| Experienced management and established track record of operations of the group
SGBNPL is part of the Chakote group of companies (Bakery division) which was established in 1991 by Mr. Chakote and family. The group is engaged in manufacturing of bakery and namkeen products. The group has a presence and a dealer network in the states of Maharashtra, Karnataka, Goa, Andhra Pradesh, Telangana and Gujarat. The group is promoted by Mr. Annasaheb Balasaheb Chakote, Mr. Satish Balasaheb Chakote and Mr. Padmini Annasaheb Chakote who extensive experience in the bakery and namkeen industry. Acuité believes that the extensive experience of the promoters will strengthen the business of the group over the medium term.
Augmentation in operating performance
The group's operating income improved by 12.45 per cent to Rs. 285.90 crore in FY2025 (Prov.) as against Rs. 254.25 crore in FY2024 and Rs. 203.52 crore in FY2023 driven by commencement of co-packaging resulting in a higher capacity utilisation of installed capacity. Further, the group’s operating income has improved by ~18 per cent in Q1FY2026 to Rs. 84.7 crore as against Rs. 71.55 crore in Q1FY2025. Furthermore, the operating profit margin improved to 5.74 per cent in FY2025 (Prov.) as against 4.18 per cent in FY2024. Further, the PAT Margin improved to 3.30 per cent in FY2025 (Prov.) compared to 1.65 per cent in FY2024. Acuite believes that the group’s ability to improve its scale of operations and operating profitability will remain a key rating sensitivity.
Moderate financial risk profile
The financial risk profile of the group stood moderate marked by average net worth, below unity gearing and comfortable debt protection metrics. The net worth of the group stood at Rs. 70.94 crore as on March 31st, 2025 (Prov.), as against Rs. 61.50 crore as on March 31st, 2024, due to accretion of profit to reserve. Further, the net worth includes quasi equity which includes the unsecured loans from directors/promoters which are interest free and have been subordinated to the bank. The total debt of the group stood at Rs. 52.38 crore.as on March 31, 2025 (Prov.) comprising of Rs. 21.85 crore of long-term debt, and Rs. 30.53 crore short term debt in term of cash credit. Further, the gearing of the group has improved to 0.74 times as on March 31, 2025 (Prov.), as against to 0.96 times as on March 31, 2024. The TOL/TNW of the group stood at 1.34 times as on March 31, 2025 (Prov.), as against 1.60 times as on March 31,2024.
Furthermore, the debt protection metrics of the group stood comfortable as reflected by debt service coverage ratio (DSCR) of 1.45 times for FY2025 (Prov.) as against 2.76 times for FY2024 and the interest coverage ratio (ICR) stood at 4.33 times for FY2025 (Prov.) as against 2.90 times for FY2024. The net cash accruals to total debt (NCA/TD) stood at 0.30 times in FY2025 (Prov.) as against to 0.18 times in FY2024. Acuite believes the financial risk profile of group will remain moderate over the medium term on account of upcoming debt funded capex.
Upcoming capex plan and subsidy receivable from state government
The group has planned capital expenditure (capex) for installing and modifying capacity for khari, pastry and puffs, rusk and cupcake lines. The total cost of the capex is Rs. 5 crore, funded through a combination of internal cash accruals of Rs. 1.3 crore and term loans of Rs. 3.7 crore. The capex is expected to be completed in FY2026. Further, the group had incurred large capex for setting up its manufacturing units which has been approved under Package Scheme of Incentives (PSI) 2019 and the group is eligible for subsidy of 100 per cent of capital investment over a period of ten years starting FY2024 which is expected to improve the PAT margins and net cash accruals for repayment of maturing debt obligations. Acuite believes that the successful implementation of the upcoming capex would be key to increase the operating income. However, timely completion of the capex without any cost overrun would remain key rating monitorable.
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| Moderately Intensive Working capital operations:
The working capital operations of the group is moderately intensive in nature, with Gross Current Assets (GCA) of 109 days in FY2025 (Prov.) and FY2024. The inventory levels stood at 21 days in FY2025 (Prov.) as against 24 days in FY2024. The debtor days stood at 62 days in FY2025 (Prov.) as against 59 days in FY2024. The creditor days stood at 50 days in FY2025 (Prov.) and FY2024. Further, the average utilization for limits is high, averaging around 90 per cent for fund-based limits over the last twelve months ending May-2025. Acuite believes that the working capital operations of the group may continue to remain moderate over the medium term.
Industry Challenges and Geographic Risk
The group operates in a fragmented and competitive industry with many unorganized players, limiting pricing and bargaining power. Low entry barriers, small investment needs, and simple operations have led to the presence of numerous small entities, increasing competition and restricting growth. Further, the profitability of the group is exposed to changes in commodity prices, as raw materials account for 65–70 per cent of revenue. A rise in agro-commodity prices can impact margins. The group also faces concentration risk, with most revenue coming from Maharashtra.
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