| Extensive industry experience of partners
The firm benefits from the extensive experience of its promoters, Mr. Krishna Reddy and Mr. T Veera Raghava Reddy, who have been engaged in the rice milling and trading business for over four decades. The partners understanding of the paddy procurement ecosystem in Andhra Pradesh, coupled with established relationships with farmers, commission agents and wholesale buyers has helped in developing recognition for their brand “Cow and calf" across Andhra Pradesh and adjoining states. The firm's operational track record spanning over four decades reflects its ability to maintain stable business operations despite the inherent volatility of commodity- linked nature of the sector. Acuite believes, the experience of the partners and established market presence will benefit the firm’s in maintaining its business profile.
Locational advantage for paddy procurement:
SRMM’s milling facilities are located in East Godavari, Andhra Pradesh, one of the leading paddy-growing states in India. The region benefits from the fertile Godavari and Krishna delta belts, supported by canal based irrigation and favourable agro-climatic conditions, ensuring abundant and sustained availability of paddy across multiple crop seasons. The proximity of the mill to major paddy producing locations and established linkages with local farmers and commission agents further strengthen raw material procurement ability. Acuite believes, the locational advantage along with strong local procurement relationships built over four decades, provides the firm with a stable supply of paddy.
Stable revenue growth and moderate operating margins:
SRMM reported an operating income of Rs.407.73 crore in FY2026 (Prov.) as against Rs.366.46 crore in FY2025, registering a healthy growth driven primarily by higher production volumes and improved capacity utilisation. Rice continued to be the principal revenue contributor, accounting for around 94.8 percent of total sales in FY2026 (Prov.). The firm witnessed an increase in rice sales volumes during the year, supported by improved utilisation of its installed capacity. However, rice realizations remained largely stable with a marginal moderation owing to fluctuations in market prices. Revenue contribution from by-products such as broken rice, bran and ravva remained broadly stable, providing limited diversification to the overall revenue profile.
The firm's operating profitability improved during the year with EBITDA increasing to Rs.14.74 crore in FY2026 (Prov.) from Rs.11.97 crore in FY2025. Consequently, the EBITDA margin improved to 3.62 percent in FY2026 (Prov.) from 3.27 percent in FY2025, supported by better absorption of fixed costs and improved operating efficiencies. PAT improved to Rs.4.96 crore in FY2026 (Prov.) from Rs.3.33 crore in FY2025, resulting in an improvement in PAT margin to 1.22 percent from 0.91 percent over the same period. Acuité believes, the revenues will improve over the medium term driven by higher production. However, margins continue to remain susceptible to fluctuations in paddy procurement costs, rice realisations and regulatory interventions in the rice sector.
Above-average financial risk profile:
SRMM's financial risk profile remains above average, marked by a healthy net worth base, moderate leverage and improving debt protection metrics. The firm's tangible net worth improved to Rs.82.62 crore as on March 31, 2026 (Prov.) against Rs.77.66 crore as on March 31, 2025 and Rs.74.43 crore as on March 31, 2024. The improvement in net worth is supported by steady accretion of profits to reserves over the years. The total debt of the firm, comprising predominantly working capital borrowings, increased to Rs.91.65 crore as on March 31, 2026 (Prov.) from Rs.80.56 crore as on March 31, 2025 on account of higher working capital requirements associated with the increased scale of operations. Despite the increase in debt levels, the gearing and TOL/TNW remained comfortable at 1.11 times and 1.19 times, respectively, as on March 31, 2026 (Prov.) against 1.04 times and 1.12 times as on March 31, 2025. The debt protection metrics witnessed improvement with interest coverage ratio improving to 2.06 times in FY2026 (Prov.) from 1.48 times in FY2025 and 1.53 times in FY2024. Similarly, DSCR improved to 1.75 times in FY2026 (Prov.) against 1.47 times in FY2025. Debt to EBITDA remained high at 6.11 times in FY2026 (Prov.) as against 6.46 times in FY2025, supported by improvement in operating profitability.
Acuité believes that the financial risk profile is likely to remain above average over the medium term, supported by healthy net worth accretion and improving profitability.
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| Moderately intensive working capital operations
The firm's working capital operations remain moderately intensive in nature as reflected by the Gross Current Assets (GCA) of 156 days in FY2026 (Prov.) against 158 days in FY2025. The working capital cycle continues to be driven by inventory requirements inherent in the rice milling business, wherein inventory days, although improved, remained high at 107 days in FY2026 (Prov.) as compared to 117 days in FY2025. The firm is required to maintain inventory of paddy and finished rice to ensure uninterrupted operations and mitigate fluctuations in raw material availability and pricing. Debtor levels remained comfortable at 11 days in FY2026 (Prov.), comparable with the historical trend, reflecting timely realization from customers. Further, creditor period remained low at around 6 days in FY2026 (Prov.), against 7 days in FY2025. The current ratio stood at 1.78 times as on March 31, 2026 (Prov.) against 1.83 times as on March 31, 2025. The fund-based working capital limits were utilized at an average of 87.25 percent during the past ten months ended May 2026, with utilization peaking at ~97 percent in March 2026.
Acuité believes that the working capital operations are expected to remain moderately intensive over the medium term on account of the inventory-led nature of operations and seasonal procurement requirements of the rice milling business.
Inherent risk of capital withdrawal
Being a partnership firm, SRMM remains exposed to the inherent risk of capital withdrawals by the partners, which could impact the net worth and financial flexibility of the entity. However, the risk is partially mitigated as there have been minimal capital withdrawals by the partners during the last two years.
Exposure to agro-climatic conditions, raw material price volatility and regulatory risks
The operations of Sri Ramalingeswara Modernrice Mill are exposed to agro-climatic risks, as paddy availability and quality largely depend on monsoon patterns and regional climatic conditions. Further, profitability is susceptible to fluctuations in raw material prices, as paddy procurement costs and realizations are influenced by demand-supply dynamics. In addition, the industry is subject to government regulations relating to minimum support prices (MSP), levy obligations and export/import policies, which can have a direct bearing on input costs and operating margins.
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