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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 100.00 | ACUITE BBB- | Stable | Reaffirmed | - |
| Total Outstanding | 100.00 | - | - |
| Total Withdrawn | 0.00 | - | - |
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Rating Rationale |
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Acuite has reaffirmed its long term rating of 'ACUITE BBB-' (read as Acuite triple B minus) on the Rs.100.00 crore bank facilities of Om Shri Shubh Labh Agritech Private Limited. The outlook is 'Stable'.
Rationale for rating The reaffirmation in rating takes into consideration the established market position of the group in the FMCG industry and long and extensive experience of the promoters. The rating also factors in the improvement in the scale of operations, moderate financial risk profile reflected by low gearing which is below unity, along sufficient net cash accruals against the debt repayment obligation in the same period. 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 volatility in commodity trade and group's ability to increase its production capacity utilization resulting into substantial improvement in revenue and profitability remains key rating monitorable. |
| About the Company |
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Om Shri Shubh Labh Agritech Private Limited was incorporated in 2017 by Mr. Girraj Bansal and his son Mr.Ketan Bansal who are the two directors of the company. The company is based in Gwalior (M.P). The company is engaged in trading of wheat, chana, pulses, rice, mustard, various types of wheat flour & other commodities.
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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), Shri Paramsukh Edible Foods Pvt Ltd (SPEF) B P Food Products Pvt Ltd (BPF) and Om Shri Shubh labh Agritech Private Limited (OSSATL). Om Shri Shubh Labh Agritech Retailers Private Limited (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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| Unsupported Rating |
| Not applicable |
| 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 Private Limited (OSSATL), Om Shri Shubh labh Agrifresh Private Limited (OSSAF), Shri Paramsukh Edible Foods Private Limited (SPEF) and B P Food Products Private Limited (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 t rack 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. 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. Moderate financial risk profile The financial risk profile of OSSLG is marked by a moderate net worth, low gearing and comfortable debt protection metrics. The tangible net-worth of the company stood at Rs. 182.89 Cr. as on 31st March 2024(P) as against Rs. 155.70 Cr. as on 31st March 2023. The Networth of the company has strengthened due to equity infusion and accretion of profits to reserves. The total Debt of the company stood at Rs. 161.09 crore as on 31st March, 2024 (Prov.) as against Rs. 68.38 Cr. as on 31st March, 2023. Further, the gearing of the company stood at 0.88 times as on 31st March, 2024 (Prov.) as against 0.44 times as on 31st March, 2023. Gearing of the company has increased in FY24 on account of higher utilization of the short term debt to support working capital requirement. TOL/TNW of the company stood at 1.24 times as on 31 March, 2024 (Prov.) as against 1.11 times as on 31st March, 2023. In addition, Debt protection metrics remain comfortable with Debt service coverage ratio (DSCR) at 1.77 times in FY2024 (Prov.) as against 1.81 times in FY2023 and Interest Coverage ratio (ICR) stood at 2.31 times in FY2024 (Prov.) as against 4.31 times in FY2023. Going forward, Acuite believes that financial risk profile of the group is expected to add additional short term borrowings to fund the working capital requirements in near to medium term. Efficient working capital operation Working capital operations of the group though moderated is efficient with GCA days of 65 days in FY24 (Prov.) as against 67 days in FY23. GCA days of the company are driven by debtor collection period. The debtor collection period of the group stood at 38 days in FY24 (Prov.) as against 48 days in FY23. The group on an average extends 30-60 days of credit period to its customers. The inventory holding period stood at 22 days in FY24 (Prov.) as against 10 days in FY23 as the group changed in focus from pure trading to manufacturing wherein the company needs to hold higher inventory. The creditor days of the group stood at 9 days in FY2024 (Prov.) as against 23 days in FY2023. Acuite believes that working capital operations of the company is expected to remain in the same range in near to medium term. |
| Weaknesses |
| Thin profitability margins
Om Shri Shubh Labh Group (OSSLG) has recorded an increase in operating performance of 37 percent in FY23 which has increased from Rs.1494.14 Crore in FY23 to Rs.2042.42 Crore in FY24 (P). Despite increase in the top-line of the company the operating margins and PAT margins are thin reflected by EBITDA Margins of 1.94% in FY24 (P) against 1.50% in FY23 and PAT margins of 0.54% in FY24 (P) against 0.44% in FY23. 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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| Liquidity Position |
| Adequate |
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Liquidity of the group is adequate with sufficient net cash accruals as against the debt repayment obligation. The net cash accruals of the company stood at Rs. 18.39 crore in FY24 (P) as against debt repayment obligation of Rs. 2.89 crore in the same period. The company is expected to generate sufficient net cash accruals against debt repayment obligation in near to medium term. The fund based bank limit utilization on consolidated basis stood at 97.77% in last six months ending July 2024. The company maintains unencumbered cash balance of Rs.0.85 crore as on 31st March 2024 (Prov). Acuite believes that higher dependence on the external borrowings will remain a key monitorable.
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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 significant 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 decline in revenue and profitability leading to lower than expected cash accruals or further deterioration in the debt protection metrices.
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 24 (Provisional) | FY 23 (Actual) |
| Operating Income | Rs. Cr. | 2042.42 | 1494.14 |
| PAT | Rs. Cr. | 10.98 | 6.65 |
| PAT Margin | (%) | 0.54 | 0.44 |
| Total Debt/Tangible Net Worth | Times | 0.88 | 0.44 |
| PBDIT/Interest | Times | 2.31 | 4.31 |
| Status of non-cooperation with previous CRA (if applicable) |
| Not applicable |
| 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 Entities: https://www.acuite.in/view-rating-criteria-61.htm |
| Note on complexity levels of the rated instrument |
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| *Annexure 2 - List of Entities (applicable for Consolidation or Parent / Group / Govt. Support) | ||||||||||
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