| Sharat Industries Limited | ||||||
| Rated amount enhanced | ||||||
| Rating Action | ||||||
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| 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 to around Rs. 253 crore for fiscal 2021 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 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 1.50 times as on Mar 31, 2021. 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 2.03 times and 0.07 time, respectively, for fiscal 2021 and likely to remain adequate over the medium term; sustaining overall financial risk profile.
Weaknesses 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 Liquidity remains adequate, indicated by moderate bank limit utilisation and sufficient cash accrual. Bank limit utilisation is around 88 percent for the past twelve months ended Nov 2021. Cash accrual of around Rs. 7-8 crore is expected to be generated against repayment obligations of Rs. 3-4 crore per annum. Liquidity is also supported by the absence of debt funded capital expenditure and healthy cash and bank balances of around Rs.2-3 crore that is expected to be maintained at any point in time. CRISIL believes that SIL's liquidity shall continue to remain adequate over the medium term. |
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: CRISIL Ratings' complexity levels are assigned to various types of financial instruments. The CRISIL Ratings' complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL Ratings' complexity levels for instruments that they consider for investment. Users may also call the Customer Service Helpdesk with queries on specific instruments. |
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 28-Jan-2022 in line with the lender-wise facility details as on 04-Aug-2021 received from the rated entity.
Criteria Details
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