable going forward.
The debt metrics continue to remain healthy post conversion of external commercial borrowings of Rs 478 crore to equity by the parent in fiscal 2022. Gearing remains healthy at 1.1 times in fiscal 2023 and expected to improve to below 0.9 times in fiscal 2024 supported by debt reduction and absence of any major debt funded capex. However, interest cover moderated to 2.44 times in fiscal 2023 as against 5.91 times in previous fiscal due to lower profitability.
The ratings continue to factor in strong technical, financial, and operational support received from the parent, Roquette Freres, France (RF; rated ‘A-/Stable/A-2’ by SP Global Ratings [S&P]) and the company’s established market position. These strengths are partially offset by susceptibility to fluctuations in maize prices and limited pricing flexibility. |
Analytical Approach The ratings factor in the support RIPL receives from its parent RF, which holds 100% stake in the company. |
Key Rating Drivers & Detailed Description Strengths:
During the previous 4-5 fiscals the company has incurred capex for capacity expansion and entering the specialty food ingredients business in India. RF has fully funded the company’s capital expenditure requirements in the past through unsecured loans under the ECB route in rupees at an interest rate of 8.9-9.5%. Any further capex is also expected to be fully funded by RF. Support from parent is also evident from conversion of ECBs of Rs 478 crores into equity in June 2021. Additionally, the parent has since provided an additional loan of 37 million euros (~Rs 320 crores) to the Indian entity for meeting working capital requirements and for general corporate purposes, at a low interest rate of 2% per annum. The repayment for this loan commences on Sep 30, 2026.
Furthermore, RF’s technical, financial and operational support continue to strengthen the company’s business risk profile. The company continues to derive benefit from its association with the parent in the medium-to-long term.
Weaknesses:
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Liquidity: Strong Liquidity is strong in the absence of any major capex plans and long-term debt obligations, other than the one availed from the group. With improvement in operating performance, net cash accruals are expected to be sufficient to cover upcoming repayments to group companies. Nevertheless, in case of distress, RIPL has flexibility in regard to repayment of the loan and the same is expected to refinanced. Utilisation of fund-based lines averaged a moderate 30% in the 12 months through September 2023. RIPL had cash and bank balances of Rs 30.5 crores as on September 30, 2023. |
Outlook: Stable CRISIL Ratings believes RIPL will continue to benefit from its established market position in the starch and starch-derivatives business, and strong support from RF. Company’s financial risk profile is expected to maintain positive trajectory, while sustenance of operating margins remain a key monitorables |
Rating Sensitivity factors Upward factors:
Downward factors:
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About the Company RIPL is India’s second largest manufacturer of starch and starch derivatives. It has plants at Viramgam in Gujarat, Gokak in Karnataka, and Pantnagar in Uttarakhand, with total maize-processing capacity of 2,720 tpd. Products include corn starch powder, liquid and powdered glucose, modified starches, glucose D, dextrose monohydrate, maltodextrine, high-maltose corn syrup, and dextrose syrup. These products are used in industries such as food processing, pharmaceuticals, paper, textiles, adhesives, inks, and paints. RF has 100% stake in RIPL. RF is the fifth-largest corn processor and largest producer of polyols (sugar-free sweeteners) globally. It is also a leading global producer of starch derivatives. |
Key Financial Indicators
^Interest cover includes interest cost of unsecured loan from the parent RF |
Any other information: Not Applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
!Interchangeable with working capital demand loan/pre- and post-shipment credit (export packing credit)/foreign usance bills discounte, foreign bills purchased/purchase bills - invoice discounting/sales bills - invoice discounting #Interchangebale with working capital demand loan/export packing credit/foreign usance bills/purchase bills/cash credit %interchangeble between fund based and non fund based credit facilities @@Includes sublimits of Rs 70 crore overdraft $Interchangable with working capital demand loan/pre and post shipment credit and includes sublimit of working capital loan of Rs 80 crore @Interchangeable with bank guarantees |
| 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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!Interchangeable with working capital demand loan/pre- and post-shipment credit (export packing credit)/foreign usance bills discounte, foreign bills purchased/purchase bills - invoice discounting/sales bills - invoice discounting
#Interchangebale with working capital demand loan/export packing credit/foreign usance bills/purchase bills/cash credit
%interchangeble between fund based and non fund based credit facilities
@@Includes sublimits of Rs 70 crore overdraft
$Interchangable with working capital demand loan/pre and post shipment credit and includes sublimit of working capital loan of Rs 80 crore
@Interchangeable with bank guarantees
Criteria Details
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