Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 11.23 Crs. of Sri Lakshmi Poultry Farm
Particulars| Facilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||
|---|---|---|---|---|---|
| Previous | Present | Previous (30 Apr 2020) |
Present | ||
| Fund Based | 10.26 | 11.23 | Long Term |
BWR B-;Stable
Assigned |
BWR B -
/Stable Reaffirmation |
| Grand Total | 10.26 | 11.23 | (Rupees Eleven Crores and Twenty Three lakhs Only) | ||
BWR has reaffirmed the long-term rating at "BWR B-" with a "Stable" outlook for the sanctioned bank loan facilities of Sri Lakshmi Poultry Farm. The rating draws strength from the vast experience of the partners, established track record of operations and above average financial risk profile . However, the rating is constrained by scale of operations, nature of constitution as partnership firm, customer concentration risk, high gearing level and high competition from other established players in the market.
The rating outlook has been assigned as "Stable" as BWR believes that Sri Lakshmi Poultry Farm 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 revenue and profitability margins show sustained improvement. The rating outlook may be revised to 'Negative' if the financial risk profile goes down.
KEY RATING DRIVERSCredit Strengths:
Partners have more than 2 decades of experience in the same business.
Operating profit margin increased from 7.02% in FY19 to 7.15% in FY20. Also the net profit margin increased from 0.52% in FY19 to 0.69% in FY20.
DSCR and ISCR of the firm stands at 1.03 and 1.42 respectively in FY20 thus indicating firm's ability to service its debt obligations.
Credit Risks:
withdrawal of capital by the proprietor/Partners for any personal contingency would adversely affect the capital structure of the firm.Limitations of Proprietorship constitution in terms of capital and management.
The firm derives all the revenue from Lakshmi Poultry Farms thus indicating significant customer concentration risk.
The operating revenue of the firm increased marginally from Rs.21.20 crore in FY19 to Rs. 22.38 crore in FY20. However, on provisional basis the operating revenue has declined to Rs.18.64 crore in FY21.
The net worth of the company is low which results in high gearing.
BWR has essentially relied upon the audited financials of FY20 and projections upto FY22, publicly available information and clarifications provided by the management.
RATING SENSITIVITIES
The ability of the entity to increase revenues , improve its profitability margins , strengthen its credit risk profile and manage its working capital efficiently would remain the key rating sensitivities.
Positive
Negative
The liquidity position of the firm is stretched with average monthly CC utilization of 95%. The current ratio is moderate at 1.26 times in FY20 as against 1.29 times in FY19. The cash conversion cycle stood high at 182 days in FY20 , however, improved from 189 days in FY19 due to improvement in collection period. The cash and cash equivalents of the firm were at Rs.0.064 crores as on March 2020 as against Rs.0.059 crores as on March 2019.
ABOUT THE ENTITYFormed business entity in 1997 at Brahmanagudem, Andhra Pradesh, Sri Lakshmi Poultry Farm is engaged in commercial layer poultry farming business. The firm operates through its facilities located in Brahmanagudem and Chikkala villages with a total capacity of 2,80,000 commercial layers, presently running at capacity of 1,80,000 commercial layers and a total capacity of 70000 chick cum growers. The firm has 14 layer sheds, 3 grower sheds and feed godowns spread across 25 acres of land . The firm procure day old chicks from Sri Venkateswara Hatcheries Pvt Ltd, Hyderabad and poultry feed locally.
KEY FINANCIAL INDICATORS (Standalone)| Key Parameters | Units |
FY 19-20 (Audited) |
FY 18-19 (Audited) |
|---|---|---|---|
| Operating Revenue | Rs.Crs. | 22.38 | 21.20 |
| EBITDA | Rs.Crs. | 1.60 | 1.49 |
| PAT | Rs.Crs. | 0.15 | 0.11 |
| Tangible Net Worth | Rs.Crs. | 4.93 | 4.51 |
| Total Debt/Tangible Net Worth | Times | 2.11 | 2.47 |
| Current Ratio | Times | 1.26 | 1.29 |
The terms of sanction include standard covenants normally stipulated for such facilities.
ICRA has retained the ratings at ICRA C+ for the Bank facilities of Sri Lakshmi Poultry Farm with continuation in the 'Issuer Not Cooperating' category on May 21, 2021.
ANY OTHER INFORMATIONNA
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 | 11.23 |
BWR B-/Stable
(Reaffirmation) |
30Apr2020 |
BWR B-;Stable
(Assigned) |
NA |
NA
|
NA |
NA
|
| Grand Total | 11.23 | (Rupees Eleven Crores and Twenty Three 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.
Hyperlink/Reference to applicable Criteria| Analytical Contacts | |
|---|---|
|
Roshan Ranjan Ratings Analyst roshan.r@brickworkratings.com |
Nagaraj K Associate Director - Ratings Board : +91 80 4040 9940 nagaraj.ks@brickworkratings.com |
| 1-860-425-2742 | media@brickworkratings.com | |
| SL.No. | Type Of Facilities | Long Term(Rs.Crs.) | Short Term(Rs.Crs.) | Total(Rs.Crs.) | ||
|---|---|---|---|---|---|---|
| 1 | Cash CreditSanctioned | 8.00 | _ | 8.00 | ||
| 2 | Term LoanSanctioned | 1.73 | _ | 1.73 | ||
| 3 | Covid -19 Emergency Line CreditSanctioned | 1.50 | _ | 1.50 | ||
| Total | 11.23 | 0.00 | 11.23 | |||
| TOTAL (Rupees Eleven Crores and Twenty Three lakhs Only) | ||||||
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