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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 100.00 | ACUITE BBB- | Stable | Assigned | - |
| Bank Loan Ratings | 76.00 | ACUITE BBB- | Stable | Reaffirmed | - |
| Total Outstanding Quantum (Rs. Cr) | 176.00 | - | - |
| Rating Rationale |
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Acuite has reaffirmed its long term rating of 'ACUITE BBB-' (read as Acuite triple B minus) to Rs. 76 crore bank facilities. Further Acuite has assigned its long term rating of 'ACUITE BBB-' (read as Acuite triple B minus) to Rs. 100 crore bank facilities of 'B P Food Products Private Limited'. The outlook is 'Stable'.
Rationale for rating action The rating reaffirmation takes into consideration the established market position of the group in the FMCG industry and long and extensive experience of the promoters in the aforementioned industry. The rating also factors the healthy financial risk profile of the group. However, these strengths of the group are partially offset by the group’s high reliance on working capital limits and thin profitability margins due to presence in a highly fragmented and competitive industry. Acuite further takes into account the decline in the operations of the group on account of volatility in commodity trade resulting into lower trade volumes and change in the global commodity market scenario due to continued Russia Ukraine War. The group's ability to increase its production capacity utilization resulting into substantial improvement in revenue and profitability remains key rating monitorable. |
| About Company |
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BP Food Products Private limited (BPF) is engaged in manufacturing of various wheat flour. Its sells the flour under its brand 'Double Trishul' and 'Awesome'. BPF is one of the largest wheat millling companies and has five plants located across Madhya Pradesh with a total capacity of 1800 MT per day. The company also has access to best quality wheat which is produced in Madhya Pradesh and has a established network of channel partners in terms of sourcing of raw materials and sale of finished goods. BPF was acquired by the promoters of Om Shri Shubh Labh Agritech Private Limited in May 2020 form NCLT.
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| About the Group |
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Om Shri Shubh labh group is engaged in trading, repackaging of various FMCG products, processing of wheat flour and extraction of edible oil. It has four group companies- Om Shri Shubh labh Agrifresh Private Limited (OSSAF), Om Shri Shubh Labh Agritech Retailers Pvt Ltd(OSSAR), Shri Paramsukh Edible Foods Pvt Ltd (SPEF) and BP Food Products Pvt Ltd (BPF) OSSAF is engaged in trading of fruits and vegetables. OSSAR is engaged in operating a retail chain- ‘C-mart’. The company has 27 retail stores across Uttar Pradesh, Haryana, Noida and Gaziabad. SPEF is engaged in extraction of oil from mustard seeds. It sells this edible oil under the brand name "Smart Wife'. The company has a plant located in Gwalior with a capacity of processing 40 MT seeds per day. BPF is engaged in processing of various wheat flour. It sells the flour under its brand 'Double Trishul'. The company has five plants located across Madhya Pradesh with a total capacity of 1800 MT per day. BPF was acquired by the promoters of OSSATL in May 2020 form NCLT. All these companies are 100% held by the promoters of OSSATL.
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Analytical Approach
| Extent of Consolidation |
| •Full Consolidation |
| Rationale for Consolidation or Parent / Group / Govt. Support |
| Acuité has considered the consolidated business and financial risk profiles of Om Shri Shubh Labh Agritech Pvt Ltd (OSSATL), Om Shri Shubh labh Agrifresh Private Limited (OSSAF), Om Shri Shubh Labh Agritech Retailers Pvt Ltd (OSSAR), Shri Paramsukh Edible Foods Pvt Ltd (SPEF) and BP Food Products Pvt Ltd (BPF) to arrive at this rating. The consolidation is in view of the common management, strong operational linkages between the entities and the group is herein referred to as Om Shri Shubh Labh Group (OSSLG).
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Key Rating Drivers
| Strengths |
| Established track record of operations with experienced management
OSSLG is based out of Madhya Pradesh and was incorporated in the year 2017. The group is promoted by Mr. Girraj Bansaol who have been engaged in the FMCG industry for more than a decade. The extensive experience of the promoters has helped the group to established long and healthy relationships with reputed customers and suppliers over the years. The key customers of the group include names such as Patanjali Agro India Pvt Ltd, Patanjali Ayurved Ltd and Ruchi Soya Industries Ltd. Acuité believes that the promoter's experience and reputed clientele is expected to support in improvement of its business risk profile over the medium term. Above average financial risk profile The financial risk profile of OSSALG is above average marked by a modest net worth, low gearing and comfortable debt protection metrics. The tangible networth of the company stood at Rs. 129.15 Cr. as on 31st March 2023 as against Rs. 99.98 Cr. as on 31st March 2022. Networth of the company has strengthened due to equity infusion Rs. 22.55 Cr. and accretion of profits to reserves. The total Debt of the company stood at Rs. 94.04 crore as on 31st March, 2023 (Prov.) as against Rs. 72.47 Cr as on 31st March, 2022. Total Debt of the company consists of Rs. 11.27 Cr of long term debt, short term debt of Rs. 53.79 Cr and unsecured loans of Rs. 26.36 Cr. Gearing of the company stood at 0.73 times as on 31st March, 2023 (Prov.) as against 0.72 times as on 31st March, 2022. Gearing of the company has increased in FY23 on account of additional short term debt to support working capital requirement. TOL/TNW of the company stood at 1.60 times as on 31 March, 2023 (Prov.) as against 3.40 times as on 31st March, 2022.Debt protection metrics remain comfortable with Debt service coverage ratio (DSCR) at 1.89 times in FY2023 (Prov.) as against 2.44 times in FY2021. Interest Coverage ratio (ICR) stood at 4.27 times in FY2023 (Prov.) as against 6.49 times in FY2022. Efficient working capital operation Working capital operations of the group though moderated is efficient with GCA days of 69 days in FY23 (Prov.) as against 58 days in FY22. GCA days of the company are driven by debtor collection period. The debtor collection period of the group stood at 50 days in FY23 (Prov.) as against 49 days in FY22. The company on an average extends 30-60 days of credit period to its customers. The inventory holding period stood at 10 days in FY23 (Prov.) as against 3 days in FY22 as the company changed in focus from pure trading to manufacturing wherein the company needs to hold higher inventory.The creditor days of the group stood at 26 days in FY2023 (Prov.) as against 41 days in FY2022. |
| Weaknesses |
| Thin profitability margins along with decline in sales
Om Shri Shubh Labh Group (OSSLG) has recorded a decline in operating performance with a y-o-y dip of 37 percent in FY22. The revenue of the company stood at Rs. 1493.31 Cr. in FY23 (Prov.) as compared to Rs.2382.66 crore in FY22. While the revenue of the group has declined the operating profit margin of the group improved. The operating margin improved by 49 bps and stood at 1.51 percent in FY23 (Prov.) as against 1.02 percent in FY22. PAT margin of the company stood at 0.44 percent as against 0.36 percent in FY22. The net sales (net of intercompany transactions) of Om Shri Shubh Labh Agritech Private Limited and B.P. Food Products Private Limited stood at Rs.415 crore in Q1FY24 as against Rs.336.76 crore in Q1FY23. Highly fragmented and competitive industry The industry is marked by presence of large number of organized and unorganized players in the industry. The industry is intensely competitive and fragmented because of low entry barriers and moderate capital requirements. The high competitive industry further limits the pricing flexibility and exerts pressures on the margins of all participants. |
| Rating Sensitivities |
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| Material Covenants |
| None |
| Liquidity Position |
| Adequate |
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Liquidity of the group is adequate with sufficient net cash accruals as against the debt repayment obligation. Net cash accruals of the company stood at Rs. 14.94 crore as against debt repayment obligation of Rs. 5.26 crore in FY23 (Prov.). The company is expected to generate net cash accruals in the range of Rs. 28 crore as against debt repayment obligation of Rs. 2.63 crore. Cash credit limit in B P Foods of Rs. 56.15 Cr. on an average remained 92.04% utilised for 6 months ended June 2023 and the limit of Rs. 25 Cr. of OSSLAPL remained fully utilised for 6 months ended June 2023. The company maintains unencumbered cash balance of Rs.2.33 crore as on 31st March 2023 (Prov.).
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| Outlook: Stable |
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Acuité believes that Om Shri shubh labh group will continue to maintain a ‘Stable’ outlook over the medium term owing to its experienced and qualified management. The outlook may be revised to 'Positive' if the group reports consistent higher than envisaged improvement in revenue and scale of operations while maintaining operating profitability, leading to higher cash accruals. Conversely, the outlook may be revised to 'Negative' if the group registers further decline in revenue or profitability leading to lower than expected cash accruals or deterioration in the liquidity or financial risk profile or both.
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 23 (Provisional) | FY 22 (Actual) |
| Operating Income | Rs. Cr. | 1493.31 | 2377.81 |
| PAT | Rs. Cr. | 6.62 | 8.61 |
| PAT Margin | (%) | 0.44 | 0.36 |
| Total Debt/Tangible Net Worth | Times | 0.73 | 0.72 |
| PBDIT/Interest | Times | 4.27 | 6.49 |
| Status of non-cooperation with previous CRA (if applicable) |
| ICRA Ratings vide its press release dated 20 April 2023, had reaffirmed BPF to ICRA D/D; Isuer Not Cooperating |
| Any Other Information |
| None |
| 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 • Trading Entitie: https://www.acuite.in/view-rating-criteria-61.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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