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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
|---|---|---|---|
| Bank Loan Ratings | 6.00 | ACUITE BB+ | Stable | Downgraded | Negative to Stable | - |
| Bank Loan Ratings | 9.00 | - | ACUITE A4+ | Downgraded |
| Total Outstanding | 15.00 | - | - |
Rating Rationale |
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Acuité has downgraded the long-term rating to ‘ACUITE BB+’ (read as ACUITE double B plus) from 'ACUITE BBB-' (read as ACUITE triple B minus) and short-term rating to ‘ACUITE A4+' (read as ACUITE A four plus) from 'ACUITE A3' (read as ACUITE A Three) on Rs.15.00 Cr. bank facilities of Stoney Vinimay Private Limited (SVPL). The outlook is revised to 'Stable' from ‘Negative’. Rating Rationale for downgrade The rating downgrade takes into account the sharp decline in operating revenue and volatility in profitability margins of the group in FY2023 and FY2024(prov). The revenue of the group stood at Rs.259.02 Cr. in FY2024 (prov), Rs.752.60 Cr. in FY2023 as against Rs.1844.68 Cr. in FY2022. The profitability stood at 5.20 percent in FY2024 (prov), and (1.30) percent in FY2023 against 1.37 percent in FY2022. Further, the working capital operations of the group deteriorated with GCA days of 213 days as on March 31, 2024 (prov) as against 68 days on March 31, 2023. The rating, however, is supported by a moderate financial risk profile, adequate liquidity and moderate utilisation of bank limits. The tangible net-worth of the group stood moderate at Rs.64.88 Cr. as on March 31, 2024(prov) as against Rs.60.45 Cr. as on March 31, 2023. Going forward, the ability of the group to improve its scale of operations and profitability margins while maintaining its capital structure, adequate liquidity position and restricting further elongation in working capital cycle, will remain key monitorable. |
| About Company |
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West Bengal- based, Stoney Vinimay Private Limited was incorporated in 2011. The company is engaged in the business of trading of agricultural goods such as cotton, wheat, maize, sugar, chick seeds among others to Bangladesh. The present directors of the firm are Mr. Prodiptto Majumder and Mr. Pawan Shaw.
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| About the Group |
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West Bengal- based, Remo Exports Enterprise was incorporated in 1996 as a proprietorship concern. The company is engaged in the business of trading of agricultural goods such as cotton, wheat, maize, sugar, chick seeds among others to Bangladesh. The proprietor of the firm is Mr. Prodiptto Majumder.
West Bengal based - Soubhik Exports Limited was incorporated in 1996. It is involved in wholesale trading of agricultural goods such as cotton, wheat, maize, sugar, chick seeds among others to Bangladesh. The company is also involved in manufacturing of rice bran oil from 2015 onwards with an installed capacity of 250 MTPD. Currently the company is managed by Mr. Prodiptto Majumder, Mr. Pawan Shaw, and Mr. Suresh Halder. |
Unsupported Rating |
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Not Applicable
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Analytical Approach |
| Extent of Consolidation |
| •Full Consolidation |
| Rationale for Consolidation or Parent / Group / Govt. Support |
| For arriving at this rating, Acuité has revised the approach to include Stoney Vinimay Private Limited and Remo Exports Enterprise into the ‘Soubhik Group’ as the group has common management, same line of operation, financial linkages in terms of corporate guarantee and operational linkages in terms of inter- company sales and purchases. Soubhik Exports Ltd has given a corporate guarantee for the bank limits availed by Stoney Vinimay Pvt Ltd and Remo Export Enterprise and Stoney Vinimay Pvt Ltd is holding ~8% stake in Soubhik Exports Limited. Hence, Acuité has consolidated the business and financial risk profiles of Soubhik Exports Limited, Stoney Vinimay Pvt. Ltd. and Remo Exports Enterprise together referred to as ‘Soubhik Group’.
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Key Rating Drivers |
Strengths |
| Experienced management and a long track record of operation
The flagship company of the group, Soubhik Exports Limited was established in 1966 by Mr. Prodiptto Majumder and engaged in the export of agricultural products such as rice, wheat, maize, pulses, chickpeas and cotton mainly to Bangladesh. In 2015, the company has installed rice bran oil mill in West Bengal with an installed capacity of 75,000 MT per annum. Advanced refining technologies have been used to manufacture the refined rice barn oil which is marketed under brand name “Hear Friendly cooking oil”. During 1996 the group started trading business in Remo Exports Enterprises and in 2011 they started trading in commodities in Stoney Vinimay Pvt Ltd. Currently the group is managed by Mr. Prodiptto Majumder, who has more than six decades of experience in the agricultural trading business along with his son Mr. Soumyadeep Majumder, who also has more than two decades of experience in a similar industry. Acuité derives comfort from the long experience of the promoter will continue to support the business going forward. Moderate financial risk profileThe financial risk profile of the group is moderate marked by improving net worth, moderate gearing levels and moderate debt protection metrics. The tangible net-worth of the group stood comfortably at Rs.64.88 Cr. as on March 31, 2024(prov) as against Rs.60.45 Cr. as on March 31, 2023. The increase in net-worth is due to accretion of reserves. The group has a moderate leverage policy with a gearing level that stood at 1.39 times as on March 31, 2024(prov) as against 1.76 times as on March 31, 2023. This moderate improvement in gearing level is on account of the decrease in short term debt in FY2024 (prov). The total short term debt has declined to Rs.56.84 crore in FY2024 (prov) as compared to Rs.81.31 Cr. in the previous year. The TOL/TNW improved and stood at 2.21 times as on March 31, 2024(prov) as against 2.76 times as on March 31, 2023. The debt/EBITDA of the group stood moderate at 5.43 times as on March 31, 2024(prov) as against 5.46 times as on March 31, 2023. The debt coverage indicators of the group are moderate with Interest coverage ratio (ICR) at 2.49 times in FY2024 (prov) as against 2.34 times in FY2023. The debt service coverage ratio (DSCR) of the group also stood at 1.97 times in FY2024 (prov) as compared to 1.91 times in the previous year. The net cash accruals to total debt (NCA/TD) stood comfortable at 0.10 times in FY2024(prov). Going forward, Acuité believes the financial risk profile of the group will remain at similar levels owing to modest improvements in the scale of operations and the absence of any major debt funded capex in the near to medium term. |
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| Decline in scale of operations with volatile profitability margin
The group experienced sharp decline in operating income for the last two years, with operational revenue of Rs.259.02 Cr. in FY2024 (prov), Rs.752.60 Cr. in FY2023 as against Rs.1844.68 Cr. in FY2022. The decline in group performance is primarily due to the ban on wheat exports by the Indian government in May 2022, the economic crisis faced by Bangladesh for the last two years and a decrease in Bangladesh’s foreign exchange reserves. Further, the profitability margin of the company is volatility in nature. It stood at 5.20 percent in FY2024 (prov) ,(1.30) percent in FY2023 as against 1.37 percent in FY2022. The improvement in operating profitability margin is on account of the increase in manufacturing sales during the period, which contributes to better profitability as compared to trading sales. The net profitability margin of the group improved to 2.53 percent in FY2024(prov) as compared to 0.99 percent in the previous year. Going forward, Acuité believes that the scale of operations and profitability margin of the group will be key monitorable. Intensive working capital operationsThe working capital operations of the group are marked by a sharp increase in GCA days to 213 days as on March 31, 2024(prov) as compared to 68 days as on March 31, 2023. The significant increase in GCA days is mainly due to a sharp increase in inventory days, a moderate increase in debtor days and high amount of other current assets. The inventory days stood at 117 days as on March 31, 2024 (prov) as compared to 23 days as on March 31, 2023. The reason for the increase in inventory days is due to an increase in the stock of trading goods. The group also stocked up rice barns in the last quarter of FY2024 due to a decrease in rice barn prices. Further, the debtor days stood at 51 days as on March 31, 2024 (prov) as compared to 25 days as on March 31, 2023. Parallelly, the creditor days of the group increased and stood at 80 days as on March 31, 2024 (prov) as compared to 30 days as on March 31, 2023. The average bank limit utilisation of SEL for the fund based stood at 55.50 percent for the 12 months ended March 2024 and for REL stood at 27.98 percent for the 12 months ended March 2024. Acuite believes that the working capital operations of the group will continue to be intensive in nature over the medium term. Exposure to geographic concentration and commodity product risk Group exports agricultural goods only to Bangladesh. Customers place orders based on demand-supply conditions in Bangladesh. Prices of commodities such as cotton, sugar and rice are significantly affected by climatic conditions and the demand-supply scenario. The revenue of the group is susceptible to fluctuations in commodity prices in a particular season, monsoons, crop yield and global demand-supply conditions. |
Rating Sensitivities |
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| Liquidity Position: Adequate |
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The group has adequate liquidity marked by sufficient net cash accruals of Rs.9.12 Cr. as against Rs.1.36 Cr. long term debt obligations in FY2024 (prov). The cash accruals of the company are estimated to remain in the range of around Rs.4.47 Cr. - Rs. 5.36 Cr. during 2025-26 as against Rs.1.57 Cr. long term debt obligations during the same period. The unencumbered cash and bank balances of the group stood at Rs.1.75 Cr. as on March 31,2024(prov). The liquid investment of the group stood at Rs.7.80 Cr. as on March 31,2024(prov). The current ratio of the company stood low at 1.42 times in FY2024 (prov). Acuité believes that the liquidity of the company is likely to remain adequate on account of sufficient cash accruals against repayment obligations over the medium term. |
| Outlook: Stable |
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Acuité has revised the outlook on the company to 'Stable' over the medium term on account of the established track record of operations, experienced management and moderate financial risk profile. The outlook may be revised to 'Positive' in case of significant growth in revenue and stable operating margins from the current levels while improving its working capital management. Conversely, the outlook may be revised to 'Negative' in case of a significant increase in the gearing levels or further deterioration in the working capital cycle.
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Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 24 (Provisional) | FY 23 (Actual) |
|---|---|---|---|
| Operating Income | Rs. Cr. | 259.02 | 752.60 |
| PAT | Rs. Cr. | 6.56 | 7.43 |
| PAT Margin | (%) | 2.53 | 0.99 |
| Total Debt/Tangible Net Worth | Times | 1.39 | 1.76 |
| PBDIT/Interest | Times | 2.49 | 2.34 |
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 • Complexity Level Of Financial Instruments: https://www.acuite.in/view-rating-criteria-55.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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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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| *Annexure 2 - List of Entities (applicable for Consolidation or Parent / Group / Govt. Support) | ||||||||
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