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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 35.00 | ACUITE BB- | Reaffirmed & Withdrawn | - |
| Total Outstanding | 0.00 | - | - |
| Total Withdrawn | 35.00 | - | - |
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Rating Rationale |
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Acuité has reaffirmed and withdrawn the long-term rating of ‘ACUITE BB-’ (read as ACUITE double B Minus) on the Rs.35.00 crore bank facilities of M S International (MSI). The rating withdrawal is in accordance with Acuité's policy on withdrawal of rating as applicable to the respective facility / instrument. The rating has been withdrawn on account of the request received from the company along with no objection certificate received from the lender as per Acuité's policy on withdrawal of ratings as applicable to the respective facility / instrument.
Rationale for reaffirmation The rating reaffirmation takes into consideration the extensive experience of the partners in the industry. The rating also factors in the moderation in the company’s scale of operations, moderate financial risk profile, moderately intensive working capital operations and adequate liquidity position of the company.
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| About the Company |
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Established in October 2017, M S International is a Gujarat-based partnership firm, where Mr. Maaz Suthar, Mr. Rehanabanu Salauddin Modasiya and Mr. Zaid Tadha are partners. The firm is engaged in the business of supplying processed or chips-quality potatoes (known as Lady Rosetta potatoes) to potato chips/wafers manufacturing companies domestically and internationally. M S International has been awarded the status of Authorised Economic operator and the firm has also applied for star export house certificate
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| Unsupported Rating |
| Not Applicable |
| Analytical Approach |
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Acuite has considered standalone financial and business risk profile of M S International to arrive at the rating
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| Key Rating Drivers |
| Strengths |
| Moderate experience of promoter supported by business experience of family
M S International, a partnership firm, was established in October 2017 and is led by Mr. Maaz Suthar, managing partner of the firm. Though M S International started operations five years ago, Mr. Maaz Suthar has been in the trading business for the past seven years, and the Suthar family has long experience in the trading business. M S Group, owned by the Suthar family, has been in the trading business for the last 40 years. The group started its business by trading grocery items in a small village in Aravalli district, Gujarat, in 1982. Over the years, the group expanded into other trading businesses, such as the trading of grains, fertilizer, and pesticides, among others. The established presence of the group has helped develop good relations with suppliers and clients in agricultural-related businesses, which is also enabling M.S. International to expand its customer base and grow. In October 2017, M S International started its operations with just 1-2 customers, and the firm now has more than 15 customers, including some renowned clients like PepsiCo India Holdings Pvt. Ltd., Balaji Wafers, ITC, etc. in the domestic market. Moderate Financial Risk Profile MS International has a moderate financial risk profile, marked by a tangible net worth of Rs. 16.92 crore as of March 31, 2024(Prov.), as against Rs. 13.77 crore as on March 31, 2023. The gearing level of the company remained moderate at 2.52 times as on March 31, 2024(Prov.), as against 2.20 times as on March 31, 2023. The total debt outstanding of Rs. 42.65 crore consists of working capital borrowings of Rs. 34.20 crore, unsecured loans from promoters of Rs. 5.80 crore, term loans of Rs. 2.48 crore and current maturities of long-term debt Rs.0.18Cr. as of March 31, 2024(Prov.). The coverage ratios of the company remained moderate, with an interest coverage ratio (ICR) at 2.39 times for FY2024(Prov.) against 2.28 times for FY2023. Also, the debt service coverage ratio (DSCR) stood at 1.65 times for FY2024(Prov.) as against 1.60 times for FY2023. The total outside liabilities to tangible net worth (TOL/TNW) of the company stood at 2.69 times as on March 31, 2024(Prov.), against 3.35 times as on March 31, 2023. Further, Net Cash Accruals to Total Debt (NCA/TD) stood at 0.03 times for FY2024(Prov.) as against 0.04 times for FY2023. Acuite believes that the financial risk profile of the firm will remain moderate on account of the absence of any debt-funded capex plan. |
| Weaknesses |
| Moderately intensive working capital management The working capital operations of the Company is Moderately intensive marked by GCA days which stood at 182 days as on 31st March 2024(Prov.) against 140 days as on 31st March 2023. The high GCA days are majorly on account of high inventory levels during Last Quarter that is Q4. The debtor days stood at 123 days for FY2024(Prov.) against 118 days for FY2023. The creditor days of the company stood at 13 days for FY2024(Prov.) as against 57 days for FY2023. Since maximum Potato requirement (80-90%) is purchased through the contract farming, the firm maintain around 4–5-month inventory, resulting in higher inventory and debtors’ days at March end. The average utilization of the working capital limits of the company remained high during the peak season that is from January to September. Risk of capital withdrawal and fluctuation in foreign exchange rate The firm is susceptible to the inherent risk of capital withdrawal given its constitution as a partnership. Any significant withdrawal from the partner’s capital will have a negative bearing on the financial risk profile of the firm.
Around 80-90 percent of the firm's business is from exports and the firm has not availed any hedging instrument to cover foreign exchange risk. So, any adverse change in foreign exchange rate would hurt the overall operating performance and financial risk profile of the firm. |
| Rating Sensitivities |
| Not Applicable |
| Liquidity Position |
| Adequate |
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MSI has adequate liquidity position marked by its net cash accruals against its maturing debt obligations. The company generated cash accruals of Rs. 1.45 crore in FY2024 compared against Rs. 0.29 crore maturing debt obligations. The average utilization of the working capital limits of the firm remained at ~66.54 percent in the last Six months ended May 2024. Furthermore, the firm maintains unencumbered cash and bank balances of Rs. 2.93 crore as of March 31, 2024(Prov.), and the current ratio stood at 1.67 times as of March 31, 2024(Prov.).
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| Outlook: Not Applicable |
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 24 (Provisional) | FY 23 (Actual) |
| Operating Income | Rs. Cr. | 124.49 | 154.80 |
| PAT | Rs. Cr. | 1.38 | 1.10 |
| PAT Margin | (%) | 1.11 | 0.71 |
| Total Debt/Tangible Net Worth | Times | 2.52 | 2.20 |
| PBDIT/Interest | Times | 2.39 | 2.28 |
| 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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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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