|
|
| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 10.50 | - | ACUITE A2+ | Reaffirmed |
| Bank Loan Ratings | 49.50 | ACUITE BBB+ | Stable | Reaffirmed | - |
| Total Outstanding Quantum (Rs. Cr) | 60.00 | - | - |
| Total Withdrawn Quantum (Rs. Cr) | 0.00 | - | - |
| Rating Rationale |
|
Acuité has reaffirmed its long-term rating of ‘ACUITE BBB+’ (read as ACUITE Triple B Plus) andshort-term rating of ‘ACUITE A2+’ (read as ACUITE A two plus) on the Rs.60.00 crore bank facilities of BOS NATURAL FLAVOURS PRIVATE LIMI TED (BNPL). The outlook is 'Stable'. Rationale for Reaffirmation The rating of BNPL takes into account the growth expected in the operating income and stability in operating margins over the medium term. The rating is supported by the experienced management, long track record of operations and above average financial risk profile. |
| About the Company |
|
Perumbavoor (Kerala)-based, BNPL was incorporated in 2001 by Mr. O.S. Bobby and his wife Mrs. Shiny Bobby. The company is engaged in the business of manufacturing oleoresins and essentials oils used primarily in medicine, food and cosmetic industries. In addition, the company also trades in various commodities such as chilly, pepper, ginger, cardamom, etc. In addition, the company also trades in various commodities.
|
| Analytical Approach |
| Acuité has taken a standalone view of the business and financial risk profile of BNPL to arrive at the rating. |
Key Rating Drivers
| Strengths |
| Extensive experience of the promoters
BNPL, promoted by Mr. Bobby and Mrs. Shiny Bobby, have more than a decade’s experience in the spices & oleoresins industry. The company was incorporated in 2001 and was gradually expanded to the present total capacity of 3,000 metric tons per annum (MTPA) for spice oils and 5,000 MTPA for spice oleoresins at its plants situated in Kerala. BNPL has a competent management supported by a team of well qualified and experienced second line personnel. The promoter's experience in spices and oleoresins industry has helped the company in building healthy relationship with its suppliers and customers, to ensure a steady raw material supply and large offtake. The company has trade liaisons with customers in countries such as Vietnam, Sri Lanka, Morocco, Guatemala, etc. Exports generally accounts for around 70 percent of the total sales and the company exports to Europe, Russia, Middle East countries, Brazil & South Africa. BNPL reported revenue of Rs. 150.82 crore in FY2022 (Provisional) against Rs.125.69 crore in FY2021. Further, the management has a progressive business acumen reflected by the plans of diversification into retail business with recent brand acquisition of a well-known condiment brand based out of Kerala, named “Priyom”. The plan was delayed due to COVID in FY21 and FY22 however the company is planning to enter the B2C segment in FY23 & FY24 on a trial basis and if the response from the market is promising then the company will increase its focus on the segment. Going forward, this is expected to augment the expansion of business operations.
Financial Risk Profile BNPL has healthy financial risk profile marked by healthy net worth and above average debt protection metrics. BNPL’s net worth stood at Rs. 44.65 Cr as on 31st March 2022(Prov.) asagainst Rs. 35.75 Cr as on 31st March 2021. Gearing levels (debt-to-equity) stood at 0.97 times as on March 31, 2022 as against 0.95 in FY 2021. Further, the interest coverage ratio stood strong at 4.07 times for FY2022 as against 3.77 times in FY2021 and Debt service coverage ratio improved and stood at 2.76 times in FY2022 in comparison to 2.56 times in FY2021. Total outside liabilities to total net worth (TOL/TNW) stood at 1.19 times as on FY2022 vis-à-vis 1.44 times as on FY2021. However, Debt-EBITA stood at same level in FY 22 and 21 ie 2.25 times. |
| Weaknesses |
| Intensive working capital operations
BNPL has intensive working capital requirements as evident from gross current assets (GCA) of 157 days in FY2022 as compared to 161 days in FY2021which is a minuscule improvement. Debtor days have moderated to 71 days in FY2022 as against 58 days in FY2021. The working capital limits are utilized at ~72 per cent during the last Six months and reflects liquidity cushion available with the company. Further, the current ratio of company stood at 1.56 times as on March 31, 2022.
|
| Rating Sensitivities |
|
| Material covenants |
| None |
| Liquidity Position |
| Adequate |
|
BNPL has adequate liquidity marked by adequate net cash accruals to its maturing debt obligations. Firm generated cash accruals of Rs. 10.14 crore for FY2022 (Prov.) as against Rs. 0.65 crore of repayment obligations for the same period. Current Ratio stood at 1.56 times as on 31 March 2022(Prov.) as against 1.46 times in the previous year. Further company has bank balance of Rs. 19.96 Cr. in current account as on March 31, 2022. The working capital limits are utilized at ~72 per cent during the past Six months and indicates the liquidity cushion available with the company Therefore, Company had adequate liquidity to meets its requirements.
|
| Outlook: Stable |
|
Acuité believes that BNPL will maintain a ‘Stable’ outlook over the medium term owing to its experienced management and long track record of operations. The outlook may be revised to 'Positive' if the company demonstrates substantial and sustained growth in its revenues from the current levels while maintaining 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 or largerthan-expected debtfunded capex leading to deterioration in its financial risk profile and liquidity.
|
| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 22 (Provisional) | FY 21 (Actual) |
| Operating Income | Rs. Cr. | 150.82 | 125.69 |
| PAT | Rs. Cr. | 8.90 | 6.44 |
| PAT Margin | (%) | 5.90 | 5.12 |
| Total Debt/Tangible Net Worth | Times | 0.97 | 0.95 |
| PBDIT/Interest | Times | 4.07 | 3.77 |
| 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 • Entities In Manufacturing Sector -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 |
| https://www.acuite.in/view-rating-criteria-55.htm |
|
| |
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
Contacts |
| Analytical | Rating Desk |
| About Acuité Ratings & Research |
