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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 26.00 | ACUITE B+ | Stable | Upgraded | - |
| Bank Loan Ratings | 24.00 | - | ACUITE A4 | Reaffirmed |
| Total Outstanding | 50.00 | - | - |
| Total Withdrawn | 0.00 | - | - |
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Rating Rationale |
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Acuité has upgraded the long-term rating to 'ACUITE B+' (read as ACUITE B plus) from ‘ACUITE B-’ (read as ACUITE B Minus) and reaffirmed the short-term rating of ‘ACUITE A4’ (read as ACUITE A four) on the Rs.50.00 crore bank facilities of Food And Biotech Engineers India Private Limited (FBEIPL). The Outlook is 'Stable'.
Rationale for Upgrade The rating upgrade takes into account the company’s increasing operating income, healthy order book, support from promoters in terms of equity infusion leading to improved capital structure. However, these strengths are partly offset by the intensive working capital operations along with a stretched liquidity profile. Additionally, the rating considers timely execution of order book as key rating sensitivity factor. |
| About the Company |
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Incorporated in the year 1999, Food And Biotech Engineers India Private Limited (FBEIPL) is a Delhi based company. The directors of the company are Mr. Rabindra Prasad Singh, Mr. Abhishek Singh Prasad and Mr. Anil Kumar Sinha. The company specializes in providing engineering, design, manufacturing, and services across various industries, including food processing, sugar, chemicals, and pharmaceuticals, with a particular focus on evaporators and dryers.
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| Unsupported Rating |
| Not Applicable |
| Analytical Approach |
| Acuité has considered the standalone business and financial risk profiles of FBEIPL to arrive at this rating. |
| Key Rating Drivers |
| Strengths |
| Established track record of operations and experienced management
FBEIPL was incorporated in the year 1999. The directors of the company have been engaged in the business line for more than two decades. The extensive experience of the directors has helped in establishing healthy relationships with its customers and suppliers. The key customers of the company include names like Bihar State Co-Operative Milk Production, Gujarat Ambuja Export Limited amongst others with no major concentration in revenues. The company also exports to countries like Australia, Nepal, etc. to name a few. The company also export in Australia, Iran, Nepal, Uganda, Sri-Lanka, Kazakhstan which forms 16% of its revenues in FY24. Acuité believes that the company will benefit from the experience of the directors along with a healthy relationship with its customers and suppliers along with a healthy order book position. Improvement in scale of operations albeit decline in profitability In FY2024, the company achieved a revenue of Rs 103.03 crore, a significant increase from Rs 76.15 crore in FY2023. Further, the company has achieved Rs. 78.32 crore till November 2024. The increase in revenue is primarily driven by an expanded order book profile compared to the previous year. The order book stood at Rs. 76.00 crore (unexecuted) till December 2024. This indicates the revenue visibility over the medium term. However, despite the revenue growth, the company’s operating margin declined slightly to 4.28% in FY2024, 5.86% in FY2023. This decrease is attributed to an increase in the material cost since there is a time lag in inspection from customer which leads to incremental costs occasionally. Overall, while the company has shown revenue growth, Acuite believes that the Company faces pressure on margins due to rising operating costs, with expectations of maintaining stable performance in the near to medium term. Average financial risk profile The company's financial risk profile is average marked by increasing net worth, comfortable gearing and moderate debt protection metrics. The tangible net worth has improved of the company stood at Rs. 26.33 Cr. as on FY2024 as compared to Rs.21.93 Cr. as on FY2023 due to accretion to reserves and infusion of equity. Further, there was the equity infusion in FY2024 of Rs.2.98 Cr. for the tender based order but got cancelled due to some government regulations. The gearing of the company stood high at 0.34 times as on FY2024 compared to 0.70 times in March 23. The Total Outside Liabilities/Tangible Net Worth (TOL/TNW) has stood at 1.99 times as on FY2024. The debt protection metrices of the company remain moderate marked by Interest coverage ratio (ICR) of 2.37 times and debt service coverage ratio (DSCR) of 1.38 times for FY2024. The net cash accruals to total debt (NCA/TD) stood at 0.23 times in FY2024. Going forward, Acuité believes that the financial risk profile will remain below average over the medium term. |
| Weaknesses |
| Working capital intensive nature of operations
Although the company has high working capital requirements but has improved as evident from gross current assets (GCA) of 263 days for FY2024 and 315 days for the FY2023. Debtor days decreased to 128 days in FY2024 as against 165 days in FY2023. The company receives advance from customers and then payment is received based on billing with time lag which may vary between 3- 6 months. Inventory days increased to 57 days in FY2024 as against 55 days in FY2023. Creditor days of the company stood at 50 days as on FY2024 as compared to 99 days of FY2023. The credit terms with suppliers are mainly on an advance payment basis. Acuité believes that the working capital operations of the company will remain at the similar levels over the medium term. Highly competitive industry and cash flow dependent on timely execution of orders FBEIPL’s cash flows are exposed to the timely execution of the projects. There is an intensive competition from many organised and unorganised players of the industry. But the risk is mitigated by the intensive experience of the directors and long track record of operation. Acuite believes that it is critical for the company to execute orders in hand within stipulated timelines to sustain performance. |
| Rating Sensitivities |
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| Liquidity Position |
| Stretched |
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The company has stretched liquidity marked by net cash accruals of Rs. 2.08 Cr. as on FY2024 as against debt obligation of Rs. 0.95 Cr. over the same period. The cash and bank balance stood at Rs. 0.76 Cr. for FY 2024. The company has been actively reducing its unsecured loans (USL), which carry an interest rate of 12% per annum. Further, the current ratio of the company stood at 1.46 times in FY2024. The working capital cycle of the company is marked by Gross Current Assets (GCA) of 263 days for FY2024 as compared to 315 days for the FY2023. The bank limit of the company has been ~ 97.00 percent utilized for the last six months ended in December 2024.
Acuité believes that the liquidity of the company is likely to remain stretched over the medium term. |
| Outlook: Stable |
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 24 (Actual) | FY 23 (Actual) |
| Operating Income | Rs. Cr. | 103.03 | 76.15 |
| PAT | Rs. Cr. | 1.42 | 1.66 |
| PAT Margin | (%) | 1.38 | 2.18 |
| Total Debt/Tangible Net Worth | Times | 0.34 | 0.70 |
| PBDIT/Interest | Times | 2.37 | 2.16 |
| Status of non-cooperation with previous CRA (if applicable) |
| Not Applicable |
| Any other information |
| None |
| 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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