Product Quantum (Rs. Cr) Long Term Rating Short Term Rating
Bank Loan Ratings 15.00 ACUITE BB- | Stable | Reaffirmed -
Bank Loan Ratings 35.00 - ACUITE A4 | Reaffirmed
Total Outstanding Quantum (Rs. Cr) 50.00 - -
 
Rating Rationale
­Acuité has reaffirmed its long term rating to ‘ACUITE BB-’ (read as ACUITE double B minus) and the short term rating to ‘ACUITE A4’ (read as ACUITE A four) to the Rs.50.00 crore bank facilities of Capithan Exporting Company (CEC). The outlook is ‘Stable’.

Rating Rationale
The rating reaffirmation takes into account the stable operating and financial performance of CEC, marked by improved operating income and range bound operating margins. The operating income of the Company improved to Rs.90.97 Cr in FY2022 as against Rs.62.93 Cr in FY2021. In 7M FY23 the company generated revenues of Rs.75.74 Cr and is expected to close the year in the range of Rs. 110-115 Cr. The operating margins ranged between 4-5.30 percent for the last three years ended FY2022.The rating remains constrained by the below average financial risk profile and working capital intensive nature of operations.
 

About the Company
­CEC established in the year 1974 as a partnership firm by Mr Alphonse Joseph along with his father George Joseph is engaged in the business of exporting seafood products across European Countries, Far East & Middle East Countries. The firm has established a seafood processing plant in Sakthikulangara, Kollam district in Kerala and deals in various types of seafood products such as Fish, Octopus, Crabs, Squid, Cuttlefish, Shrimps etc.
 
Analytical Approach
­Acuité has considered the standalone business and financial risk profiles of CEC for arriving at the rating.
 

Key Rating Drivers

Strengths
  • ­Extensive experience of promoters in the industry and established t rack record of operations 
CEC established in the year 1974 is engaged in processing and exports of different types of seafood products and it has an established track record of operations for more than five decades. The key promoters Mrs. Jeneefer Alphone and Ms. Amitha Alphonse have extensive experience in the business. The extensive industry experience of the promoters has enabled the firm to establish a healthy relationship with its suppliers and customers.The operating income of the Company improved to Rs.90.97 Cr in FY2022 as against Rs.62.93 Cr in FY2021. In 7M FY23 the company generated revenues of Rs.75.74 Cr and is expected to close the year in the range of Rs. 110-115 Cr. The operating margins ranged between 4-5.30 percent for the last three years ended FY2022. Acuité believes that CEC will continue to benefit from extensive experience of its management and established track record of operations.
Weaknesses

  • Below average financial risk profile

The financial risk profile of the firm is below average marked by moderate gearing and modest debt protection metrics. The net worth of the company stood at Rs.23.18 Cr and Rs.21.43 Cr as on March 31, 2022 and 2021 respectively. The gearing of the firm stood at 1.85 times as on March 31, 2022 against 2.00 times as on March 31, 2021. Debt protection metrics – Interest coverage ratio and debt service coverage ratio stood at 1.34 times and 1.27 times as on March 31, 2022 respectively as against 1.29 times and 1.26 times as on March 31, 2021 respectively. The debt to EBITDA of the company stood at 9.74 times as on March 31, 2022 as against 12.58 times as on March 31, 2021. TOL/TNW stood at 2.00 times in FY2022 as against 2.11times in FY2021.
  • working capital operations
CEC’s working capital cycle is intensive as reflected by its high GCA days at 258 days as on March 31, 2022 as against 354 days as on March 31, 2021. The improvement in GCA days is on account of improvement in inventory and debtor days. Inventory days stood at 200 days as on March 31, 2022 as against 301days as on March 31, 2021. Subsequently, the payable period stood at 14 days as on March 31, 2022 as against 15 days as on  March 31, 2021 respectively.  The debtor day stood at 59 days as on March 31, 2022 as against 63 days as on March 31, 2021. Further, the average bank limit utilization in the last twelve months ended January, 23 remained at ~88 percent for fund based.
Rating Sensitivities
  • ­Further deterioration in the working capital cycle
 
Material covenants
­None
 
Liquidity Position: Stretched
The liquidity profile of the company  is stretched  marked by modest net cash accruals against repayment obligations. The company generated  net cash accurals (NCA) of Rs 0.89 Cr ending FY2022 against its maturing  debt obligations of Rs. 0.18 Cr . The company is expected to generate net cash accruals in the range of Rs.1.74 to 2.76 Cr against  no repayment obligations over the medium term. The working capital cycle of CEC stood intensive on account of high GCA (Gross Current Asset) days of 258 in FY2022. Unencumbered cash and bank balances stood at 0.57 Cr as on March 31, 2022. The current ratio of the company stood at 1.39 times as on March 31, 2022. Acuité believes that the liquidity of the company is likely to improve over near to medium term owing to increase in scale of operations and margins.
 
Outlook: Stable
Acuité believes that CEC will maintain a ‘Stable’ outlook over the medium term owing to its promoters' extensive experience and  established track record of operations. The outlook may be revised to 'Positive' if the Company  registers higher than expected revenue growth while maintaining its profitability and capital structure.. Conversely, the outlook may be revised to 'Negative' incase of further elongation of working capital cycle leading to deterioration of liquidity position of the Company.
 
Other Factors affecting Rating
­None
 

Particulars Unit FY 22 (Actual) FY 21 (Actual)
Operating Income Rs. Cr. 90.97 62.93
PAT Rs. Cr. 0.36 0.11
PAT Margin (%) 0.40 0.17
Total Debt/Tangible Net Worth Times 1.85 2.00
PBDIT/Interest Times 1.34 1.29
Status of non-cooperation with previous CRA (if applicable)
­Crisil vide its press release dated 31.12.21 had reaffirmed the company to CRISIL B+/A4;INC
 
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
­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
 

Date Name of Instruments/Facilities Term Amount (Rs. Cr) Rating/Outlook
24 Dec 2021 Packing Credit Short Term 40.00 ACUITE A4 (Assigned)
Proposed Bank Facility Short Term 2.00 ACUITE A4 (Assigned)
Bills Discounting Long Term 8.00 ACUITE BB- | Stable (Assigned)
­

Lender’s Name ISIN Facilities Date Of Issuance Coupon Rate Maturity Date Quantum (Rs. Cr.) Complexity Level Rating
Federal Bank Not Applicable FBN/FBP/FBD/PSFC/FBE Not Applicable Not Applicable Not Applicable 15.00 Simple ACUITE BB- | Stable | Reaffirmed
Federal Bank Not Applicable PC/PCFC Not Applicable Not Applicable Not Applicable 35.00 Simple ACUITE A4 | Reaffirmed

Contacts
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