Rating Advisory
January 11, 2019 | Mumbai A dar sh Bi r m echaO r i gi nal Tem pl at e123
Shri Lakshmi Agro Foods Private Limited
Advisory as on January 11, 2019
This rating advisory is provided in relation to the rating of Shri Lakshmi Agro Foods Private
Limited
The key rating sensitivity factors for the rating include:
Future capital expenditure (capex) plans and its funding mix
Working capital management
Fluctuation in operating profitability
CRISIL Ratings has a policy of keeping its accepted ratings under constant and ongoing
monitoring and review. Accordingly, it seeks regular updates from companies on business and
financial performance. CRISIL is yet to receive adequate information from Shri Lakshmi Agro
Foods Private Limited (SLAFPL) to enable it to undertake a rating review. CRISIL is taking all
possible efforts to get the rated entity to cooperate with its rating process for enabling it to carry
out the rating review.
CRISIL views information availability risk as a key factor in its assessment of credit risk. (Please
refer to CRISIL Ratings publication dated April 30, 2012 - 'Information Availability - a key risk
factor in credit ratings')
If SLAFPL continues to delay the provisioning of information required by CRISIL to undertake a
rating review then, in accordance with circular SEBI/HO/MIRSD/ MIRSD4/CIR/P/2016/119 dt Nov
1, 2016 and SEBI/HO/MIRSD/ MIRSD4/ CIR/ P/ 2017/ 71 dt June 30, 2017 issued by Securities
and Exchange Board of India, CRISIL will carry out the review based on best available
information and issue a press release.
About The Company
Shri Lakshmi Agro Foods Private Limited (SLAFPL) was establish as partnership firm around 1940
and was later incorporated in 2002 as SLAFPL. SLAFPL, is a leading manufacturer and exporter of
Indian pulses and grains through its flagship brand Udhaiyam Pulses'. Company has its
manufacturing plant at Tiruvottiyur, Chennai, Tamil Nadu
Please note: This advisory should not be construed as a rating reaffirmation.
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Rating Rationale
October 31, 2017 | Mumbai
Shri Lakshmi Agro Foods Private Limited
'CRISIL BBB-/Stable/CRISIL A3' assigned to bank debt
Rating Action
Total Bank Loan Facilities Rated Rs.47 Crore
Long Term Rating CRISIL BBB-/Stable (Assigned)
Short Term Rating CRISIL A3 (Assigned)
1 crore = 10 million
Refer to annexure for Details of Instruments & Bank Facilities
Detailed Rationale
CRISIL has assigned its 'CRISIL BBB-/Stable/CRISIL A3' ratings to the bank loan facilities of Shri Lakshmi Agro
Foods Private Limited (SLAFPL). The ratings reflect extensive experience of promoters in the agro-commodity
industry, strong relationship with customers and suppliers and its above average financial risk profile marked by low
gearing. These strength are offset by moderate scale of operations in a highly fragmented agro-commodity industry
and its operating profitability susceptible to fluctuation in raw material prices.
Key Rating Drivers & Detailed Description
Strengths
* Extensive experience of promoters in the agro-commodity industry resulting in strong relationship with
customers and suppliers: The promoters' family has been engaged into processing and trading of pulses and
grains since last 75 years. The company is being managed by Mr. Selvaraj Sudhakar and Mr. Selvaraj Dhinakar.
Chennai based, Selvaraj family has been engaged into manufacture and export of grains and pulses through its
flagship company SLAFPL. Ltd since 2001.This company is an leading supplier of pulses in the Chennai NCR region.
The grain and pulses are sell its products under 500gms to 25 kg packing's through retailers, modern retail outlets
and institutional sales. Over the years, the promoters have established good relations with suppliers and customers.
SLAFPL is primarily caters to the customers in the domestic market and sells its product through the dealers in
wholesale.
* Above average financial risk profile marked by low gearing: The company had a low gearing of about 1.12
times as on March 31,2017 This is due to reliance on short term debt for funding incremental working capital
requirements. Although the company doesn't have any debt funded capex plans over the medium term, hence, cash
accruals will support business only.
Weaknesses
* Moderate scale of operations in a highly fragmented agro-commodity industry resulting in volatile
operating profitability susceptible to fluctuation in raw material prices: The agro-commodity industry is highly
fragmented with presence of large number of traders/exporters. The company faces intense competition from such
players. Such high fragmentation, limits the bargaining power of the moderate players like SLAFPL . Its operating
margins have remained low and fluctuated between 2.0 3.00per cent in the last 4 years ended March 2017 but the
ROCE and net profit margins have remained healthy at around 1 percent and 20 percent respectively.
Outlook: Stable
CRISIL believes that SLAFPL will continue to benefit over the medium term from its promoters' extensive industry
experience and its established relationships with its customers. The outlook may be revised to 'Positive' if the
company substantially improves its scale of operations and operating profitability as compared to expectations
leading to higher cash accruals. Conversely, the outlook may be revised to 'Negative' if there is deterioration in its
financial risk profile either on account of lower than expected profitability, larger than expected working capital
requirements or a large debt-funded capex.
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About the Company
SLAFPL was establish as partnership firm around 1940 and was later incorporated in 2002 as SLAFPL. SLAFPL, is
a leading manufacturer and exporter of Indian pulses and grains through its flagship brand Udhaiyam Pulses'.
Company has its manufacturing plant at Tiruvottiyur, Chennai, Tamil Nadu
SLAFPL operations are managed by Mr. Selvaraj Sudhakar and Mr. Selvaraj Dhinakar. Selvaraj family has been
engaged into processing and trading of pulses and grains since last 100 years. The groups is a manufacturer and
exporter of Indian grains and pulses through its brand Udhaiyam Pulses'. SLAFL also does manufacturing of papad &
some trading business in rice, Atta, Suji, Maida, Sugar, and other food items.
Key Financial Indicators
Particulars Unit 2017 2016
Revenue Rs. Cr. 647.8 651.8
Profit After Tax (PAT) Rs. Cr. 5.7 4.4
PAT Margins % 0.9 0.7
Adjusted Debt/Adjusted Net worth Times 1.1 1.1
Interest coverage Times 4.6 3.6
Any other information: Not applicable
Note on complexity levels of the rated instrument:
CRISIL complexity levels are assigned to various types of financial instruments. The CRISIL complexity levels are
available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL complexity levels for instruments that
they consider for investment. Users may also call the Customer Service Helpdesk with queries on specific
instruments.
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Annexure - Details of Instrument(s)
Issue Rating
Name of Date of Coupon
ISIN Maturity date Size assigned with
instrument allotment Rate (%)
(Rs crore) outlook
CRISIL BBB-
NA Term Loan NA NA Sept-2021 19.25
/Stable
NA Letter of Credit NA NA NA 4.75 CRISIL A3
NA Overdraft NA NA NA 23 CRISIL A3
Annexure - Rating History for last 3 Years
Start of
Current 2017 (History) 2016 2015 2014
2014
Instrument Type Quantum Rating Date Rating Date Rating Date Rating Date Rating Rating
CRISIL
BBB-
Fund-based Bank LT/S
42.25 /Stable/ -- -- -- -- --
Facilities T
CRISIL
A3
Non Fund-based LT/S CRISIL
4.75 -- -- -- -- --
Bank Facilities T A3
Table reflects instances where rating is changed or freshly assigned. 'No Rating Change' implies that there was no rating change under the release.
Annexure - Details of various bank facilities
Current facilities Previous facilities
Amount Amount
Facility Rating Facility Rating
(Rs.Crore) (Rs.Crore)
CRISIL BBB-
Term Loan 19.25 -- 0 --
/Stable
Letter of Credit 4.75 CRISIL A3 -- 0 --
Overdraft 23 CRISIL A3 -- 0 --
Total 47 -- Total 0 --
Links to related criteria
CRISILs Approach to Financial Ratios
CRISILs Bank Loan Ratings - process, scale and default recognition
Rating criteria for manufaturing and service sector companies
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advice. The Report is not an offer to sell or an offer to purchase or subscribe for any investment in any securities, instruments, facilities or solicitation of any kind or
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within the meaning of any law or regulation (including the laws and regulations applicable in the US).
Ratings from CRISIL Rating are statements of opinion as of the date they are expressed and not statements of fact or recommendations to purchase, hold, or sell any
securities / instruments or to make any investment decisions. Any opinions expressed here are in good faith, are subject to change without notice, and are only current as
of the stated date of their issue. CRISIL assumes no obligation to update its opinions following publication in any form or format although CRISIL may disseminate its
opinions and analysis. CRISIL rating contained in the Report is not a substitute for the skill, judgment and experience of the user, its management, employees, advisors
and/or clients when making investment or other business decisions. The recipients of the Report should rely on their own judgment and take their own professional
advice before acting on the Report in any way.
5
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applicable regulations, if any) are made available on its web sites, www.crisil.com (free of charge). Reports with more detail and additional information may be available
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CRISIL and its affiliates do not act as a fiduciary. While CRISIL has obtained information from sources it believes to be reliable, CRISIL does not perform an audit and
undertakes no duty of due diligence or independent verification of any information it receives and / or relies in its Reports. CRISIL keeps certain activities of its business
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information received in connection with each analytical process. CRISIL has in place a ratings code of conduct and policies for analytical firewalls and for managing
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This Report should not be reproduced or redistributed to any other person or in any form without a prior written consent of CRISIL.
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