Growel Processors Pvt. Ltd.

Brickwork Ratings (BWR) reaffirms the long-term and short-term ratings of BWR BBB+/Stable, BWR A2 for the Bank Loan Facilities of Rs. 150.06 Crs. of Growel Processors Pvt. Ltd.

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (27 Apr 2023)	Present
Fund Based	69.60	46.89	Long Term	BWR BBB+ /Stable Reaffirmation	BWR BBB + /Stable Reaffirmation
	(0.00)	(30.00)	Long Term	BWR BBB+ /Stable Reaffirmation	BWR BBB + /Stable Reaffirmation
	0.00	90.00	Short Term	BWR A2 Reaffirmation	BWR A2 Reaffirmation
	(0.00)	(35.00)
	(0.00)	(35.00)
	(20.00)	(0.00)
	(0.00)	(60.00)
	(0.00)	(30.00)
Non Fund Based	0.00	13.17	Short Term	BWR A2 Reaffirmation	BWR A2 Reaffirmation
Grand Total	69.60	150.06	(Rupees One Hundred Fifty Crores and Six lakhs Only)

#Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank Loan facilities,consolidation or instruments are provided in Annexure

RATING ACTION / OUTLOOK

The rating reaffirmation of the bank loan facilities of Growel Processors Private Limited (GPPL) reflects the steady financial and operational performance in FY24 (Provisional), sustained moderate credit risk profile, favorable location of the manufacturing facility in proximity to the aquaculture zone in Andhra Pradesh, improved capacity utilization, stable working capital cycle, and comfortable liquidity.

The ‘Stable’ outlook indicates a low likelihood of rating change over the medium term. BWR believes GPPL’s business and financial risk profile will be maintained over the medium term. The ratings are, however, constrained by the geographical concentration risk, susceptibility of the industry to frequent viral attacks and disease risk, volatile raw material prices, dependence on manpower availability, stiff competition, and low margin levels.

KEY RATING DRIVERS

Credit Strengths:

Steady operating performance and moderate financial performance :

The company’s overall capacity utilization increased from ~35% in FY23 to ~43% in FY24 (Prov) due to the improvement in exports from China. In volume terms, the sales of processed shrimp increased from 7975 MT in FY23 to 9930 MT in FY24 (Prov). The overall capacity utilization is impacted due to monthly variations in the availability of raw shrimp in India. Keeping in view the seasonality and availability of fresh raw shrimp as it has to be processed within 24 hours of harvesting, the capacity utilization is high during April- September and low during the other months. Revenue improved by 14% in FY24 (Prov) as compared to FY23 on account of improvement in sales volume. In FY24 (Prov) OPM dipped to 4.0% (FY23: 4.83%; FY22: 4.57%) despite an increase in the sales volume and realization. Net Profit Margin declined to 0.86% in FY24 (Prov) (FY23: 0.91%).
Stable Credit Profile and moderate working capital cycle :
Debt coverage metrics remained moderate as reflected by ISCR of 2.02x and DSCR of 1.03x as of FY24 (Prov). Total debt to total net worth has increased to 0.87x in the year FY24 (Prov) as compared to 0.48x which is due to the issuance of more debt. TOL/TNW is 1.20x in FY24 (Prov) as compared to 0.66x in FY23. The Cash Conversion Cycle has been increased from 60 days as of FY23 to 62 days as of FY24 (Prov).
Locational advantages and accredited processing facility :
The company's processing unit is situated in the Krishna region of Andhra Pradesh, which is known for significant aquaculture-related activities. This helps the company in both accessing fresh raw material at competitive costs from in and around Andhra Pradesh and immediate processing after the harvest. The company’s processing unit has certifications from the Global Aquaculture Alliance Best Aquaculture Practices (BAP), Export Inspection Council, HACCP, NSF Certification, US FDA Certification, Halal India Certificate, and FSSAI. These certifications and accreditations ensure that the company adheres to the international standards of hygiene and food safety at its processing unit. It also helps the company access both the international and domestic markets for its products.
Experienced promoters and established track record :

The promoters bring over two decades of experience in the aquaculture sector. Their established presence through sister companies Growel Feeds Private Limited and Growel Formulations Private Limited further strengthens their support to the business. The company specializes in processing and selling frozen shrimp, primarily focusing on the L. Vannamei variety.

Credit Risks:

Volatile raw material prices, stiff competition, and low margins: :

Growel’s business is exposed to raw material price volatility as it has to procure through dealers at spot price while its sales prices are driven by global demand and supply conditions. Additionally, the company faces stiff competition from established and new players. These factors translate into low margins for the company. Growel continues to explore new geographies and customer bases apart from its existing market. Further, Growel operates in a working capital-intensive industry that maintains a high quantum of inventory. The company’s average debtor cycle is around 43 days while it receives a short credit period of around 15 to 20 days from its creditors. As a result, the Cash Conversion Cycle has remained almost stagnant at 60 days in FY23 and 62 days in FY24 (Prov).
Concentration risk and foreign exchange risk :

Around 87% is export revenue generated from China and 50% of revenue is being generated from the top 5 customers. Since the majority of the revenue comes from export sales, it exposes it to forex risk since the customers are billed in USD. Growel is trying to diversify into other geographies to broaden its geography and customer base. Additionally, the company hedges 50% of its forex exposure as a policy to contain its forex risk.
Disease risks :
The outbreak of diseases such as Early Mortality Syndrome(EMS) and White Spot Syndrome(WSS), in one place leads to their spread to similar other aquatic ecosystems and is a continuing industry risk that can potentially affect the price of raw materials as well as the finished product.

ANALYTICAL APPROACH - Standalone

The company does not have any subsidiary or associate as of FY24 (Prov). For arriving at its ratings, BWR has considered standalone applied its rating methodology as detailed in the Rating Criteria detailed below (hyperlinks provided at the end of this rationale).

RATING SENSITIVITIES

Positive:

Increase in scale of operation as projected by the company while maintaining EBITDA margins above 5 % and TOL / TNW of less than 1.0x and reduction in customer concentration on a sustained basis.

Negative:

Significant deterioration in the scale of operations and EBITDA margins due to industry- or company-specific factors, or significant deterioration in the credit metrics reflected in TOL/TNW of above 1.5x.

LIQUIDITY INDICATORS - Adequate

The liquidity position of the company is adequate with an adequate net cash accrual and the absence of any major long-term debt. The net cash accrual for FY23 and FY24 (Prov) is 10.20cr and 9.06cr against repayment obligations of 3.62cr and 4.65cr respectively. The cash and cash equivalents were at Rs.23.16 Cr (unencumbered is Rs 20.56cr) as of FY24 (Prov). The working capital cycle has remained stagnant at 2 months for the past two years. Further, it has unutilized working capital limits of around 50% (due to additional sanctions). The additional limits will be sufficient to operate at a higher scale going forward.

ABOUT THE ENTITY

Macro Economic Indicator	Sector	Industry	Basic Industry
Fast Moving Consumer Goods	Fast Moving Consumer Goods	Food Products	Seafood

Growel Processors Private Limited (GPPL) is part of the Growel Group which was started by Late Dr. M.S. Ranga Chary in 1994. GPPL was incorporated on 26 Aug 2010 in Hyderabad. The processing facility is located in Krishna district of Andhra Pradesh. The primary business activity of GPPL is processing and sale of frozen shrimp. The frozen shrimp is exported principally under three major categories – head-on, head-less and value-added. Value added products include peeled and deveined (PD), peeled and undeveined (PUD), peeled deveined and tail on/off etc. Most of the product is exported to countries like China, Vietnam, Malaysia, USA, UAE, and Japan.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 21 - 22 (Audited)	FY 22 - 23 (Audited)	FY 23 - 24 (Provisional)
Operating Revenue	Rs.Crs.	425.15	431.17	491.39
EBITDA	Rs.Crs.	19.43	20.85	19.66
PAT	Rs.Crs.	5.85	3.92	4.24
Tangible Net Worth	Rs.Crs.	121.14	122.68	125.20
Total Debt / Tangible Net Worth	Times	0.56	0.48	0.87
Current Ratio	Times	1.36	1.65	1.28

KEY COVENANTS OF THE FACILITY RATED

The terms of sanction include standard covenants normally stipulated for such facilities.

RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)

Facilities	Current Rating (2024)			2023		2022		2021
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	46.89	BWR BBB+/Stable (Reaffirmation)	27Apr2023	BWR BBB+ Stable (Reaffirmation)	28Jan2022	BWR BBB+ Stable (Reaffirmation)	NA	NA
FB SubLimit	LT	(30.00)	BWR BBB+/Stable (Reaffirmation)	NA	NA	NA	NA	NA	NA
Fund Based	ST	90.00	BWR A2 (Reaffirmation)	27Apr2023	BWR A2 (Reaffirmation)	28Jan2022	BWR A2 (Reaffirmation)	NA	NA
FB SubLimit	ST	(35.00)	BWR A2 (Reaffirmation)	NA	NA	NA	NA	NA	NA
		(35.00)	BWR A2 (Reaffirmation)	NA	NA	NA	NA	NA	NA
		(60.00)	BWR A2 (Reaffirmation)	NA	NA	NA	NA	NA	NA
		(30.00)	BWR A2 (Reaffirmation)	NA	NA	NA	NA	NA	NA
Non Fund Based	ST	13.17	BWR A2 (Reaffirmation)	NA	NA	NA	NA	NA	NA
NFB SubLimit	ST	NA	NA	27Apr2023	BWR A2 (Reaffirmation)	NA	NA	NA	NA
Grand Total		150.06	(Rupees One Hundred Fifty Crores and Six lakhs Only)

Hyperlink/Reference to applicable Criteria

Analytical Contacts
Sejal Santosh Jaiswal Ratings Analyst sejal.sj@brickworkratings.com	Niraj Kumar Rathi Director Ratings niraj.r@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

Growel Processors Pvt. Ltd.

ANNEXURE-I

Details of Bank Facilities rated by BWR

SL.No.	Name of the Bank/Lender	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)	Complexity of the Instrument
1	HDFC Bank	Term Loan - Out-standing	11.89	_	11.89	Simple##
2	HDFC Bank	Cash Credit - Sanctioned	35.00	_	35.00	Simple##
	Sub-Limit (EPC) - Sanctioned		(35.00)
	Sub-Limit (Post shipment) - Sanctioned		(35.00)
3	HDFC Bank	Export Packing Credit (EPC) - Sanctioned	_	90.00	90.00	Simple##
	Sub-Limit (Cash credit) - Sanctioned	(30.00)
	Sub-Limit (Post shipment) - Sanctioned		(60.00)
	Sub-Limit (Post shipment) - Sanctioned		(30.00)
4	HDFC Bank	BG/ILC - Sanctioned	_	3.17	3.17	Simple##
5	HDFC Bank	Pre Settlement Risk - Sanctioned	_	10.00	10.00	Simple##
6	ICICI Bank	Cash Credit - Sanctioned	_	_	0.00	Simple##
	Sub-Limit (Export Packing Credit (EPC)) - Sanctioned		(0.00)
Total			46.89	103.17	150.06
TOTAL (Rupees One Hundred Fifty Crores and Six lakhs Only)

## BWR complexity levels are meant for educating investors. The BWR complexity levels are available at www.brickworkratings.com / download / ComplexityLevels.pdf. Investors queries can be sent to info@brickworkratings.com.

ANNEXURE-II

INSTRUMENT DETAILS

Instrument	Issue Date	Amount (Rs.Crs)	Coupon Rate (%)	Maturity Date	ISIN Particulars	Complexity of the Instrument
Nil	Nil	Nil	Nil	Nil	Nil	Nil

ANNEXURE-III

List of entities consolidated

Name of Entity	% Ownership	Extent of consolidation	Rationale for consolidation
Nil	Nil	Nil	Nil

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