RATING RATIONALE
22Nov2023

Vishwaraj Sugar Industries Ltd.

Brickwork Ratings downgrade and withdraw the ratings for the Bank Loan Facilities of Rs. 233.01 Crs. of Vishwaraj Sugar Industries Ltd.

Particulars
Facilities** Amount (Rs.Crs.) Tenure Rating#
Previous Present Previous
(28 Sep 2022)
Present
Fund Based 244.63 233.01 Long Term BWR BBB- /Stable
Reaffirmation
BWR BB +
Downgrade/Withdrawal
Non Fund Based (10.00) (10.00) Short Term BWR A3
Reaffirmation
BWR A4 +
Downgrade/Withdrawal
Grand Total 244.63 233.01 (Rupees Two Hundred Thirty Three Crores and One lakhs Only)
#Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank Loan facilities,consolidation or instruments are provided in Annexure

RATING ACTION / OUTLOOK

Brickwork Ratings (BWR) downgrades Vishwaraj Sugar Industries Ltd (VSIL)  bank loan ratings to BWR BB+ /Stable based on the annual financials for FY23 and H1FY24 financial results published on the BSE website and the best available information. BWR has simultaneously withdrawn the ratings. The withdrawal of the rating is based on the company’s request for withdrawal and pursuant to receiving No Objection Certificates (NOC) from lenders in this regard.  The withdrawal of ratings is in line with BWR's withdrawal policy for bank loan ratings.

 In FY23, the company's operating revenue was Rs. 616.5 Crores (FY22: Rs. 468.8 Crores) and Rs. 279.8 Crores as of 30th September 2023. It reported operating profit margin of 10.7% (FY22: 19.9%) and net profit margin of -3.8% (FY22: 12.8%).  Provisionally during H1FY24, the company reported an operating margin of -20.6 % and a net profit margin of 0.1%.

The gearing level was marginally elevated at 1.4x (FY22: 1.3x) owing to the net loss incurred in FY23. Further, its interest service cover weakened to 2.4x in FY23 (FY22: 2.9x) and debt coverage weakned to 0.30x (FY22: 1.81X). On a half-yearly basis, gearing improved to 1.03x, however, the debt coverage indicators further worsened with interest service cover at 0.02x and debt service cover at 0.07x as of 30th September 2023. 

BWR believes that VSIL’s financial risk profile improvement will be dependent on its ability to improve and stabilize its operating margins and its business profile continues to be exposed to industry cyclicality, regulatory policies for sugar mills, and agro-climatic risks impacting crop yields. 

Liquidity Stretched: Net Cash accrual during H1FY24 was negative at Rs. 12.58 Crores. However, cash flow from operations remained positive at Rs. 4.34 Crores during H1FY24 owing to a shorter gross working capital cycle and supported liquidity. The company has Cash and Cash equivalents of Rs. 4.35 Crores as of 30th September 2023. BWR believes that a delay in turnaround in operating performance or elongation of the working capital cycle during H1FY24 could pressurize the liquidity profile of the company and impair its debt serviceability further since its current portion of long-term debt is Rs. 18.34 Crores for FY24.

Analytical Approaches - Standalone

For arriving at the ratings, BWR has considered the standalone business and financial profile of  Vishwaraj Sugar Industries Ltd. and has applied the rating methodology as detailed in the Rating Criteria.

KEY FINANCIAL INDICATORS (Standalone)

 

ABOUT THE ENTITY
Macro Economic Indicator Sector Industry Basic Industry
Fast Moving Consumer Goods Fast Moving Consumer Goods Agricultural Food & other Products Sugar

Based in Belgaum, Karnataka, VSIL was incorporated in May 1995; it is listed on the BSE and NSE. It is engaged in the manufacturing of sugar, alcoholic spirits by distillation including ethanol and natural alcohol vinegar, and generation of power. The company has a fully integrated plant at Bellad Bagewadi, Belgaum District in North Karnataka. The company procures only sugarcane as raw material from local farmers and utilises the by-products for distillery unit and power generation.

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

India Ratings has migrated the Bank loan rating of VSIL to IND BB/Issuer Not Cooperating dated 6 January 2023, stating the reason that the issuer did not participate in the rating exercise despite continuous requests and follow-ups by the agency.

RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)
Facilities Current Rating  (2023) 2022 2021 2020
Type Tenure Amount
(Rs.Crs.)
Rating Date Rating Date Rating Date Rating
Fund Based LT 233.01
BWR BB+
(Downgrade/Withdrawal)
20May2022
BWR BBB- Stable
(Upgrade)
27Aug2021
BWR BB+ Stable
(Assignment)
NA
NA
0.00
NA
28Sep2022
BWR BBB- Stable
(Reaffirmation)
NA
NA
NA
NA
NFB SubLimit ST (10.00)
BWR A4+
(Downgrade/Withdrawal)
20May2022
BWR A3
(Upgrade)
27Aug2021
BWR A4+
(Assignment)
NA
NA
NA
NA
28Sep2022
BWR A3
(Reaffirmation)
NA
NA
NA
NA
Grand Total 233.01 (Rupees Two Hundred Thirty Three Crores and One lakhs Only)
COMPLEXITY LEVELS OF THE INSTRUMENTS - Simple

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

KunjalDabhi

Ratings Analyst kunjal.d@brickworkratings.com

Niraj Kumar Rathi

niraj.r@brickworkratings.com
1-860-425-2742 | media@brickworkratings.com
Vishwaraj Sugar Industries Ltd.
ANNEXURE-I
Details of Bank Facilities rated by BWR
SL.No. Name of the Bank/Lender Type Of Facilities Long Term(Rs.Crs.) Short Term(Rs.Crs.) Total(Rs.Crs.)
1 Bank of India Cash CreditSanctioned 46.00 _ 46.00
Sub-Limit (BG Inland) Sanctioned (10.00)
2 Bank of India Working Capital Demand LoanSanctioned 69.00 _ 69.00
3 Bank of India GECLSanctioned 28.01 _ 28.01
4 State Bank Of India (SBI) Working Capital Demand LoanSanctioned 90.00 _ 90.00
Total 233.01 0.00 233.01
TOTAL (Rupees Two Hundred Thirty Three Crores and One lakhs Only)
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