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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 18.00 | ACUITE BB- | Stable | Assigned | - |
| Bank Loan Ratings | 17.00 | - | ACUITE A4 | Assigned |
| Total Outstanding | 35.00 | - | - |
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Rating Rationale |
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Acuite has assigned its long-term rating of ‘ACUITÉ BB-' (read as ACUITE double B minus) and short-term rating of ‘ACUITÉ A4’ (read as ACUITE A four) on the Rs. 35.00 Cr. bank facilities of Simosis International(SI). The outlook is ‘Stable’.
Rationale for rating The rating assigned reflects the established track record of operations and experience of the partners in the industry. Further, the rating considers the growth recorded in operating income in FY2024(Prov) albeit volatile nature of operating profit margins. Furthermore, it reflects the firm’s moderate working capital operations marked by GCA days of 81 days in FY2024(Prov) and its adequate liquidity position. However, the rating is constrained by the below average financial risk profile, exposure to agro climatic risk and risk related to economic conditions of the export countries, foreign exchange and government regulations. |
| About the Company |
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Established in the year 2002, Simosis lnternational is a registered partnership firm having 3 partners Aanshul Agrawal, Sunita Agrawal and Sanskar Agrawal. The Firm is engaged in the business of export of agro commodities. The firm procure agri commodities from farmers, grain merchants across India and process the same at its Plant situated at SEZ JNPT& Uran (Navi Mumbai). After processing the firm export the same to various countries.
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| Unsupported Rating |
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Not Applicable
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| Analytical Approach |
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Acuité has considered the standalone business and financial risk profile of Simosis International while arriving at the rating.
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| Key Rating Drivers |
| Strengths |
| Experienced management and long track record of operations-
Established in 2002, the firm has over two decades of experience in the export business. The partners have forged strong relationships with a diverse group of customers and suppliers. Acuité believes that the experience of the management in the industry is likely to benefit the firm over the near to medium term. Improvement in operating income; albeit volatile operating profit margins In FY 2024 (Prov.), the firm experienced a significant increase in revenue to Rs. 94.93 Cr. marking a 28.32 % increase compared to Rs. 73.98 Cr. in FY2023. This growth is driven by increase in sales volumes and increase in average selling price.However, the operating profit margins have remained volatile and stood at 4.28% in FY2024(Prov) against 6.24% in FY2023 and 1.93% in FY2022. The Profit After Tax (PAT) margin stood at 0.76% in FY24(Prov.), as compared to 1.84% in FY23 and (1.64%) in FY2022. Acuité believes that the ability of the firm to sustain the growth in operating income while maintaining its profitability margins will remain a key monitorable. Moderate working capital management
The working capital operations of the firm are moderate in nature marked by GCA days of 81 days in FY2024(Prov.) against 113 days in FY2023. The debtor’s collection period stood at 41 days in FY2024(Prov.) as against 46 days in FY2023. The inventory days stood at 30 days in FY2024(Prov) against 53 days in FY2023 and 27 days in FY2022. The creditor days stood at 22 days in FY2024 as against 38 days in FY2023.However, the fund-based limit utilization stood high at ~93.20 per cent over the last six months ended July 2024. Acuite believes that working capital operations of the firm may continue to remain moderate considering the nature of business. |
| Weaknesses |
| Below average financial risk profile
Financial risk profile of the firm is below average with low net worth, high gearing and below average debt protection indicators. The net worth of the firm stood at Rs. 7.10 Cr. in FY 2024(Prov.) as compared to Rs.5.12 Cr. in FY2023. This improvement in net-worth is mainly due to infusion of capital by the partners in the firm. Further, gearing of the firm stood high at 3.31 times as on 31st March 2024 as against 5.10 times as on 31st March 2023. Total outside liabilities to Tangible net worth (TOL/TNW) stood at 4.11 times as on 31st March 2024(Prov.) as against 6.51 times as on 31st March 2023. Debt service coverage ratio stood at 1.61 times in FY24(Prov.) as against 1.25 times in FY23. Interest coverage ratio stood at 1.76 times in FY24(Prov.) as against 2.15 times in FY23. Net Cash Accruals to Total Debt (NCA/TD) of the firm stood at 0.08 times for FY2024(Prov.) as against 0.10 times for FY2023. Acuite believes that financial risk profile of the firm may improve going forward with no major debt-funded capex. Exposure to agro climatic risk The firm operates in the export of agro commodities. The availability and prices of the agricultural commodities is highly dependent on the agro climatic conditions. Hence, the operations and profitability of Simosis International is exposed to agro climatic risks. Risk related to economic conditions of the export countries, foreign exchange and government regulations The firm is engaged in in the export of agro commodities. This exposes the firm to the risks related to economic conditions of the export countries. Any slowdown in the economic conditions of these countries may adversely impact the orders inflow of the firm. The profitability margins remain susceptible to fluctuations in foreign exchange rates. However, the firm mitigates this risk by securing payment before releasing the original shipping documents. Once the cargo is shipped, the customer makes the payment afterwards original documents are sent, allowing them to release the cargo. This process ensures advance payment, safeguarding the firm against any potential defaults or payment delays. |
| Rating Sensitivities |
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| Liquidity Position |
| Adequate |
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The firm's liquidity position is adequate. The firm generated sufficient net cash accruals of Rs.1.77 Cr. in FY2024(Prov.) as against its maturity debt obligations of Rs. 0.05 Cr. in the same tenure. In addition, it is expected to generate sufficient cash accrual in the range of Rs. 2.33 – Rs.2.87 Cr. as against the maturing repayment obligations of around Rs. 0.90 Cr. over the medium term. Further, the working capital management of the firm is moderate marked by GCA days of 81 days in FY2024(Prov.) as against 113 days in FY2023. However, the reliance on working capital limits stood high at 93.20% over the last 6 months ending July 2024. The current ratio stands at 0.94 times as on 31st March 2024(Prov.) as against 0.91 times as on 31st March 2023.
Acuité believes that going forward the firm will maintain adequate liquidity position on account of expected increase in accruals generation and absence of any major debt funded capex plan in the near term. |
| Outlook: Stable |
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Acuité believes that the outlook on Simosis International will remain ‘Stable’ over the medium term on account of the firm’s experienced management and long track record of operations. The outlook may be revised to ‘Positive’ if the firm registers a higher than expected growth in revenues while improving their profit margins and maintaining a comfortable financial risk profile. Conversely, the outlook may be revised to ‘Negative’ if there is a steep decline in the firm’s operating revenue and margins or in case of a significant deterioration in the firm’s capital structure on account of larger than envisaged working capital borrowings and further elongation in working capital management.
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 24 (Provisional) | FY 23 (Actual) |
| Operating Income | Rs. Cr. | 94.93 | 73.98 |
| PAT | Rs. Cr. | 0.72 | 1.36 |
| PAT Margin | (%) | 0.76 | 1.84 |
| Total Debt/Tangible Net Worth | Times | 3.31 | 5.10 |
| PBDIT/Interest | Times | 1.76 | 2.15 |
| Status of non-cooperation with previous CRA (if applicable) |
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None
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| Any other information |
| None |
| Applicable Criteria |
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• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm • Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm • Trading Entities: https://www.acuite.in/view-rating-criteria-61.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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| Rating History : |
| Not Applicable |
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