Press Release

Press Release

August 19, 2024

AKASH FISHMEAL AND FISHOIL PRIVATE LIMITED
Rating Assigned and Reaffirmed

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
Bank Loan Ratings	15.50	ACUITE BB- \| Stable \| Assigned	-
Bank Loan Ratings	29.50	ACUITE BB- \| Stable \| Reaffirmed	-
Total Outstanding	45.00	-	-

Rating Rationale

Acuité has reaffirmed the long-term rating to ‘ACUITE BB-’ (read as ACUITE double B minus) on the Rs. 29.50 Cr. bank facilities of Akash Fishmeal and Fishoil Private Limited (AFPL). The outlook is 'Stable'.
Acuité has assigned the long-term rating to ‘ACUITE BB-’ (read as ACUITE double B minus) on the Rs. 15.50 Cr. bank facilities of Akash Fishmeal and Fishoil Private Limited (AFPL). The outlook is 'Stable'.

Rationale for Rating
The rating reaffirmed reflects the stable business risk profile as reflected from the growth in revenues of the company which stood at Rs.222.22 Cr. as on FY2024(Prov.) and Rs. 116.52 Cr. in FY2023. However, the EBITDA margin of the company declined to 10.87 percent in FY2024(Prov.) against 17.69 percent in FY2023. The cause of the declining margin in FY2024 is that production had halted in June and July 2023 due to a government rule prohibiting fishing during these two months. Additionally, because the company is largely into exports, there were expenses associated with the increased cost of fish, which the company was unable to pass on to the customers.
The financial risk profile of the company remained average marked by improving net worth, moderate gearing and healthy debt protection metrics. However, these strengths are offset by highly fragmented nature of industry and susceptibility of margins to fluctuating raw material prices.

About the Company

Incorporated in the year 2015, AFPL is a Sindhudurg, Maharashtra based company. The company is engaged in the manufacturing of fishmeal and fish oil. The installed capacity is 550 MT per day. The operations of the company are handled by Mr. Thota Mohammed Suhel, Mr. Fairoz Thota, Mr. Thota Jaaved, and others.

Unsupported Rating

Not Applicable

Analytical Approach

Acuité has taken a standalone view of the business and financial risk profile of AFPL to arrive at the rating.

Key Rating Drivers

Strengths

Experienced management
AFPL was incorporated in the year 2015. The promoters of the company have more than two decades of experience in the seafood industry. The promoters of the company also have two other companies, namely, Goan Fresh Marine Exports Private Limited and Ocean Pearl Fisheries, which are engaged in the business of processing and cutting marine products. The extensive experience of the promoters has helped the company to maintain a healthy relationship with its customers and suppliers. Acuité believes that the company will benefit from the extensive experience of the promoters and long association with its customer and suppliers.

Increasing Revenue albeit declining Profitability
The revenue of the company stood at Rs.222.22 Cr. as on FY2024(Prov.) and Rs. 116.52 Cr. in FY2023. The EBITDA margin of the company stood at 10.87 percent in FY2024(Prov.) against 17.69 percent in FY2023.
However, the EBITDA margin of the company declined to 10.87 percent in FY2024(Prov.) against 17.69 percent in FY2023. The cause of the declining margin in FY2024 is that production had halted in June and July 2023 due to a government rule prohibiting fishing during these two months. Additionally, because the company is largely into exports, there were expenses associated with the increased cost of fish, which the company was unable to pass on to the customers.
Moreover, the PAT margin stood at 6.44% for FY2024(Prov.) as compared to 10.56% for FY2023. Acuité believes that the profitability margin will remain at similar levels over the medium term.

Average financial risk profile
The financial risk profile of the company remained average marked by improving net worth, moderate gearing and robust debt protection metrics. The net worth of Rs.30.09 Cr. as on FY2024(Prov.) as against Rs.15.78 Cr. as on FY2023 due to accretion to reserves.. The gearing (debt-equity) stood at 1.27 times as on FY2024(Prov.) as against 2.35 times as on FY2023. The total debt of Rs.38.31 Cr. as on FY2024(Prov.) consists of long-term of Rs.8.17 Cr. and short term of Rs.29.89 Cr. of bank borrowings. The interest coverage ratio stood at 7.65 times for FY2024(Prov.) as against 8.00 times for FY2023. The DSCR stood at 5.98 times for FY2024(Prov.) as compared to 6.39 times for FY2023. The Net Cash Accruals to Total debt stood at 0.43 times for FY2024(Prov.) as against 0.39 times for FY2023. The Total outside liabilities to Tangible net worth stood high at 1.69 times for FY2024(Prov.) as against 3.66 times in FY2023. Acuite believes that the financial risk profile of the Company is expected to improve slightly at the back of improving capital structure and healthy debt protection metrices.

Weaknesses

Highly fragmented industry and susceptibility of margins to fluctuating raw material prices:
The margins are highly susceptible to fluctuating raw material prices since, raw material accounts for 78-80 percent of the aggregate revenue. Further, the availability of raw material is seasonal in nature and the prices vary in tandem with the catch in each market. In addition, fishmeal industry is highly fragmented; the company faces competition from organised and unorganised players thereby limiting its pricing flexibility and bargaining power with customers.

Rating Sensitivities

Sustainable improvement in revenue and profit margins
Elongation of working capital cycle
Any debt funded capex plan

Liquidity Position

Adequate

The company has an adequate liquidity profile as reflected from the Net Cash Accruals which stood at Rs. Rs.16.38 Cr. for FY2024(Prov.) as against negligible debt obligations Its working capital cycle remained moderate with Gross Current Asset days of 94 days in FY2024(Prov.) due to low debtor and moderate inventory requirements. The bank limit utilisation of the company stood at 68% for 6 months ended till June 2024. Current ratio stood moderate at 1.35 times in FY2024(Prov.). Acuité believes liquidity profile will continue to remain adequate in the medium term due to high working capital requirement.

Outlook: Stable

Acuité believes that AFPL will maintain a ‘Stable’ outlook over the medium term owing to its experienced management. The outlook may be revised to 'Positive' if the company demonstrates substantial and sustained growth in its revenues from the current levels along with improving its margins. Conversely, the outlook may be revised to 'Negative' in case the company registers lower than expected growth in revenues and profitability or deterioration in its working capital management leading to deterioration in its financial risk profile and liquidity

Other Factors affecting Rating

None

Key Financials

Particulars	Unit	FY 24 (Provisional)	FY 23 (Actual)
Operating Income	Rs. Cr.	222.22	116.52
PAT	Rs. Cr.	14.31	12.31
PAT Margin	(%)	6.44	10.56
Total Debt/Tangible Net Worth	Times	1.27	2.35
PBDIT/Interest	Times	7.65	8.00

Status of non-cooperation with previous CRA (if applicable)

Not Applicable

Any other information

None

Applicable Criteria

• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm
• Manufacturing Entities: https://www.acuite.in/view-rating-criteria-59.htm
• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm

Note on complexity levels of the rated instrument

In order to inform the investors about complexity of instruments, Acuité has categorized such instruments in three levels: Simple, Complex and Highly Complex. Acuite’ s categorisation of the instruments across the three categories is based on factors like variability of the returns to the investors, uncertainty in cash flow patterns, number of counterparties and general understanding of the instrument by the market. It has to be understood that complexity is different from credit risk and even an instrument categorized as 'Simple' can carry high levels of risk. For more details, please refer Rating Criteria “Complexity Level Of Financial Instruments” on www.acuite.in.

Rating History

Date	Name of Instruments/Facilities	Term	Amount (Rs. Cr)	Rating/Outlook
30 Nov 2023	Cash Credit	Long Term	20.00	ACUITE BB- \| Stable (Upgraded from ACUITE B+ \| Stable)
30 Nov 2023	Proposed Long Term Bank Facility	Long Term	9.50	ACUITE BB- \| Stable (Upgraded from ACUITE B+ \| Stable)
19 Oct 2022	Cash Credit	Long Term	20.00	ACUITE B+ \| Stable (Upgraded from ACUITE B \| Stable)
19 Oct 2022	Proposed Long Term Bank Facility	Long Term	9.50	ACUITE B+ \| Stable (Upgraded from ACUITE B \| Stable)
05 Jan 2022	Proposed Long Term Bank Facility	Long Term	9.50	ACUITE B \| Stable (Reaffirmed)
05 Jan 2022	Cash Credit	Long Term	20.00	ACUITE B \| Stable (Reaffirmed)

Annexure - Details of instruments rated

Lender’s Name	ISIN	Facilities	Date Of Issuance	Coupon Rate	Maturity Date	Quantum (Rs. Cr.)	Complexity Level	Rating
Canara Bank	Not avl. / Not appl.	Cash Credit	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	20.00	Simple	ACUITE BB- \| Stable \| Reaffirmed
Canara Bank	Not avl. / Not appl.	Cash Credit	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	10.00	Simple	ACUITE BB- \| Stable \| Assigned
Canara Bank	Not avl. / Not appl.	Covid Emergency Line.	31 Dec 2021	Not avl. / Not appl.	01 Nov 2026	0.44	Simple	ACUITE BB- \| Stable \| Assigned
Canara Bank	Not avl. / Not appl.	Covid Emergency Line.	10 Nov 2020	Not avl. / Not appl.	01 Nov 2024	1.78	Simple	ACUITE BB- \| Stable \| Assigned
Not Applicable	Not avl. / Not appl.	Proposed Long Term Bank Facility	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	9.50	Simple	ACUITE BB- \| Stable \| Reaffirmed
Not Applicable	Not avl. / Not appl.	Proposed Long Term Bank Facility	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	1.93	Simple	ACUITE BB- \| Stable \| Assigned
Canara Bank	Not avl. / Not appl.	Term Loan	08 Sep 2022	Not avl. / Not appl.	01 Dec 2029	1.35	Simple	ACUITE BB- \| Stable \| Assigned

Contacts

Analytical Details	Contact Details
Mohit Jain Senior Vice President - Rating Operations Tel: 022–49294017 mohit.jain@acuite.in Abhishek Singh Analyst - Rating Operations Tel: 022-49294065 abhishek.s@acuite.in	Contact details exclusively for investors and lenders Mob: +91 8591310146 Email ID: analyticalsupport@acuite.in Tel: 022-49294011 rating.desk@acuite.in

About Acuité Ratings & Research

Acuité is a full-service Credit Rating Agency registered with the Securities & Exchange Board of India (SEBI). The company received RBI Accreditation as an External Credit Assessment Institution (ECAI) for Bank Loan Ratings under BASEL-II norms in the year 2012. Acuité has assigned ratings to various securities, debt instruments and bank facilities of entities spread across the country and across a wide cross section of industries. It has its Registered and Head Office in Kanjurmarg, Mumbai.

Disclaimer: An Acuité rating does not constitute an audit of the rated entity and should not be treated as a recommendation or opinion that is intended to substitute for a financial adviser's or investor's independent assessment of whether to buy, sell or hold any security. Ratings assigned by Acuité are based on the data and information provided by the issuer and obtained from other reliable sources. Although reasonable care has been taken to ensure that the data and information is true, Acuité, in particular, makes no representation or warranty, expressed or implied with respect to the adequacy, accuracy or completeness of the information relied upon. Acuité is not responsible for any errors or omissions and especially states that it has no financial liability whatsoever for any direct, indirect or consequential loss of any kind, arising from the use of its ratings. Ratings assigned by Acuité are subject to a process of surveillance which may lead to a revision in ratings as and when the circumstances so warrant. Please visit our website (www.acuite.in) for the latest information on any instrument rated by Acuité. Please visit https://www.acuite.in/faqs.htm to refer FAQs on Credit Rating.