Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 50.00 Crs. of Shree Gita Ginning and Oil Industries
ParticularsFacilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||
---|---|---|---|---|---|
Previous | Present | Previous (08 Jun 2020) |
Present | ||
Fund Based | 50.00 | 50.00 | Long Term |
BWR BB+/Stable
Reaffirmed |
BWR BB +
/Stable Reaffirmation |
Non Fund Based | (15.00) | (15.00) | Short Term |
BWR A4+
Reffirmed |
BWR A4 +
Reaffirmation |
(13.00) | (13.00) | ||||
Grand Total | 50.00 | 50.00 | (Rupees Fifty Crores Only) |
BWR has essentially relied on Audited financials upto FY21 , publicly available information and information & clarifications provided by management.
The rating draws comfort from experienced management with long standing established relationships with clients, moderate financial risk profile and locational advantage. However, the rating is constrained by working capital intensive operation and volatile raw material prices.
BWR believes that Shree Gita Ginning and Oil Industries (SGGOI) business risk profile will be maintained over the medium term. The 'Stable' outlook indicates a low likelihood of rating change over the medium term.
KEY RATING DRIVERSCredit Strengths:
The firm is located in Morbi cluster and thus has a competitive advantage in terms of skilled labor, logistics, production knowledge and vendors making the company more efficient and cost effective.
The debt protection metrics of the company remained at a comfortable level during FY 21 as ISCR and DSCR stood respectively at 1.64x and 1.73x. The gearing of the company stood at a moderate level of 1.65x in FY21. However, the thin Net profitability margin can be a concern in the long run.
The partners of the company are very well experienced in this line of business. SGGOI is into this business since more than 4 decades now. The vintage of the successful running of the company shows us its creditablity and track record.
The operating profitability remains highly susceptible to raw material prices as it constitutes 95-98% of direct cost. The prices of raw cotton are highly volatile and susceptible to good monsoon. Further low bargaining power with customers and low value addition nature of business limits the ability to pass on the fluctuation in raw material prices.
The firm procures raw material without any credit period and has to extend credit period to their clients. Moreover cotton cultivation being seasonal, the firm has to maintain a high level of inventory during peak season.
Below are the links to the rating criteria followed :-
RATING SENSITIVITIES
Positive:
Negative:
The liquidity of the company stood at a moderate level. The company is utilizing around 80% of its CC facilities in average. EBITDA has been higher than the interest and finance charges. The current ratio stood at a moderate level of 1.50x. The cash conversion cycle remains at a moderate level of 40days.
ABOUT THE ENTITYShree Gita Ginning and Oil Industries is a partnership concern established in the year 1976 in Morbi, Gujarat.The firm is vertically integrated and is engaged in ginning and pressing of cotton. SGGOI crushes the cotton seeds to extract cottonseed oil cake and non edible oil which is further refined into edible oil. Factory for the same is located in Morbi and has a production capacity of 13765 MT of edible oil per day.
KEY FINANCIAL INDICATORS (Standalone)Key Parameters | Units |
FY 20-21 (Audited) |
FY 19-20 (Audited) |
---|---|---|---|
Operating Revenue | Rs.Crs. | 356.64 | 296.75 |
EBITDA | Rs.Crs. | 4.84 | 4.76 |
PAT | Rs.Crs. | 1.78 | 1.20 |
Tangible Net Worth | Rs.Crs. | 22.52 | 22.50 |
Total Debt/Tangible Net Worth | Times | 1.65 | 1.78 |
Current Ratio | Times | 1.50 | 1.47 |
Facilities | Current Rating (2021) | 2020 | 2019 | 2018 | |||||
---|---|---|---|---|---|---|---|---|---|
Type | Tenure | Amount (Rs.Crs.) |
Rating | Date | Rating | Date | Rating | Date | Rating |
Fund Based | LT | 50.00 |
BWR BB+/Stable
(Reaffirmation) |
08Jun2020 |
BWR BB+Stable
(Reaffirmed) |
07Mar2019 |
BWR BB+Stable
(Upgraded) |
31Jan2018 |
BWR BBStable
(Assigned) |
NFB SubLimit | ST | (15.00) |
BWR A4+
(Reaffirmation) |
08Jun2020 |
BWR A4+
(Reffirmed) |
07Mar2019 |
BWR A4+
(Upgraded) |
31Jan2018 |
BWR A4
(Assigned) |
NFB SubLimit | ST | (13.00) |
BWR A4+
(Reaffirmation) |
NA |
NA
|
NA |
NA
|
NA |
NA
|
Grand Total | 50.00 | (Rupees Fifty 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 CriteriaAnalytical Contacts | |
---|---|
Parth Modi Rating Analyst parth.m@brickworkratings.com |
Dileep Narayan Singh Director dileep.s@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 | Union Bank of India | Cash CreditSanctioned | 50.00 | _ | 50.00 |
Sub-Limit (Advance to suppliers) Sanctioned | (13.00) | ||||
Sub-Limit (EPC/PCFC/FDBP) Sanctioned | (15.00) | ||||
Total | 50.00 | 0.00 | 50.00 | ||
TOTAL (Rupees Fifty Crores Only) |
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