Professional Documents
Culture Documents
Registration No.
SE 3B
Rating*
Rating Valid Up to
*The rating indicates the level of creditworthiness, which is adjudged in relation to other MSEs
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NOTICE
NSIC CARE Rating is assigned under the scheme for Rating of Micro & Small Enterprises (MSEs), designed and
subsidised by the National Small Industries Corporation (NSIC). A copy of the rating report is also submitted to
NSIC. The rating is a one-time exercise and it will not be kept under surveillance. The validity of the rating is one
year from the date of report, subject to no significant changes / events occur during this period that can materially
impact the operational and financial parameters of the entity.
The rating and the report is based on the information and explanations provided to CARE and /or obtained by
CARE from reliable sources. CARE does not guarantee the accuracy, completeness or adequacy of any
information on which this rating and report is based. CARE is not responsible for any error / omissions for the
results/opinions obtained for the use of this report. The rating is not an audit and also not any recommendation to
enter into or not enter into any transaction with the entity. CARE reserves the right to disclose the rating along
with the rating report to Government, Regulatory Agencies, Courts of Law, etc., if required.
CARE, its directors, Rating Committee members, employees and other associated with the rating assignment do
not have any financial liability whatsoever. Any reproduction of the report or part of it would require explicit
written approval of CARE.
SE 3B
Moderate Performance Capability
&
Moderate Financial Strength
Performance
Capability
Highest
High
Moderate
Weak
Poor
Financial
High
SE 1A
SE 2A
SE 3A
SE 4A
SE 5A
Strength
Moderate
SE 1B
SE 2B
SE 3B
SE 4B
SE 5B
Low
SE 1C
SE 2C
SE 3C
SE 4C
SE 5C
Highest Performance capability; High Financial strength. Prospects of performance are the highest and
the entity has high capacity to meet its financial obligations.
Highest Performance capability; Moderate Financial strength. Prospects of performance are the highest.
However, the entity has moderate capacity to meet its financial obligations.
Highest Performance capability; Low Financial strength. Prospects of performance are the highest.
However, the entity has low capacity to meet its financial obligations.
High Performance capability; High Financial strength. Prospects of performance are high and the entity
has high capacity to meet its financial obligations.
High Performance capability; Moderate Financial strength. Prospects of performance are high.
However, the entity has moderate capacity to meet its financial obligations.
High Performance capability; Low Financial strength. Prospects of performance are high. However, the
entity has low capacity to meet its financial obligations.
Moderate Performance capability; High Financial strength. Prospects of performance are moderate.
However, the entity has high capacity to meet its financial obligations.
Moderate Performance capability; Moderate Financial strength. Prospects of performance are moderate
and the entity has moderate capacity to meet its financial obligations.
Moderate Performance capability; Low Financial strength. Prospects of performance are moderate.
However, the entity has low capacity to meet its financial obligations.
Weak Performance capability; High Financial strength. Prospects of performance are weak. However,
the entity has high capacity to meet its financial obligations.
Weak Performance capability; Moderate Financial strength. Prospects of performance are weak.
However, the entity has moderate capacity to meet its financial obligations.
Weak Performance capability; Low Financial strength. Prospects of performance are weak and the
entity has low capacity to meet its financial obligations.
Poor Performance capability; High Financial strength. Prospects of performance are poor. However, the
entity has high capacity to meet its financial obligations.
Poor Performance capability; Moderate Financial strength. Prospects of performance are poor.
However, the entity has moderate capacity to meet its financial obligations.
Poor Performance capability; Low Financial strength. Prospects of performance are poor and the entity
has low capacity to meet its financial obligations.
Strengths
Experienced partners for more than two decades in the similar line of business
Significant achievement of total operating income during FY12
Comfortable capital structure and satisfactory debt coverage indicator
Capital infusion by partners to support business operations
Risk Factors
Constitution of the entity as a Partnership firm with inherent risk of withdrawal of capital and
Shiva Sai Dairy Products (SSDP) was initially started as a proprietorship concern by Mr. M. Parvath
Reddy in September, 2010 and later converted into partnership firm in the year 2012. The firm is
engaged in dairy processing with a total processing capacity of 90 lakh liters of milk per annum at
its
chilling processing unit located at LB Nagar, Hyderabad. The firm procures milk from around 300 local
farmers and markets the dairy products under the brand name of Dairy Gold in and around Hyderabad.
Name
Position
Qualification
Age
Work Experience
Earlier Business
Responsibilities Handled
Mrs. B Praveena
Partner
Graduate
26 years
3 years
Looks after Administration activities
Comment
The average experience of the partners is 13 years. The entity is likely to be benefited due to
wide experience of the partners in the dairy industry.
Apart from the above two, the firm has three more inactive partners; Mrs. K Lalitha, Mrs.
Kotha Shamntha and Mr. PVN Ravi Varma who are the family members and relatives of the
managing partners.
Promoters stake
Promoters & Relatives (P & R)
Mr. M Parvath Reddy
Mrs. B Praveena
Other partner
Total
Nos.
4
3
15
22
Comment :
The level of professionalization seems to be moderate. The key decisions are family centric.
Processing of Milk
Dairy
Milk
Plot No.4, Sy No. 18, Pindi Pulla Reddy Colony,
Bairamalguda, LB Nagar, Hyderabad, Andhra Pradesh-500079
4000 Sq. Feet
Leased
No
Units
Liters in thousand
Liters in thousand
%
FY12(A)
FY13 (Prov)
9000
3770
41.89%
9000
4140
46.00%
Sathish
India
9.00 %
SSDP is dealing with this customer since 3 years.
Moderate diversified
Nil
Nil
SSDP has about 50 customers in Hyderabad, and the firm
offers a credit period of around 15 days as per the business
requirements. The above top 3 customers are dealing with
SSDP from past 3 years.
Country
India
Key Raw
Materials
Milk
As % of Purchases in
FY12
100
11 days
Adequate
Nil
The firm procures milk from local farmers. Credit
period availed from farmers is 10 to 15 days.
10
Dairy
Milk
Moderate
INDUSTRY WRITE-UP:
Industry Outlook
The Indian food industry has witnessed strong growth over the past few years and is the world's second
largest producer of food next to China. Food processing industry is one of the largest industries in India,
ranking fifth in terms of production, growth, consumption, and export. The food processing industries in
India attracted foreign direct investments (FDI) worth US$ 1,811.06 million during April 2000 to March
2013, according to the latest data published by Department of Industrial Policy and Promotion (DIPP).
The Government of India has allowed 100 per cent FDI under the automatic route in the food processing
sector, in agri-products, milk and milk products, and marine and meat products. In the Union Budget
2013-14, an additional provision of Rs.10,000 crore (US$ 1.67 billion) has been allocated for National
Food Security Act. Anticipating the future growth, many big international players are entering the Indian
market by partnering the domestic players. This trend will emerge more strongly by 2015, providing
opportunities to local players to widen their product portfolios. The packaged food segment is expected
to grow 9 per cent annually to become a Rs.6 lakh crore (US$ 100.19 billion) industry by 2030,
dominated by milk, sweet and savoury snacks and processed poultry, among other products.
The dairy products are exposed to environmental risk related to epidemic, since most of the procurement
of milk is from its surrounding farmers. Therefore exposed to the quality of milk and adequate supply of
milk is critical for a dairy units. Also, milk supply and its prices are exposed to several external risks
like cattle diseases, yield etc. Also local dairy distributors faces stiff competition from the established
players in the milk industry like Amul Brand, Mother Dairy, Dodla Dairy, Reliance, Vijaya
as well as individual milk vendors in the unorganized sector which leads to low profitability margins.
11
Adequate
Structured
Adequate
Andhra Pradesh State Electricity Board and Generator
Adequate
Bore well
Diesel
No
Good
Adequate
Adequate
Operational
12
13
31 Mar 2011
Actual
Not Applicable
Rs. In Lakh
31 Mar 2012
Actual
Not Applicable
5.00
340.83
340.83
340.83
301.40
9.65
6.28
11.11
2.53
6.44
0.20
337.60
3.23
0.00
3.23
0.90
2.33
1.55
2.33
0.00
2.33
0.78
1.55
1.55
12.00
1132.56
1132.56
1132.56
1025.08
0.60
14.40
43.47
14.43
13.82
0.80
1112.61
19.96
1.78
18.17
1.08
17.09
11.10
17.09
-0.78
16.31
5.72
10.59
12.38
MC = Material Costs EC = Employee Costs Dep = Depreciation P&F = Power and Fuel I&F = Interest and
Finance Charges OC = Other Cost
Comment
Being FY12, first full year of operations, SSDP has achieved a total operating income of
Rs.1132.56 lakh in FY12 as against Rs.340.83 lakh in FY11 at the back of stabilization of its
operations coupled with addition of new customers by the firm and increase in sales volume and
realization of the same.
Raw material cost increased in FY12 over FY11 on back increase in the scale of operations.
Interest cost increased in FY12 over FY11 with addition of working capital borrowings during
FY12.
Depreciation increased in FY12 over FY11 with the purchase of new assets like machinery,
furniture, computer etc. (which is a substitute to the leased machinery and furniture).
14
Comment
PBILD and PAT margins improved in FY12 over FY11 along with increased scale of operations.
But however, PAT margins remained on lower side at below unity due to stiff competition from
established players in the milk industry as well as from individual milk vendors in the
unorganized sector.
An efficient working capital cycle leading to low capital employed and low profit margins
resulted in moderate return on capital employed (RoCE) to 37.98 percent during FY12.
15
31 Mar 2011
Actual
Rs. In Lakh
31 Mar 2012
Actual
9.78
0.00
9.78
0.00
9.78
5.49
0.60
6.10
14.25
14.25
12.50
2.88
15.38
35.73
45.51
17.85
-1.78
16.06
41.04
57.10
8.72
0.00
8.72
50.94
50.94
17.44
5.25
22.69
82.35
139.45
Gross Block increased as on March 31, 2012 over March 31, 2011 on account of addition of
machinery, computer, furniture etc which was funded through internal accruals and infusion of
capital. Capital working in progress as on March 31, 2012 includes purchase of machinery and
its eructation works (During FY11, the firm has operated its business through a rent premises and
leased machinery and furniture. However, during FY12 the firm has purchased new machinery
and furniture in substitute for leased one).
The project was started in December, 2011 and it was completed in July 2012 with a total project
cost of Rs.150 lakhs which was funded through term loan of Rs.75 lakh taken in the month of
June, 2012 and remaining by infusion of capital by the partners and internal accruals.
16
31 Mar 2011
Actual
Rs. In Lakh
31 Mar 2012
Actual
22.22
22.22
0.00
0.00
21.74
21.74
1.55
1.55
23.29
68.67
68.67
4.80
4.80
49.23
49.23
16.75
16.75
65.98
0.00
45.51
4.80
139.45
The tangible net worth of the firm increased from Rs.22.22 lakh as on March 31, 2011 to Rs.68.67
lakh as on March 31, 2012 on account of infusion of capital by partners to the tune of Rs.35.86
lakh coupled with accretion of profits to networth.
17
18
31 Mar 2011
Actual
31 Mar 2012
Actual
232.30
232.30
518.69
585.00
11.57
0.95
0.95
0.68
0.45
0.45
14.51
14.51
6.96
0.00
9.49
1.76
1.60
1.51
0.98
0.94
37.98
37.98
23.31
44.88
15
35
27
6
6
15
23
-2
24
33
79
2
2
10
11
1
0.00
0.00
0.00
0.00
0.00
0.00
3.60
3.60
3.60
1.53
1.27
0.00
0.07
0.00
0.07
0.00
0.39
18.54
16.88
18.54
1.16
1.04
Liquidity Ratio
Particulars
Working Capital Turnover Ratio
Average Finished Goods Inventory Period
Average Inventory Period (days)
Average Collection Period (days)
Average Creditors Period (days)
Working Capital Cycle (days)
31 Mar 2011
27
6
6
15
23
-2
31 Mar 2012
79
2
2
10
11
1
Comment
Collection period of the firm improved from 15 days as on March 31, 2011 to 10 days as on March
31, 2012 mainly due to timely collection and realization of debtors. However the firm offers 15 days
of credit period to its customers.
Creditors period improved during FY12 against FY11 mainly due to timely payment to creditors.
However the firm availed credit period of 1to 2 week depending of farmer.
19
31 Mar 2011
0.00
0.00
0.00
0.00
0.00
0.00
0.98
31 Mar 2012
0.00
0.07
0.07
0.00
0.07
44.88
0.79
Comment
Debt equity ratio remained at nil on account of absence of long term debt from both banks and financial
institutions. Overall gearing ratio deteriorated to 0.07 times as on March 31, 2012 against March 31,
2011 mainly due to addition of new working capital borrowings to support its increasing scale of
operations. But however, overall gearing ratio stood comfortable at below unity.
20
Comment
Interest coverage ratio stood comfortable and increased in FY12 to 18.54 times over 3.60 times
during FY11 mainly due to increase in PBILDT on back of increased scale of operations.
Total debt to GCA stood comfortable at 0.38 times during FY12 on the back of low debt vis-vis high cash accruals.
21
31 Mar 2011
Actual
100.00
100.00
100.00
88.43
2.83
1.84
3.26
0.74
1.89
0.06
99.05
0.95
0.00
0.95
0.26
0.68
0.45
0.68
0.68
0.23
0.45
22
% to total sales
31 Mar 2012
Actual
100.00
100.00
100.00
90.51
0.05
1.27
3.84
1.27
1.22
0.07
98.24
1.76
0.16
1.60
0.10
1.51
0.98
1.51
1.44
0.51
0.94
31 Mar 2011
Actual
31 Mar 2012
Actual
21.49
0.00
21.49
0.00
21.49
12.07
1.32
13.40
31.31
31.31
31.31
27.47
6.34
33.80
78.51
100.00
12.80
-1.28
11.52
29.43
40.95
6.25
0.00
6.25
36.53
36.53
36.53
12.51
3.77
16.27
59.05
100.00
23
31 Mar 2011
Actual
31 Mar 2012
Actual
48.83
48.83
0.00
0.00
0.00
47.77
47.77
3.40
3.40
51.17
49.24
49.24
3.44
0.00
3.44
35.31
35.31
12.01
12.01
47.32
0.00
100.00
3.44
100.00
Nature of Facility
Over Draft
Term Loan*
Remarks:
The account is regular with HDFC Bank, the banker has expressed satisfaction over the conduct
of the account and there has been no instance of delays / defaults in the account.
As per the banker, the average fund based working capital limits were stood at 100 percent
during the past 12 months period ended November, 2013.
Disclaimer
CAREs MSE rating is an independent opinion on performance capability and financial strength. The rating is a one-time
exercise and it will not be kept under surveillance. The validity of the rating is one year from the date of provisional
communication of rating, subject to no significant changes / events occur during this period that can materially impact the
operational and financial parameters of the entity. The rating is not an audit and also not a recommendation for entering into
any transaction with the entity. CARE has based its ratings on information obtained from sources believed by it to be
accurate and reliable. CARE does not, however, guarantee the accuracy, adequacy or completeness of any information and is
not responsible for any errors or omissions or for the results obtained from the use of such information.
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