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 (02 Aug 2021) |
Present | ||
| Fund Based | 65.00 | 65.00 | Short Term |
BWR A3+
Reaffirmation |
BWR A3 +
Reaffirmation |
| (10.00) | (10.00) | ||||
| Grand Total | 65.00 | 65.00 | (Rupees Sixty Five Crores Only) | ||
Brickwork Ratings (BWR) reaffirms the short-term rating at BWR A3+ (mapped with assigned long-term rating of BWR BBB/Stable) for the bank loan facilities of AL-Sameer Exports Pvt. Ltd. (ASEPL or the company).
The rating reaffirmation continues to derives comfort from established track record, comfortable financial risk profile having low leverage levels, 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, besides declined revenue due to Covid-19 impact and post implications 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. Directors of the company viz Mr. Mohammad Shameer has 5 years of experience and Mrs Naaz has more than a decade of experience.
Gearing(Total Debt/TNW) ratio of the company is comfortable at 0.40x in FY22 provisional (PY : 0.23x) owing to good net worth of Rs 117.27 Crs as compared to the low debt obligations in FY22 provisional. The company's ability to meet its current liabilities from current assets, indicated by a comfortable current ratio of 2.27x in FY22 provisional (PY:1.46x). The company’s total Debt/EBITDA ratio is reasonable at 3.56x in FY22 provisional though deteriorated from 1.13x in FY21 due to increased debt and declined EBITDA.
ASEPL has comfortable debt protection metrics and has moderate ability to meet its interest from its operating profit, indicated by its comfortable interest service coverage ratio (ISCR) of 7.17x in FY22 provisional (PY: 12.13x).
Operating cycle of the company is good at 30 days owing to receivable days and inventory period of 34 days and 22 days respectively in FY22 provisional.
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 approximately 93% of the revenue comes from export against NIL import. However, the company’s low receivable period (34 days) mitigates risk to some extent, besides the company uses its forward contracts to an extent to mitigate risk.
There is country concentration risk as exports to one country is more than 39% and exports to 5 countries contribute more than 71% out of total exports in FY22.
The revenue has declined from Rs 788.22 Crs in FY20 to Rs 717.71 Crs in FY21 and further declined to Rs 568.55 Crs as per FY22 provisional. The company business operations was affected due to covid-19 in the last quarter of FY20, FY21 and first quarter of FY22 and because of this exports affected to the major export country (China) and currently the company switched over its major business to the Egypt market besides continuing the export to other existing countries.
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 significant improvement in the scale of operations, besides improvement in profitability margins and 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 9.92 Crs in FY22 provisional against no major fixed term liabilities while it had unencumbered cash and cash equivalents of Rs 12.59 Crs at the end of March 2022. BWR is expecting cash accruals of around Rs 11 Crs for FY23 and expecting ISCR of above 4 times. The average utilization of fund based limits for last 6 months was around 50% till June 2022. The entity had a comfortable current ratio ia 2.27x in FY22 provisional.
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 21-22 (Provisional) |
FY 20-21 (Audited) |
|---|---|---|---|
| Operating Revenue | Rs.Crs. | 568.55 | 717.71 |
| EBITDA | Rs.Crs. | 13.20 | 22.20 |
| PAT | Rs.Crs. | 7.37 | 14.66 |
| Tangible Net Worth | Rs.Crs. | 117.27 | 109.90 |
| Total Debt/TNW | Times | 0.40 | 0.23 |
| Current Ratio | Times | 2.27 | 1.46 |
NA
NA
ANY OTHER INFORMATIONNA
RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)| Facilities | Current Rating (2022) | 2021 | 2020 | 2019 | |||||
|---|---|---|---|---|---|---|---|---|---|
| Type | Tenure | Amount (Rs.Crs.) |
Rating | Date | Rating | Date | Rating | Date | Rating |
| Fund Based | LT | 0.00 |
NA
|
NA |
NA
|
28Apr2020 |
BWR BBB Stable
(Withdrawn) |
23Jan2019 |
BWR BBBStable
(Assignment) |
| 0.00 |
NA
|
NA |
NA
|
NA |
NA
|
26Aug2019 |
BWR BBBStable
(Reaffirmation) |
||
| Fund Based | ST | 65.00 |
BWR A3+
(Reaffirmation) |
02Aug2021 |
BWR A3+
(Reaffirmation) |
28Apr2020 |
BWR A3+
(Reaffirmation) |
23Jan2019 |
BWR A3+
(Assignment) |
| 0.00 |
NA
|
NA |
NA
|
NA |
NA
|
26Aug2019 |
BWR A3+
(Reaffirmation) |
||
| FB SubLimit | ST | (10.00) |
BWR A3+
(Reaffirmation) |
NA |
NA
|
NA |
NA
|
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 |
Kewal Krishan Singla Director - Ratings kewalsingla@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 | |
| Sub-Limit (Cash Credit(CC)) Sanctioned | (10.00) | |||||
| Total | 0.00 | 65.00 | 65.00 | |||
| TOTAL (Rupees Sixty Five Crores Only) | ||||||
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