Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs. 48.00 Crs. of Sri Lakshmi Srinivasa Oil Industries
Particulars| Facilities** | Amount(Rs.Crs.) | Tenure | Rating#@ | |
|---|---|---|---|---|
| Fund Based | 48.00 | Long Term |
BWR B +
/Stable Assignment |
|
| Grand Total | 48.00 | (Rupees Forty Eight Crores Only) | ||
The rating takes into account experienced promoters of the firm and the location specific advantage. The rating, however, is constrained by risk associated with project implementation and timely stabilization of operations, project dependency on sanctioning of term loan, competitive nature of industry and vulnerability of profitability and revenue to fluctuations in prices of raw material.
BWR believes that Sri Lakshmi Srinivasa Oil Industries 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 revised to 'Negative' if the revenues go down and profit margins show lower than expected figures.
KEY RATING DRIVERSCredit Strengths:
The promoters of the firm are the 12 partners of the firm. All the partners of the firm hail from the agriculture family and have sound experience in the fields of rice milling and other agriculture products. The promoters have sound financial background to infuse required capital from their sources. Mr. Srinivas Chitturi and Mr. Naveen Dhronavalli are the managing partners of the firm. Mr Srinivas Chitturi has more than 20 years of experience in the field of rice milling. Mr. Naveen Dhronavalli is well qualified with Btech qualification.
The manufacturing unit of the firm is located at Sindhanur. The place is called Rice Bowl of India and is having all infrastructure facilities for development of industries which are related to rice and rice products. It is connected to Raichur, Bellary and Koppal where Rice milling activity is major source of revenue. The place has access to all infrastructure facilities as it is connected with good transportation both road and rail mode, having sufficient power arrangements and plenty of manpower to work and hence setting up of this industry will be beneficial for the firm.
The project, being in implementation stage, has projected to commence its commercial operations in September 2024. Hence, the firm is exposed to risks associated with stabilization and successful scale up of the plant as per the expected parameters. The ability of the firm to ensure commencement of commercial operations without any time or cost overruns and stabilize its operations as projected, will remain the key sensitivities.
The overall implementation schedule and projected timeline is subject to the sanctioning of term loan and its terms & conditions. Any deviation in the same would impact the project execution accordingly.
The firm will operate in the rice bran oil industry. The industry is highly competitive with presence of number of players in the industry. This limits the financial flexibility and bargaining power and thereby will place pressure on the revenue and profit margins of the firm.
The profitability of the firm remains vulnerable to fluctuations in prices of the raw material as they are the major manufacturing cost components that determine the cost competitiveness of players in the industry. Hence, any adverse movement in the prices of raw materials could impact margins adversely.
For arriving 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).
RATING SENSITIVITIES
Positive: Given the implementation period of the project of more than a year from now, the rating upgrade in the near term appears unlikely.
Negative: The rating would be adversely revised if there is delay in project execution with significant time and cost overruns. Demand for the firm's products would also remain key sensitivities towards the rating.
LIQUIDITY INDICATORS - Stretched
The project is under implementation and the firm is in the process of availing the term loan. Going forward, liquidity of the firm will depend on the timely commissioning of the production and stabilizing its business operations to generate adequate cash accruals to meet its debt repayment obligations.
ABOUT THE ENTITYSri Lakshmi Srinivasa Oil Industries is a partnership firm constituted on 25 May 2022 with the Registrar of firms, Karnataka. The registered address of the firm is SY No 830/P2 & P4 EJ Hosahalli Cross, Hutti Road, Sindhanur-584128, Raichur district, Karnataka. The firm is in the process of setting up a processing unit with an installed capacity of 350 Tonnes/day at Hutti Road, EJ Hosalli, Sindhanur for the production of Rice Bran Oil. It will also set up a crude bran oil refinery with an installed capacity of 100 Tonnes/day. The cost of project is estimated at Rs. 40 crore is to be funded through equity contribution of Rs. 12 crore and term loan from bank of Rs. 28 crore. As on 25 November 2022, the promoters have infused Rs. 1.21 crores of capital towards acquisition of land and other preoperative expenses. The firm has projected to commence its commercial operations by September 2024. The promoters are 12 partners in the firm. Mr. Shrinivas Chitturi and Mr. Naveen Dhronavalli are the managing partners of the firm.
KEY FINANCIAL INDICATORS (Standalone)| Key Parameters | Units |
FY 23-24 (Projected) |
FY 22-23 (Projected) |
|---|---|---|---|
| Operating Revenue | Rs.Crs. | Not Available | Not Available |
| EBITDA | Rs.Crs. | Not Available | Not Available |
| PAT | Rs.Crs. | Not Available | Not Available |
| Tangible Net Worth | Rs.Crs. | 13.00 | 10.00 |
| Total Debt/TNW | Times | 1.54 | 1.00 |
| Current Ratio | Times | Not Available | Not Available |
NA
NA
ANY OTHER INFORMATIONNA
RATING HISTORY FOR LAST 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 | 48.00 |
BWR B+/Stable
(Assignment) |
NA |
NA
|
NA |
NA
|
NA |
NA
|
| Grand Total | 48.00 | (Rupees Forty Eight 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 | |
|---|---|
|
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. | Name of the Bank/Lender | Type Of Facilities | Long Term(Rs.Crs.) | Short Term(Rs.Crs.) | Total(Rs.Crs.) | |
|---|---|---|---|---|---|---|
| 1 | Un tied portion | Term LoanProposed | 28.00 | _ | 28.00 | |
| 2 | Un tied portion | Cash CreditProposed | 20.00 | _ | 20.00 | |
| Total | 48.00 | 0.00 | 48.00 | |||
| TOTAL (Rupees Forty Eight Crores Only) | ||||||
The Rating Rationale is sent to you for the sole purpose of dissemination through your print, digital or electronic media. While it may be used by you acknowledging credit to BWR, please do not change the wordings in the rationale to avoid conveying a meaning different from what was intended by BWR. BWR alone has the sole right of sharing (both direct and indirect) its rationales for consideration or otherwise through any print or electronic or digital media.
About Brickwork RatingsBrickwork Ratings (BWR), a Securities and Exchange Board of India [SEBI] registered Credit Rating Agency and accredited by Reserve Bank of India [RBI], offers credit ratings of Bank Loan, Non- convertible / convertible / partially convertible debentures and other capital market instruments and bonds, Commercial Paper, perpetual bonds, asset-backed and mortgage-backed securities, partial guarantees and other structured / credit enhanced debt instruments, Security Receipts, Securitization Products, Municipal Bonds, etc. BWR has rated over 12,000 medium and large corporates and financial institutions’ instruments. BWR has also rated NGOs, Educational Institutions, Hospitals, Real Estate Developers, Urban Local Bodies and Municipal Corporations. BWR has Canara Bank, a leading public sector bank, as one of the promoters and strategic partner. BWR has its corporate office in Bengaluru and a country-wide presence with its offices in Ahmedabad, Chandigarh, Chennai, Hyderabad, Kolkata, Mumbai and New Delhi along with representatives in 150+ locations.
Disclaimer
Brickwork Ratings India Pvt. Ltd. (BWR), a Securities and Exchange Board of India [SEBI] registered Credit Rating Agency and accredited by the Reserve Bank of India [RBI], offers credit ratings of Bank Loan facilities, Non- convertible / convertible / partially convertible debentures and other capital market instruments and bonds, Commercial Paper, perpetual bonds, asset-backed and mortgage-backed securities, partial guarantees and other structured / credit enhanced debt instruments, Security Receipts, Securitization Products, Municipal Bonds, etc. [ hereafter referred to as "Instruments"]. BWR also rates NGOs, Educational Institutions, Hospitals, Real Estate Developers, Urban Local Bodies and Municipal Corporations.
BWR wishes to inform all persons who may come across Rating Rationales and Rating Reports provided by BWR that the ratings assigned by BWR are based on information obtained from the issuer of the instrument and other reliable sources, which in BWR's best judgment are considered reliable. The Rating Rationale / Rating Report & other rating communications are intended for the jurisdiction of India only. The reports should not be the sole or primary basis for any investment decision within the meaning of any law or regulation (including the laws and regulations applicable in Europe and also the USA).
BWR also wishes to inform that access or use of the said documents does not create a client relationship between the user and BWR.
The ratings assigned by BWR are only an expression of BWR's opinion on the entity / instrument and should not in any manner be construed as being a recommendation to either, purchase, hold or sell the instrument.
BWR also wishes to abundantly clarify that these ratings are not to be considered as an investment advice in any jurisdiction nor are they to be used as a basis for or as an alternative to independent financial advice and judgment obtained from the user's financial advisors. BWR shall not be liable to any losses incurred by the users of these Rating Rationales, Rating Reports or its contents. BWR reserves the right to vary, modify, suspend or withdraw the ratings at any time without assigning reasons for the same.
BWR's ratings reflect BWR's opinion on the day the ratings are published and are not reflective of factual circumstances that may have arisen on a later date. BWR is not obliged to update its opinion based on any public notification, in any form or format although BWR may disseminate its opinion and analysis when deemed fit.
Neither BWR nor its affiliates, third party providers, as well as the directors, officers, shareholders, employees or agents (collectively, "BWR Party") guarantee the accuracy, completeness or adequacy of the Ratings, and no BWR Party shall have any liability for any errors, omissions, or interruptions therein, regardless of the cause, or for the results obtained from the use of any part of the Rating Rationales or Rating Reports. Each BWR Party disclaims all express or implied warranties, including, but not limited to, any warranties of merchantability, suitability or fitness for a particular purpose or use. In no event shall any BWR Party be liable to any one for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of any part of the Rating Rationales and/or Rating Reports even if advised of the possibility of such damages. However, BWR or its associates may have other commercial transactions with the company/entity. BWR and its affiliates do not act as a fiduciary.
BWR keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of the respective activity. As a result, certain business units of BWR may have information that is not available to other BWR business units. BWR has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with each analytical process.
BWR clarifies that it may have been paid a fee by the issuers or underwriters of the instruments, facilities, securities etc., or from obligors. BWR's public ratings and analysis are made available on its web site, www.brickworkratings.com. More detailed information may be provided for a fee. BWR's rating criteria are also generally made available without charge on BWR's website.
This disclaimer forms an integral part of the Ratings Rationales / Rating Reports or other press releases, advisories, communications issued by BWR and circulation of the ratings without this disclaimer is prohibited.
BWR is bound by the Code of Conduct for Credit Rating Agencies issued by the Securities and Exchange Board of India and is governed by the applicable regulations issued by the Securities and Exchange Board of India as amended from time to time.