Brickwork Ratings Reaffirms the ratings for the Bank Loan Facilities of Rs. 65.00 Crs. of AL-Sameer Exports Pvt. Ltd.
Particulars| Facilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||
|---|---|---|---|---|---|
| Previous | Present | Previous (28 Apr 2020) |
Present | ||
| Fund Based | 65.00 | 65.00 | Short Term |
BWR A3+
Reaffirmation |
BWR A3 +
Reaffirmation |
| Grand Total | 65.00 | 65.00 | (Rupees Sixty Five Crores Only) | ||
Brickwork Ratings (BWR) reaffirms the short-term rating at BWR A3+ for the bank loan facilities of AL-Sameer Exports Pvt. Ltd. (ASEPL or the company).
The rating reaffirmation derives comfort from established track record, comfortable financial risk profile having low leverage levels along with comfortable debt protection metrics and current ratio, besides efficient cash conversion cycle. However, the ratings are constrained by the inherent risk associated with the meat industry, country concentration risk, competition and foreign currency fluctuation risk. There is decline in revenue due to Covid-19 impact but scale of operations has remained reasonable nevertheless.
KEY RATING DRIVERSCredit Strengths:
The company has been in existence over a decade and has a good track record of the operations over the years. The company has a moderate scale of operations. Although the total operating income has declined from Rs 924.30 Crs in FY19 to Rs 788.22 Crs in FY20 and further declined to Rs 717.44 Crs in FY21 provisional but still reasonable scale of operations. The decline in sales is mainly due to Covid 19 impact.
Gearing (Total Debt/TNW) ratio is comfortable at 0.23x in FY21 provisional (0.26x in FY20) owing to good net worth as compared to the low debt obligations. The company's ability to meet its current liabilities from current assets, indicated by a comfortable current ratio of 1.41x in FY21 provisional (1.59x in FY20).
ASEPL has comfortable debt protection metrics i.e. it has moderate ability to meet its interest obligations from its operating profit, indicated by comfortable interest service coverage ratio (ISCR) of 8.71x in FY20. The ISCR has improved to 16.64x in Fy21 provisional due to decrease in Interest and finance charges owing to low limits utilization.
Conversion cycle of the company is efficient at 13 days (17 days in FY20) owing to receivable days and inventory holding period of 30 days (32 days in FY20) and 7 days in FY21 provisional (7 days in FY20) respectively.
Credit Risks:
The company is subject to changing regulations for the meat processing industry, can be affected by socio-political concerns due to the sensitive nature of business, besides competition from small and big players in the industry could impact the future margins.
Intense competition in the market from other major players in the industry and global competition in the buffalo meat market and pricing pressure may constrain the ratings. The company is susceptible to currency fluctuation risk loss as more than 95% of the revenue comes from export against NIL import. However, the company’s low receivable period (30 days) mitigates risk to some extent, coupled with approximately 50% of sales being hedged through forward contracts.
There is country concentration risk as exports to one country is more than 50% out of total exports in FY21. In addition to that, the top 5 customers contribute approximately 50% of the total revenue.
BWR has factored in the standalone business parameters and financial risk profile of the trust to arrive at the rating.
RATING SENSITIVITIES
Upward : The outlook may be revised to positive or the rating may be upgraded if there is reasonable improvement in the profitability and scale of operations, besides financial risk profile continuing to be comfortable.
Downward : BWR may revise the ratings downwards if the company achieves notably lower revenue than expected and deterioration in debt protection metrics and liquidity.
Company had cash accruals (profit after tax+depreciation) of Rs 17.20 Crs in FY21 provisional (Rs 15.89 Crs in FY20). The company had cash and cash equivalents of Rs 31.20 Crs at the end of March 2021. The working capital utilization is below 50% and the company has no fixed term liabilities.
ABOUT THE ENTITYAL-Sameer Exports Pvt. Ltd. (ASEPL), was incorporated in 2008, with its registered office at Kaiser Gunj, Meerut. It is being managed and promoted by Mohd Shameem Qureshi and wife Mrs Naaz Shameem. The company is engaged in the processing and export of frozen halal boneless buffalo meat and poultry products. The company owns an integrated abattoir cum meat processing plant at Araria, Bihar which is approved by the Agricultural and Processed Food Export Development Authority (APEDA) and Bihar State Pollution Control Board.
KEY FINANCIAL INDICATORS (Standalone)| Key Parameters | Units |
FY 19-20 (Audited) |
FY 18-19 (Audited) |
|---|---|---|---|
| Operating Revenue | Rs.Crs. | 788.22 | 924.30 |
| EBITDA | Rs.Crs. | 25.09 | 27.54 |
| PAT | Rs.Crs. | 12.71 | 18.89 |
| Tangible Net Worth | Rs.Crs. | 92.69 | 79.98 |
| Total Debt/Tangible Net Worth | Times | 0.26 | 0.56 |
| Current Ratio | Times | 1.59 | 1.40 |
NA
NA
RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)| Facilities | Current Rating (2021) | 2020 | 2019 | 2018 | |||||
|---|---|---|---|---|---|---|---|---|---|
| Type | Tenure | Amount (Rs.Crs.) |
Rating | Date | Rating | Date | Rating | Date | Rating |
| Fund Based | LT | NA |
NA
|
28Apr2020 |
BWR BBB (Stable)
(Withdrawn) |
23Jan2019 |
BWR BBB (Stable)
(Assignment) |
NA |
NA
|
| NA |
NA
|
NA |
NA
|
26Aug2019 |
BWR BBB (Stable)
(Reaffirmation) |
NA |
NA
|
||
| Fund Based | ST | 65.00 |
BWR A3+
(Reaffirmation) |
28Apr2020 |
BWR A3+
(Reaffirmation) |
23Jan2019 |
BWR A3+
(Assignment) |
NA |
NA
|
| NA |
NA
|
NA |
NA
|
26Aug2019 |
BWR A3+
(Reaffirmation) |
NA |
NA
|
||
| Grand Total | 65.00 | (Rupees Sixty Five Crores 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.
Hyperlink/Reference to applicable Criteria| Analytical Contacts | |
|---|---|
|
Raman Thakur Senior Rating Analyst Board : +91 11 2341 2232 raman.t@brickworkratings.com |
Tanu Sharma Director - Ratings tanusharma@brickworkratings.com |
| 1-860-425-2742 | media@brickworkratings.com | |
| SL.No. | Name of the Bank/Lender | Type Of Facilities | Long Term(Rs.Crs.) | Short Term(Rs.Crs.) | Total(Rs.Crs.) | |
|---|---|---|---|---|---|---|
| 1 | Punjab National Bank | Packing Credit (PC)Sanctioned | _ | 40.00 | 40.00 | |
| 2 | Yes Bank | Packing Credit (PC)Sanctioned | _ | 25.00 | 25.00 | |
| Total | 0.00 | 65.00 | 65.00 | |||
| TOTAL (Rupees Sixty Five Crores Only) | ||||||
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