Al-Sumama Agro Foods Pvt. Ltd.

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.12.50 Crs. of Al-Sumama Agro Foods Pvt. Ltd.

Particulars

Facility**	Amount (Rs.Crs)	Tenure	Rating*
Fund Based
Over Draft - Sanctioned Over Draft - Proposed	08.80 03.70	Long Term	BWR B + (Stable)
Sub Total	12.50
Grand Total	12.50	(Rupees Twelve Crores and Fifty lakhs Only)

*Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank facilities are provided in Annexure-I RATING ACTION / OUTLOOK : Stable

BWR believes that Al-Sumama Agro Foods Pvt. Ltd. business risk profile will be maintained over the medium term. the 'Stable' outlook indicates a low likelihood of rating change over the medium term. The rating outlook may be revised to 'Positive' in case the revenues and profit show sustained improvement. The rating outlook may be revisd to 'Negative' if the revenues go down and profit margins show lower than expected figures

KEY RATING DRIVERS

Strengths

• Experience of the Promoters :

  The directors have extensive experience in the field of meat trading, meat processing and export business. The directors have also been doing meat processing and exports in their group associated companies.

• Moderate Financial Risk Profie :

  Strong Debt Protection Metrics marked by ISCR and DSCR at 2.40X and 1.93X respectively in FY18. Gearing is considered to be moderate. The capital structure of the company as marked by moderate gearing of 1.89X in FY18 which has increased from 1.57X in FY17.

• Location-Specific Advantage :

  Most of the players in the industry have facilities in Uttar Pradesh, given easy access to high inventory of buffaloes in the region. Also, the active participation by farmers ensures easy availability of the livestock.

• Uptrend in Revenues :

  During FY18, the company reported net revenues of Rs.126.79 Crs and PAT of Rs.1.18 Crs. According to the provisional financials and the information provided by the management, the company has clocked a revenue of Rs.374.91 Crs in FY19 registering a growth of 195%. The management has also informed that the company has achieved Rs.107.54 Crs. in Q1 of FY20.

Weakness

• Regulatory Risk :

  The industry is highly regulated by the government. Any changes in existing regulatory framework/ environment may adversely affect the profitability of the company.

• Weak Liquidity and Profitability Margins :

  Current ratio in FY18 is at 0.55X which is below average. The same has declined from FY17 which was at 0.72X. Though, the other liquidity indicators stood moderate as marked by comfortable Conversion Cycle of 21 Days in FY 18 which has increased from 5 Days in FY17. Below Average Profitability margins marked by Operating Profit and Net Profit margin stood weak at 2.05% and 0.93% respectively. Though the same have improved from 1.36% and 0.63% in FY17. Further, the Operating Profit and Net Profit margin of the company stood at 0.97% and 0.61% respectively in FY19 (Prov.)

ANALYTICAL APPROACH AND APPLICABLE RATING CRITERIA

For ariving at its ratings, BWR has applied its rating methodology as detailed in the Rating Criteria detailed below (hyperlinks provided at the end of this rationale).

LIQUIDITY POSITION

Cash and Cash Equivalents amounts to Rs.0.08 Cr. in FY18 Long Term Borrowings in FY18 include interest free unsecured loans from the Related Parties (Marya Day Agro Foods Pvt Ltd) amounting Rs.4.59 Cr. and interest free unsecured loans from Directors amounting Rs.0.16 Cr. It also include Unsecured deposits from the  amounting Rs.5.18 Cr. The same has been diverted to Marya Frozen Agro Food Products Pvt Ltd. in the form of interest free unsecured loans amounting Rs.8.97 Cr. Current ratio in FY18 is at 0.55X which is below average.  Conversion Cycle of 21 Days in FY18. The firm has an OD Limit of Rs.8.80 Cr. with 100%  utilization. Strong Debt Protection Metrics marked by ISCR and DSCR at 2.40X and 1.93X respectively in FY18. The Overall Liquidity of the company is under stress.

PROFILE

The company got incorporated on 7th May, 2013 and started its operations in the same year itself. The company is in wholesale trading of buffalo and buffalo meat. The company purchases the live buffalo in bulk from its registered vendors. They also purchase the livestock directly from farmers. The company has 18 employees. The company enjoys a credit term of 30 Days with the suppliers and get paid by the customers in 15 Days. In FY19, sale of buffalo meat amounts to Rs.203.27 Cr. which contributes to 54.22% of its total revenue. The company also trades in buffalo offals and live buffaloes which together contributes to 45.78% of the total revenue

KEY FINANCIAL INDICATORS

Key Parameters	Units	FY 17-18	FY 16-17
Operating Revenue	Rs.Crs.	126.79	384.35
EBITDA	Rs.Crs.	2.60	5.23
PAT	Rs.Crs.	1.18	2.43
Tangible Net Worth	Rs.Crs	9.98	9.07
Total Debt/Tangible Net Worth	Times	1.89	1.57
Current Ratio	Times	0.55	0.72

RATING HISTORY (INCLUDING WITHDRAWAL AND SUSPENSION)

S.No	Current Rating (2019)				Rating History
	Facilities	Tenure	Amount (Rs.Crs)	Rating	2018	2017	2016
Fund Based
1	Over Draft - Sanctioned Over Draft - Proposed	Long Term	8.80 3.70	BWR B+ (Pronounced as BWR Single B plus) (Outlook: Stable)	NA	NA	NA
Total			12.50	(Rupees Twelve Crores and Fifty lakhs Only)

COMPLEXITY LEVELS OF THE INSTRUMENTS

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.

For More Information Contact:

Analytical Contacts	Investor Contacts
Aayush Verma Ratings Analyst B : +91 11 2341 2232 aayush.v@brickworkratings.com	Liena Thakur Assistant Vice President - Corporate Communications M : +91 84339 94686 liena.t@brickworkratings.com
Satvinder Kumar Gakhar Associate Director - Ratings B : +91 11 2341 2232 satvinder.g@brickworkratings.com
1-860-425-2742

SL.No.	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)
1	Over Draft - Sanctioned	8.80	_	8.80
2	Over Draft - Proposed	3.70	_	3.70
Total				12.50
TOTAL (Rupees Twelve Crores and Fifty lakhs Only)