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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 94.23 | ACUITE BBB- | Stable | Reaffirmed | - |
| Bank Loan Ratings | 14.77 | - | ACUITE A3 | Reaffirmed |
| Total Outstanding | 109.00 | - | - |
| Total Withdrawn | 0.00 | - | - |
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Rating Rationale |
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Acuité has reaffirmed its long-term rating of 'ACUITE BBB-’ (read as ACUITE triple B minus) and short-term rating of ‘ACUITE A3’ (read as ACUITE A three) on the Rs.109.00 Cr. bank facilities of Sri Varsha Food Products India Private Limited (Erstwhile Sri Varsha Food Products India Limited) (SVFPIL). The outlook is 'Stable'.
Rationale for rating The rating reaffirmation considers augmentation in operating performance albeit moderate financial risk profile. The rating also draws comfort from company’s long operational track record and established position of the group in the food industry along with extensive experience of the promoters. However, these strengths are partly offset by working capital intensive operations and susceptibility of profitability to volatility in raw material prices and forex risk in an intensely competitive and highly fragmented industry. |
| About the Company |
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Based in Tirupati (Andhra Pradesh) Sri Varsha Food Products India Private Limited (SVFPIL) incorporated in 2008. The company is engaged into processing and packaging of natural fruit concentrates and pulp. The directors include Mr. Viswas Viswanath Kasthuri, Mr. Sivaji Rao Ramineni and Ms. Varsha Viswanath Kasthuri.
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| About the Group |
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Varsha Trading company
Based in Tirupati (Andra Pradesh) Varsha Trading Company (VTC) incorporated in 2021, managed by proprietor of the firm Mrs Varsha (Daughter of K Vishwanth Naidu, promoter and chairman of Varsha group). The firm is engaged in supply of fresh fruits, trading into fruit pulps and concentrates and has a production capacity of 3000 tonnes per annum. Vakula Traders Based in Tirupati (Andra Pradesh) Vakula traders (VT) incorporated in 2023, managed by proprietor of the firm Mrs Varalakshmi (Wife of K Vishwanth Naidu, promoter and chairman of Varsha group). The firm is engaged in processing of fruits, pulps, and concentrates and has a production capacity of 3000 tonnes per annum |
| Unsupported Rating |
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Not applicable
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| Analytical Approach |
| Extent of Consolidation |
| •Full Consolidation |
| Rationale for Consolidation or Parent / Group / Govt. Support |
| Acuité has consolidated business and financial risk profiles of the Sri Varsha Food Products India Private Limited (SVFPIL), VTC (Varsha Trading Company) and Vakula traders (VT) to arrive at this rating. The consolidation is in the view of common management, engaged into similar line of business and central operational, financial and strategic decision making.
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| Key Rating Drivers |
| Strengths |
| Promoters’ extensive experience in food processing industry; Established regional player in Andhra Pradesh
The group is promoted by Mr. K. Viswanada Naidu and Mr. V. Pradeep Kumar who has been associated with the group since its inception; this has helped group to establish strong market presence in the state of Andhra Pradesh. Mr.K.Viswanada Naidu (Chairman) looks after the day-to-day operations of the group and is assisted by team of experienced professionals down the line. Mr. Naidu has more than 30 years of experience in multiple businesses and has set up the first highly modernized fruit processing unit in the region. Mr. V. Pradeep Kumar (Technical manager) has more than 15 years of experience in Fruit Processing industry and developed good understanding in Food and Drug Administration (FDA) rules and good manufacturing practice (GMP) in Fruit Processing sector. Acuité believes that group will continue to derive benefits from its promoter’s experience, its established presence providing revenue visibility over the medium term. Augmentation in operating performance In FY2025(Prov.) the group has reported revenue of Rs. 255.08 Cr. registering the growth of ~17.36 percent as against Rs.217.35 Cr. in FY2024. The improvement in the revenues is majorly on account of an improvement in price realisation albeit dip in overall volume. SVFPIL revenue is moderated in FY2024 due to El Nino effect which has impacted the mango crop. Further SVFPIL has an assured order of Rs. 111.24 Cr. from its regular customers as on date. Acuité believes that SVFPIL will continue to derive benefits from these assured orders providing adequate revenue visibility over the near to medium term. The operating margin of the group improved and stood at 8.09 percent in FY2025 (Prov.) as against 6.43 percent in FY2024 due to improvement in price realization and control in overhead expense. PAT margin of the group is also improved which stood at 2.87 percent in FY2025 (Prov.) as against 1.36 percent in FY2024 albeit increase in finance cost. Group’s flagship product has been mango pulp and concentrate over the years since inception. The management in the last few years has been venturing into various other nonseasonal fruits and vegetables to reduce dependence on seasonal fruit i.e. Mango. SVFPIL’s revenue from banana pulp, red papaya concentrates, Tomato pulp, white guava pulp amongst other has shown improvement Year-on-Year (YoY) basis. Acuité believes that the ability of the group to improve its scale of operations along with profitability will going to remain a key monitorable over the medium term. |
| Weaknesses |
| Moderate financial risk profile
The group has moderate financial risk profile marked by moderate net worth, gearing and debt protection metrics. The tangible net worth of the group increased to Rs 50.57 Cr. as on March 31, 2025 (Prov.) from Rs 43.49 Cr. as on March 31, 2024 on account of accretion of reserves. The total debt of the group as on March 31, 2025 (Prov.) stood at Rs 92.56 Cr. which consist of long-term borrowings of Rs 8.12 Cr, working capital limit of Rs 69.93 Cr, unsecured loans of Rs 10.02 Cr. and current portion of long term debt of Rs 4.49 Cr. Gearing of the group improved and stood at 1.83 times as on March 31,2025(Prov.) as against 2.25 times as on March 31,2024 on account of improvement in profitability coupled with repayment of long term debt obligations. Total Outside Liabilities/Tangible Net Worth (TOL/TNW) stood at 2.65 times as on March 31,2025(Prov.) as against 3.15 times as on March 31, 2024. Further, the debt coverage indicators improved as evidenced by Interest Coverage Ratio (ICR) of 2.12 times and Debt service coverage ratio (DSCR) 1.26 times as on March 31, 2025 (Prov.) as against 1.77 times as on March 31, 2024 and 1.22 times respectively on account of improvement in operating margins. Acuité believes that the financial risk profile of the group will improve on account of steady net cash accruals with no major debt funded capex plans. Working Capital Intensive Operations The company’s operations remained working capital intensive marked by high Gross Current Assets (GCA) of 240 days as on March 31, 2025 (Prov.) as against 277 days as on March 31, 2024 The high GCA days are primarily on account of the inventory holding which stood at 170 days as on March 31, 2025 (Prov.) as against 183 days as on March 31, 2024. Further debtors’ days also improved which stood at 49 days as on March 31, 2025 (Prov.) as against 57 days as on March 31, 2024. Whereas creditors days stood at same level i.e. 41 days as on March 31, 2025(Prov.) as against 46 days as on March 31, 2024. The company has almost utilized fund based limit which stood at ~96 percent of its working capital facility for the last twelve months ended March 2025. Acuité believes that the operations of group will remain working capital intensive on account of nature of the food processing industry model. Susceptible to volatility in raw material prices, forex and regulatory risks The food processing and export business is highly fragmented with presence of several small players and dependence on fruits farms for raw material which limits bargaining power. Additionally, the procurement price of fruits depends on the season and availability during a particular period, which exposes group to volatility in product prices. The industry has low entry barriers such as low capital, low technical requirements of the business and liberal policy regime. This has resulted in severe competition and inherently thin profitability margins. Furthermore, as a portion of revenue (~40 percent of revenue in FY25(Prov.) is generated from exports, credit risk profile remains susceptible to volatility in forex rates. However, from FY2025 group have opted for open hedging policy to mitigate the risk to that extend. Besides, group is also exposed to risk arising from regulatory changes and demand pattern in client countries and changes such as levy of antidumping duties by import. |
| Rating Sensitivities |
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| Liquidity Position |
| Adequate |
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The group’s adequate liquidity position is marked by net cash accruals stood at Rs 9.16 Cr. as on March 31, 2025(Prov.) as against long term debt repayment of Rs 5.26 Cr. over the same period. The current ratio stood comfortable at 1.45 times as on March 31, 2025(Prov.) as against 1.48 times as on March 31, 2024. Whereas the group has almost utilized fund-based limit which stood at ~96 percent of its working capital facility for the last twelve months ended March 2025. Acuité believes the group will maintain adequate liquidity position over the near to medium term backed by adequate net cash accruals as against the expected repayment obligations.
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| Outlook: |
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Stable
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| Other Factors affecting Rating |
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None
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| Particulars | Unit | FY 25 (Provisional) | FY 24 (Actual) |
| Operating Income | Rs. Cr. | 255.08 | 217.35 |
| PAT | Rs. Cr. | 7.31 | 2.95 |
| PAT Margin | (%) | 2.87 | 1.36 |
| Total Debt/Tangible Net Worth | Times | 1.83 | 2.25 |
| PBDIT/Interest | Times | 2.12 | 1.77 |
| Status of non-cooperation with previous CRA (if applicable) |
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Not applicable
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| Interaction with Audit Committee anytime in the last 12 months (applicable for rated-listed / proposed to be listed debt securities being reviewed by Acuite) |
| Not applicable |
| Any Other Information |
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None
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| Applicable Criteria |
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• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm • Consolidation Of Companies: https://www.acuite.in/view-rating-criteria-60.htm • Default Recognition: https://www.acuite.in/view-rating-criteria-52.htm • Manufacturing Entities: https://www.acuite.in/view-rating-criteria-59.htm |
| Note on complexity levels of the rated instrument |
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| *Annexure 2 - List of Entities (applicable for Consolidation or Parent / Group / Govt. Support) | ||||||||
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