| Sameera Agro Industries | ||||
| Rated amount enhanced | ||||
| 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 rating on the long term bank facilities of Sameera Agro Industries (SAI; part of sameera group) at ‘CRISIL BB+/Stable’.
The rating reflects the extensive experience of the partners in the rice industry and established relationship with customers, healthy scale of operations, and healthy financial risk profile. These strengths are partially offset by working capital-intensive operations, high dependence on the monsoon, and exposure to changes in government policies. |
Analytical Approach For arriving at the rating, CRISIL Ratings has combined the business and financial risk profiles of SAI and Sri Lakshmi Srinivasa Modern Rice Mill (SLS). That’s because the two entities, together referred as the Sameera group, are engaged in a similar business and have common management.
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: * Extensive industry experience of the partners and an established relationship with customers: Sameera group’s managing partner, Mr. Jonnada Sridhar has been in the rice milling business since the 1998. Due to extensive experience, they have developed an understanding of the dynamics of the industry and the local market, which has helped to establish a strong customer relationship.
* Healthy scale of operations: With revenue of Rs. 306 Cr in fiscal 2019-20, Sameera group is one of the largest players in Andhra Pradesh. Scale of operations remain healthy in this highly competitive rice milling industry. While large players have better efficiencies and pricing power because of their scale of operations, small players are exposed to intense competition. Due to the advantage of scale of operations, Sameera group has operating profitability around 4 % while smaller players have profitability around 2-3 %.
* Above average financial risk profile: Financial risk profile is marked by healthy networth base, moderate capital structure and above-average debt protection metrics.
Net worth remains healthy at Rs. 48.47 Cr as on March 31, 2020. With modest net profit margins, networth is estimated to be around Rs. 51-53 Cr over the medium term. Capital structure remains moderate with gearing and total outside liabilities to tangible networth (TOLTNW) of 1.36 times and 1.76 times, respectively, as on March 31, 2020. Debt protection metrics remain adequate, with interest coverage of 1.50 times for fiscal 2020.
Weakness: * Working capital-intensive nature of operations: Gross current assets were high at around 144 days as on March 31, 2020, mainly due large inventory requirement. Paddy, the major raw material, is available only in the crop season (October to December). Therefore, players have to procure a substantial portion (50-60%) of their annual paddy requirement during this period.
* High dependence on the monsoon and exposure to changes in government policies: Agricultural commodities depend on rainfall, which, if weak in a year, can lead to lower operating income and depressed profitability for players. Given the seasonal availability of rice, the operating margin will remain modest and vulnerable to volatility in raw material prices over the medium term. Also, agricultural commodity exports are highly regulated. |
Liquidity: Adequate Sameera group has generated Rs. 3.20 Cr against repayment obligations of less than Rs. 1 Cr for FY20. With no major debt funded capital expenditure, it is expected to maintain healthy cushion between accruals and repayments over the medium term. Due to working capital intensive operations, bank limit utilization remains moderate with average utilization of 76 % for the past 13 months ending January 2021. Current ratio remains healthy at 1.49 times as on March 31, 2020. |
Outlook: Stable CRISIL Ratings believes that the Sameera group will continue to benefit from the extensive industry experience of its partners and their funding support. |
Rating Sensitivity factors Upward factor
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SAI was established as a partnership firm in 2014 by Mr. Jonnada Sridhar and his family members. The firm mills and processes non-basmati rice at its facilities in Rajahmundry, Andhra Pradesh. It has a milling and sorting capacity of around 12 tons per hour.
SLS was established as a partnership firm in 2004 by the same partners. The firm mills and processes non-basmati rice at its facilities in Rajahmundry, Andhra Pradesh. It has a milling and sorting capacity of around 16 tons per hour. |
Key Financial Indicators - Consolidated
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Status of non-cooperation with previous CRA SAI has not cooperated with Brickwork Ratings India Private Limited which has classified it as issuer not cooperative vide release dated Jan 25, 2021. The reason provided by Brickwork Ratings India Private Limited 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)
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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 various bank facilities | ||||||||||||||||||||||||
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Criteria Details
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