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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 84.71 | ACUITE BB+ | Stable | Reaffirmed | - |
| Bank Loan Ratings | 0.95 | - | ACUITE A4+ | Reaffirmed |
| Total Outstanding | 85.66 | - | - |
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Rating Rationale |
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Acuité has reaffirmed its long-term rating of ‘ACUITE BB+’ (read as ACUITE double B plus) and short-term rating of 'ACUITE A4+' (read as ACUITE A four plus) on the Rs.85.66 crore bank facilities of Alpine Distilleries Private Limited (ADPL). The outlook is 'Stable'. |
| About the Company |
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Incorporated in 2002, Alpine Distilleries Private Limited (ADPL), is a Kolkata based company, engaged in bottling of Indian made Foreign Liquor (IMFL). The company is promoted by Mr. Debasis Mukherjee, Mr. Debraj Mukherjee and IMFL bottling facility in Hooghly (WB) in April 2012 with an installed capacity of 18 lakh cases per annum. From 2019, Mr. Yogesh Jain, Delhi based businessman has invested funds and is presently the major shareholder of the company (64.42 per cent). The total shareholding of the Jain family is around 85.65 per cent. The company bottles and markets well-known brands like “Officer’s Choice”, “Officer’s Choice Blue” and “Old Monk Rum” for prominent liquor manufacturers. As a part of backward integration initiative, the company has set up a grain-based Extra Neutral Alcohol (ENA) plant with an installed capacity of 60 KLPD (20 million litres p.a.) and a co-generation power plant of 3MW. The plant has become operational from December- 2020.
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| Unsupported Rating |
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Not Applicable
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| Analytical Approach |
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Acuité has taken a standalone view of the business and financial risk profile of ADPL to arrive at the rating.
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| Key Rating Drivers |
| Strengths |
| Diversified presence in IMFL, IMIL and ENA supported by experienced management and favourable plant location
The promoters of ADPL have an experience of more than two decades in the business, i.e. Extra Neutral Alcohol (ENA) manufacturing. Further, the plant is headed by Mr. Debraj Mukherjee, having more than three decades of experience in distillery plant. Mr. Yogesh Jain is the major shareholder of ADPL and has rich experience in various business like hospitals, hotels, chewing tobacco, pan masala, distillery & IMFL plants, washing powder, real estate, tea etc. The promoters have demonstrated financial support to the company in the past through significant fund infusion. The manufacturing unit of the company is strategically located near the grain growing region of West Bengal which provides logistical advantage to the company. ADPL procures most of its raw material like broken rice from local farms located in and around the unit. Furthermore, distilling is highly water sensitive process, and it is necessary to have continuous supply of water to have uninterrupted output. The plant is in the vicinity of Hooghly River, thus ensuring continuous stream of water. ADPL has diversified presence across all the three segments of the distilleries business. Majority of ENA produced by the company is captively consumed for manufacturing IMIL and IMFL; while the rest is sold in the open market. Moderate Working capital operations Alpine Distilleries Private Limited has Moderate working capital operations with gross current asset (GCA) of 61 days in FY2023 and FY2022. Inventory days stood at 39 days in FY2023 against 33 days in FY2022. The inventory consists of different varieties and brands of the products. The debtor days stood at 4 days for FY23 against 10 days for FY22 due to improved collections from the customers. The creditor days of the firm stood at 38 days for FY23 as against 48 days for FY22. The firm mostly purchases on advance payment basis. Acuite believes that the working capital operations of the group will remain at similar levels over the medium term given the nature of the industry. Moderate Financial Risk Profile Alpine distilleries Private Limited has a moderate financial risk profile marked by moderate net worth, gearing, and debt protection metrics. ADPL’s net worth stood at Rs. 91.08 crore as on March 31,2023 against Rs. 87.17 crore as on 31st March 2022. The company’s gearing stood at 0.88 times as on March 31,2023 as against 0.93 times as on March 31, 2022. The company’s total debt as on March 31,2023 stood at Rs. 80.58 crore as compared to Rs. 80.98 crores as on March 31, 2022; comprising of long-term debt of Rs. 39.22 crore, short-term debt of Rs. 4.92 crore and Unsecured Loans from Directors/Promoters of Rs. 27.62 crore and maturing debt obligation of Rs. 8.82 crore. TOL/TNW stood at 1.17 times as on March 31, 2023. The interest coverage ratio of the company stood at 2.53 times in FY23 against 2.28 times in FY22. DSCR stood at 2.53 times in FY2023 against 2.28 times in FY2022. Acuité believes that going forward the financial risk profile of the company will improve backed by steady accruals and no major debt funded capex plans. |
| Weaknesses |
| Exposure to risks related to the highly regulated nature of the liquor industry
The Indian alcohol industry is highly regulated at almost every stage in the value chain. Moreover, every state has its own regulations with respect to distribution and retail, registration, taxation and pricing of alcohol. Any change in the regulatory environment will affect the profitability of the liquor industry. Volatility of input prices with limited pricing power ADPL uses grain as a raw material for its production of ENA. Since grains are seasonal products and its production depends on the vagaries of nature, the price of the same may vary depending on the production. The company’s ability to pass on any raw material price remains limited. |
| Rating Sensitivities |
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| Liquidity Position |
| Adequate |
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Liquidity is adequately backed by ADPL’s net cash accruals, which stood at Rs. 13.06 Cr. as on March 31, 2023, against no maturing debt repayment obligation. The cash and bank balances of the firm stood at Rs. 0.73 Cr. as on March 31, 2023. The current ratio stood at 0.87 times as on March 31, 2023. The working capital operations of the company are moderately marked by its gross current asset (GCA) days of 61 days for FY2023 on account of lower receivables cycle during the same period. The average bank limit utilization is ~ 51.05%.
Acuité believes that going forward the company will accelerate to maintain adequate liquidity position due to increasing accruals. |
| Outlook: Stable |
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Acuité believes that the outlook on ADPL will remain 'Stable' over the medium term on account of the long track record of operations, experienced management, strong business risk profile and healthy financial risk profile. The outlook may be revised to 'Positive' in case of significant growth in revenue while achieving sustained improvement in operating margins, capital structure and working capital management. Conversely, the outlook may be revised to ‘Negative’ in case of decline in the company’s revenues or profit margins, or in case of deterioration in the company’s financial risk profile and liquidity position or further elongation in its working capital cycle.
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| Other Factors affecting Rating |
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None
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| Particulars | Unit | FY 23 (Actual) | FY 22 (Actual) |
| Operating Income | Rs. Cr. | 153.63 | 103.18 |
| PAT | Rs. Cr. | 3.92 | 1.12 |
| PAT Margin | (%) | 2.55 | 1.08 |
| Total Debt/Tangible Net Worth | Times | 0.88 | 0.93 |
| PBDIT/Interest | Times | 2.53 | 2.28 |
| Status of non-cooperation with previous CRA (if applicable) |
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Not Applicable
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| Any other information |
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None
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| Applicable Criteria |
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• 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 |
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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.
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