Established market position and long track record of operations
STRBRIPL is incorporated in 2008 by Mr. J. Murali Mohan and Ms. Shailaja Gunda is engaged in rice milling activity. The company’s rice mill is located at Yadgarpally Village in Miryalaguda, Telangana. Promotors of the company has more than 15 years of experience in rice milling business. Company’s rice mill is located at proximity to paddy growing area and has adequate paddy availability throughout the year. Promotors of the company has long experience in paddy milling which has helped them in maintaining good relationship with farmers and distributors. Company has a milling capacity of 9.6 lakhs quintals per annum and equipped with machinery for milling both raw and boiled rice. Almost 70 percent of raw material procurement is through local market in Nalgonda district and balance procured from other districts in TS and Karnataka. Company markets its products under the brand name ‘Joker rice’.

Acuite believes that company will continue to benefit from extensive experience of the promotors and established track record of operations in rice milling industry in near to medium term.

Location advantage of the Rice Mill
Company’s Rice Mill is located at Miryalaguda, Telangana which is one of the largest rice mill hubs in India with around 170 rice mills. Factory is surrounded by paddy fields fuelled by the good irrigation facility and close proximity to procurement facilities. The area is well connected with road network for supply and procurement of finished goods and raw materials and has adequate availability of both skilled and unskilled workers. Acuite believes that company may continue to benefit from its location advantage going forward.

Improvement in revenues amidst moderation in profitability margins
The revenue of the company increased and stood at Rs. 225.09 crore in FY24 compared to revenue of Rs. 183.94 crore in FY23. The revenue of the company improved on account of increase in price realization as well as increased production capacity. STRBRIPL has reported a revenue of Rs. 251.06 crore in 11MFY25. The operating profit margin of the company stood at 2.72 percent in FY24 compared to 2.42 percent in FY23. The operating profitability margins of the company are directly attributed to the fluctuations in the paddy prices. The PAT margin of the company stood improved at 0.54 percent in FY24 compared to 0.38 percent in FY23. Acuite believes, company’s operating performance would remain steady over the medium term on the back of improvement in revenues.

Efficient working capital operations
STRBRIPL has efficient working capital operations as reflected by the gross current asset (GCA) days of 72 days in FY2024 against 93 days in FY2023. Inventory days stood at 42 days in FY2024 against 46 days in FY2023. The average inventory holding period of the company is around 30- 60 days. The debtor days stood at 29 days for FY24 against 41 days in FY23. The average credit period allowed to the customers is around 30-60 days. The creditor days of the company stood at 19 days for FY24 as against 69 days in FY23. The average credit period allowed by the suppliers is around 40-60 days. The average bank limit utilization for 06 months period ended February 2025 stood at ~56.17 per cent for fund-based limits.  Acuité believes that the working capital cycle of the company will remain on a similar level in the medium to long term.
 

Moderate financial risk profile

STRBRIPL has a moderate financial risk profile marked by average net worth, high gearing and moderate debt protection metrics. The company’s net worth stood at Rs. 11.72 crore as of March 31, 2024, against Rs. 10.50 crore as of March 31, 2023. The company’s gearing stood higher at 2.71 times as on March 31,2024 as against 1.36 times as on March 31, 2023. The company’s total debt as on March 31,2024 stood at Rs. 31.80 crore as compared to Rs. 14.23 crore as on March 31, 2023; comprising of long-term debt of Rs. 1.62 crore, short-term debt of Rs. 22.52 crore, USL from directors of Rs. 7.14 crore and maturing debt obligations of Rs. 0.53 crore for the same period. The interest coverage ratio of the company stood at 2.75 times in FY24 against 3.05 times in FY23. DSCR stood at 2.08 times in FY2024 against 2.84 times in FY2023. Acuité believes that the ability of STRBRIPL to improve its financial risk profile over the medium term will remain a key rating sensitivity factor.

Susceptibility of profitability to fragmented industry and fluctuations in raw material prices

The company operates in a highly competitive and fragmented industry and faces tough competition from various established brands in the rice milling industry as well as several unorganized players, which can have an impact on the bargaining powers with the customers and hence on the margins. The profitability margins are also susceptible to raw material price fluctuation.