Growel Processors Pvt. Ltd.

Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 144.74 Crs. of Growel Processors Pvt. Ltd.

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
	Previous	Present		Previous (05 Jul 2024)	Present
Fund Based	46.89	41.57	Long Term	BWR BBB+ /Stable Reaffirmation	BWR BBB + /Stable Reaffirmation
	(30.00)	(30.00)
	90.00	90.00	Short Term	BWR A2 Reaffirmation	BWR A2 Reaffirmation
	(35.00)	(35.00)
	(35.00)	(35.00)
	(60.00)	(60.00)
	(30.00)	(30.00)
Non Fund Based	13.17	13.17	Short Term	BWR A2 Reaffirmation	BWR A2 Reaffirmation
Grand Total	150.06	144.74	(Rupees One Hundred Forty Four Crores and Seventy Four 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 has reaffirmed the ratings for the long-term bank loan facilities of Growel Processors Pvt. Ltd. at BWR BBB+/Stable and their short-term bank loan facilities at BWR A2 aggregate rated amount Rs.144.74 crores.

The rating reaffirmation of the bank loan facilities of Growel Processors Private Limited (GPPL) reflects the steady financial and operational performance in FY25 (Provisional), sustained moderate credit risk profile, favorable location of the manufacturing facility in proximity to the aquaculture zone in Andhra Pradesh, improved capacity utilization, stable working capital cycle, and comfortable liquidity. 

The ‘Stable’ outlook indicates a low likelihood of rating change over the medium term. BWR believes GPPL’s business and financial risk profile will be maintained over the medium term. The ratings are, however, constrained by the geographical concentration risk, susceptibility of the industry to frequent viral attacks and disease risk, volatile raw material prices, stiff competition, and low margin levels.

For assigning the rating, BWR has relied upon the last 3 years of audited financials till FY24, Provisional financials for FY25 and projected financials for FY26 & FY27, and publicly available information and clarification provided by management.

KEY RATING DRIVERS

Credit Strengths:

• Operational Performance :

  The company’s overall capacity utilization increased from ~44% in FY24 to ~58% in FY25 (Prov) due to the improvement in exports from China. In volume terms, the sales of processed shrimp increased from 9993 MT in FY24 to 13129 MT in FY25 (Prov). The overall capacity utilization is impacted due to monthly variations in the availability of raw shrimp in India. Keeping in view the seasonality and availability of fresh raw shrimp as it has to be processed within 24 hours of harvesting, the capacity utilization is high during April- September and low during the other months. Revenue improved by 43% in FY25 (Prov)  as compared to FY24 on account of improvement in sales volume. In FY25 (Prov) OPM dipped to 2.40% (FY24: 4.06%; FY23: 4.83%) despite an increase in the sales volume and realization. Net Profit Margin improved to 0.85% in FY25 (Prov) (FY24: 0.69%).

• Moderate financial risk profile :

  The company's financial profile continues to be moderate as reflected by adequate TNW. Debt coverage metrics remained moderate as reflected by ISCR of 1.79x and DSCR of 1.65x as of FY25 (Prov). Total debt to total net worth has increased to 0.97x in the year FY24 (Prov) as compared to 0.89x which is due to the issuance of more debt. TOL/TNW is 1.39x in FY25 (Prov) as compared to 1.22x in FY24.

• Locational advantages :

  The company's processing unit is situated in the Krishna region of Andhra Pradesh, which is known for significant aquaculture-related activities. This helps the company in both accessing fresh raw material at competitive costs from in and around Andhra Pradesh and immediately processing after the harvest.

• Experienced promoters and established track record :

  The promoters bring over two decades of experience in the aquaculture sector. Their established presence through sister companies Growel Feeds Private Limited and Growel Formulations Private Limited further strengthens their support to the business. The company specializes in processing and selling frozen shrimp, primarily focusing on the L. Vannamei variety.

• Accredited processing facilities :

  The company’s processing unit has certifications from the Global Aquaculture Alliance Best Aquaculture Practices (BAP), Export Inspection Council, HACCP, NSF Certification, US FDA Certification, Halal India Certificate, and FSSAI. These certifications and accreditations ensure that the company adheres to the international standards of hygiene and food safety at its processing unit. It also helps the company access both the international and domestic markets for its products.

Credit Risks:

• Volatile raw material prices, stiff competition, and low margins: :

  Growel’s business is exposed to raw material price volatility as it has to procure through dealers at spot price while its sales prices are driven by global demand and supply conditions. Additionally, the company faces stiff competition from established and new players. These factors translate into low margins for the company. Growel continues to explore new geographies and customer bases apart from its existing market.

• Concentration risk and foreign exchange risk :

  Around 83% is export revenue generated from China and 66% of revenue is being generated from the top 5 customers. Since the majority of the revenue comes from export sales, it exposes it to forex risk since the customers are billed in USD. Growel is trying to diversify into other geographies to broaden its geography and customer base. Additionally, the company hedges 50% of its forex exposure as a policy to contain its forex risk.

• Disease risks :

  The outbreak of diseases such as Early Mortality Syndrome(EMS) and White Spot Syndrome(WSS), in one place leads to their spread to similar other aquatic ecosystems and is a continuing industry risk that can potentially affect the price of raw materials as well as the finished product.

• Working capital intensive operations :

   Growel operates in a working capital-intensive industry that maintains a high quantum of inventory. The company’s average debtor cycle is around  48 days while it receives a short credit period of around 15 to 25 days from its creditors. As a result, the Cash Conversion Cycle has remained almost stagnant at 62 days in FY24 and  54 days in FY25 (Prov).

ANALYTICAL APPROACH - Standalone

The company does not have any subsidiary or associate as of FY25 (Prov). For arriving at its ratings, BWR has considered standalone applied its rating methodology as detailed in the Rating Criteria detailed below (hyperlinks provided at the end of this rationale).

RATING SENSITIVITIES

Going forward, the ability of the firm to improve the scale of operations and profitability, maintain a strong liquidity position, effectively manage working capital, and strengthen the overall credit profile would be the key rating sensitivities.

Positive:

• The rating may be upgraded if the company demonstrates substantial and sustained growth in revenue and profitability, along with an improvement in DSCR above 2.5x and ISCR above 3.5x on a sustained basis.
• Continued discipline in working capital management, ensuring liquidity remains adequate despite seasonal variations.

Negative:

• The rating may be downgraded if decline in operating profit margin below 2x on a sustained basis due to raw material supply issues, regulatory actions, or if DSCR declines below 1.0x and ISCR declines below 1.50x on a sustained basis.
• Elongation of the working capital cycle results in moderation in the liquidity on a sustained basis.

 

LIQUIDITY INDICATORS - Adequate

The company’s liquidity profile remains adequate, supported by moderate internal accruals. The net cash accrual for FY25 is Rs.6.06 Crs, which is sufficient against repayment obligations of Rs.5.55 Crs. The company is expected to generate cash accruals of Rs.18.85 crore in FY26, comfortably covering its CPLTD of Rs.4.85 crore, indicating adequate debt servicing capability. Cash and cash equivalents stood at Rs.12.56 Crs in FY25 (unencumbered is Rs.11.00cr), continues to provide a liquidity buffer. The working capital cycle has remained stagnant at around 2 months for the past two years. Further, it has unutilized working capital limits of around 45%. The company’s ability to secure higher limits from banks mitigates the immediate pressure; therefore, the liquidity is assessed as comfortable.

ABOUT THE ENTITY

Growel Processors Private Limited (GPPL) is part of the Growel Group which was started by Late Dr. M.S. Ranga Chary in 1994. GPPL was incorporated on 26 Aug 2010 in Hyderabad. The processing facility is located in Krishna district of Andhra Pradesh. The primary business activity of GPPL is processing and sale of frozen shrimp. The frozen shrimp is exported principally under three major categories – head-on, head-less and value-added. Value added products include peeled and deveined (PD), peeled and undeveined (PUD), peeled deveined and tail on/off etc. Most of the product is exported to countries like China, Vietnam, Malaysia, USA, UAE, and Japan.

KEY COVENANTS OF THE FACILITY RATED

The terms of sanction include standard covenants normally stipulated for such facilities.

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

Not Applicable

ANY OTHER INFORMATION

Nil

RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)

Facilities	Current Rating (2025)			2024		2023		2022
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	41.57	BWR BBB+/Stable (Reaffirmation)	05Jul2024	BWR BBB+ Stable (Reaffirmation)	27Apr2023	BWR BBB+ Stable (Reaffirmation)	28Jan2022	BWR BBB+ Stable (Reaffirmation)
FB SubLimit	LT	(30.00)	BWR BBB+/Stable (Reaffirmation)	05Jul2024	BWR BBB+ Stable (Reaffirmation)	NA	NA	NA	NA
Fund Based	ST	90.00	BWR A2 (Reaffirmation)	05Jul2024	BWR A2 (Reaffirmation)	27Apr2023	BWR A2 (Reaffirmation)	28Jan2022	BWR A2 (Reaffirmation)
FB SubLimit	ST	(35.00)	BWR A2 (Reaffirmation)	05Jul2024	BWR A2 (Reaffirmation)	27Apr2023	BWR A2 (Reaffirmation)	NA	NA
FB SubLimit	ST	(35.00)	BWR A2 (Reaffirmation)	NA	NA	NA	NA	NA	NA
FB SubLimit	ST	(60.00)	BWR A2 (Reaffirmation)	NA	NA	NA	NA	NA	NA
FB SubLimit	ST	(30.00)	BWR A2 (Reaffirmation)	NA	NA	NA	NA	NA	NA
Non Fund Based	ST	13.17	BWR A2 (Reaffirmation)	05Jul2024	BWR A2 (Reaffirmation)	NA	NA	NA	NA
Grand Total		144.74	(Rupees One Hundred Forty Four Crores and Seventy Four lakhs Only)

Hyperlink/Reference to applicable Criteria

• General Criteria
• Approach to Financial Ratios
• Short Term Debt
• Manufacturing Company

Analytical Contacts
Chinmaya R Rating Analyst chinmaya.r@brickworkratings.com	Nitika Srivastava nitika.s@brickworkratings.com
1-860-425-2742 | media@brickworkratings.com	Customer Support | CustSupport@brickwrokratings.com

SL.No.	Name of the Bank/Lender	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)	Complexity of the Instrument
1	HDFC Bank	Term Loan - Out-standing	6.57	_	6.57	Simple##
2	HDFC Bank	Cash Credit - Sanctioned	35.00	_	35.00	Simple##
	Sub-Limit (EPC) - Sanctioned		(35.00)
	Sub-Limit (Post shipment ) - Sanctioned		(35.00)
3	HDFC Bank	Export Packing Credit (EPC) - Sanctioned	_	90.00	90.00	Simple##
	Sub-Limit (Cash credit) - Sanctioned	(30.00)
	Sub-Limit (Post shipment) - Sanctioned		(60.00)
	Sub-Limit (Post shipment) - Sanctioned		(30.00)
4	HDFC Bank	BG/ILC - Sanctioned	_	3.17	3.17	Simple##
5	HDFC Bank	Pre Settlement Risk - Sanctioned	_	10.00	10.00	Simple##
Total			41.57	103.17	144.74
TOTAL (Rupees One Hundred Forty Four Crores and Seventy Four 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.