| Sharat Industries Limited | ||||||
| Ratings Reaffirmed | ||||||
| Rating Action | ||||||
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| Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||||
| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has reaffirmed its ‘CRISIL BBB-/Stable/CRISIL A3’ ratings on the bank facilities of Sharat Industries Limited (SIL).
The ratings continue to reflect SIL’s established market position in the seafood exports industry and it’s above average financial risk profile. These strengths are partially offset by susceptibility of operating margin to volatility in input prices and foreign exchange rates and exposure to regulatory changes in export destinations. |
Key Rating Drivers & Detailed Description Strengths: Established market position in the seafood exports industry: SIL enjoys an established market position in the seafood exports industry. The turnover has improved around Rs. 249 crores for fiscal 2022 over a period of 5 years from around Rs.150 crore in fiscal 2016. SIL also derives benefits from product diversification, with around 25 percent of the turnover from the sale of feed. Further the company derives benefits from promoter’s long-standing presence of more than two decades in the seafood exports industry, which has aided the company to diversify the customer base and establish healthy relationships. CRISIL Ratings believes that SIL shall continue to benefit over the medium term, from its established market position in the seafood exports industry.
Above average financial risk profile: SIL’s financial risk profile is above average as reflected in its gearing of around 1.33 times as on Mar 31, 2022. Supported by the absence of major debt funded capital expenditure, the capital structure is expected to improve over the medium term. Debt protection metrics are adequate, as reflected in interest coverage ratio and net cash accrual to total debt ratio of 2.29 times and 0.08 time, respectively, for fiscal 2022 and likely to remain adequate over the medium term; sustaining overall financial risk profile.
Weakness: Susceptibility of operating margin to volatility in input prices and forex rates: The marine export market is marked by uncertainty, though more pronounced in supply than in demand. The supply is affected adversely because of seasonal conditions, lack of quality seeds and feed and rampant diseases. This results in volatility in the raw material prices based on the supply during the year. Increase in raw material prices has resulted in a dip inn operating profitability to around Also, the company derives significant portion of its revenue from the export market which exposes its operating profitability to fluctuations in the forex rates.
Regulatory changes in export destinations: Food product imports are subject to high quality standards in developed countries of Europe and U.SA. Since the company derives majority of its export revenues from these destinations, any adverse quality standards set by these countries or customers could affect the business risk profile. |
Liquidity: Adequate 12 month average bank limit utilization stands at 70% ended September 2022. The company is estimated to generate accruals of about 9-10 Crs against repayment obligation of 5-6 crs in fiscal 2023. Current ratio are healthy at 1.35 times on March 31, 2022. Adequate cash and bank balance of around Rs.1-2 Cr as on March 31, 2022. Moderate gearing and net worth support it’s financial flexibility, and provides the financial cushion available in case of any adverse conditions or downturn in the business |
Outlook: Stable CRISIL Ratings believes that SIL will continue to benefit from its established market position. |
Rating Sensitivity Factors Upward factor
Downward factor
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About the Company SIL was originally set up in 1990 as a private limited company by Mr S Prasad Reddy; this company was reconstituted as public limited company in 1992. SIL processes and exports shrimp and also manufacture and sells feed for shrimp. SIL is listed on the Bombay Stock Exchange. |
Key Financial Indicators
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Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
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| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||||||||||||||||||||||||||
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This Annexure has been updated on 03-Jan-2023 in line with the lender-wise facility details as on 04-Aug-2021 received from the rated entity.
Criteria Details
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