Aachi Spices and Foods Private Limited

March 15, 2018

Summary of Rated Instrument:

Previous Rated Current Rated
Instrument* Amount Amount Rating Action
(Rs. crore) (Rs. crore)
Provisional [ICRA]BBB+ (SO) (Stable);
Long term - Proposed facilities 30.00 15.00
timeline extended by 120 days
Long term – Term loans 1.92 1.92 [ICRA]BBB+ (SO) (Stable); reaffirmed
[ICRA]BBB+ (SO) (Stable); reaffirmed
(includes Rs. 15.00 crore on which
Long term – Fund based facilities 13.00 28.00
Provisional [ICRA]BBB+(SO) rating is
finalized)
Short term – Non fund based facilities 0.19 0.19 [ICRA]A2(SO); reaffirmed
Total 45.11 45.11

Rating action
ICRA has reaffirmed the long-term rating of [ICRA]BBB+ (SO) (pronounced as ICRA triple B plus Structured Obligation) to
the Rs. 1.92 crore term loan facilities and Rs. 28.00 crore (includes Rs. 15.00 crore on which Provisional [ICRA]BBB+(SO)
rating is finalised) fund-based facilities of Aachi Spices and Foods Private Limited (ASFPL / ‘the company’). The outlook on
the long-term rating is Stable. ICRA has also reaffirmed the short-term rating of [ICRA]A2 (SO) (pronounced as ICRA A two
Structured Obligation) on the non-fund based facilities of Rs. 0.19 crore.

The letters SO in parenthesis suffixed to the rating symbol stand for Structured Obligation. An SO rating is specific to the
rated issue, its terms and its structures. SO ratings do not represent ICRA’s opinion on the general credit quality of the
issuers concerned.

ICRA has also extended the validity of provisional ratings of [ICRA]BBB+ (SO) assigned to the Rs. 15.00 crore (revised from
Rs. 30.00 crore) proposed long term facilities of ASFPL by 120 days; and would keep it under review in line with its
published methodologies/ policies. The above ratings are provisional and would be converted into final upon execution
of the necessary transaction documents being in line with ICRA’s expectations.

Rationale
The ratings are based on an unconditional and irrevocable guarantee provided by Aachi Masala Foods Private Limited
(AMFPL - rated [ICRA]BBB+ (Stable)/ [ICRA]A2) for the Rs. 45.11 crore of bank lines of ASFPL and an undertaking from the
guarantor to ensure that the debt obligations are serviced on or prior to the due date, irrespective of the invocation of
the guarantee by the beneficiary.

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Outlook: Stable
The stable outlook indicates that ASFPL will continue to derive support from the corporate guarantor AMFPL. ICRA
expects the revenues, profit margins and liquidity of the company to remain stable over the medium term.

Key rating driver

Corporate guarantee from AMFPL – ASFPL’s ratings of [ICRA]BBB+ (SO) with a Stable outlook / [ICRA]A2 (SO) is solely
based on the unconditional and irrevocable corporate guarantee extended by AMFPL for the Rs. 45.11 crore bank
facilities. The ratings address the servicing of the rated facilities to take place as per the terms of the underlying loan and
the guarantee arrangement. The rating also assumes that the guarantee will be duly invoked, as per the terms of the
underlying loan and guarantee agreements, in case there is a default in payment by the borrower. For the proposed lines
of Rs. 15.00 crore (revised from Rs. 30.00 crore), the rating of Provisional [ICRA]BBB+(SO) with a Stable outlook is
applicable, considering AMFPL’s willingness to extend a corporate guarantee. In the event AMFPL revokes or
discontinues the arrangement, the captioned rating for the above mentioned facilities will not apply.

The guarantor, AMFPL is the flagship entity of the Aachi Group and is an established player in the food products industry
in southern India, supported by its brand strength and strong distribution network. AMFPL enjoys strong brand equity in
the southern Indian FMCG market, supported by a wide portfolio of spice powders, ready-to-cook and ready-to-eat
products, and sustained demand for ‘Aachi’ products in the end market. The rating addresses the servicing of the rated
facilities to take place as per the terms of the underlying loans and the corporate guarantee arrangements.

Analytical approach: For arriving at the ratings, ICRA has applied its rating methodologies/policies as indicated below

Links to applicable criteria:

Corporate Credit Rating Methodology

ICRA's Procedure to Assign Provisional Ratings

About the company

ASFPL was incorporated in 2008 as a proprietorship firm by Mr AD Padmasingh Isaac and was later incorporated as a
private limited company in March 2010. ASFPL manufactures 120 products, such as ready-to-cook products, pickles,
pastes and spices from its manufacturing facilities in Chennai.

ASFPL’s revenues registered a healthy growth of 24% in FY2017, backed by the addition of new products like asafoetida
and turmeric powder to its portfolio. The standalone financial profile remains weak with thin profitability margins and
stretched working capital indicators, and susceptibility of margins to raw material price fluctuations, which are prone to
agro-climatic risks. Nevertheless, the concerns are largely mitigated with the entire sales made to AMFPL.

Guarantor profile
AMFPL is a family-run business established by Mr. Padmasingh Isaac in December 2006. The company initially started out
as the marketing division of Nazareth Foods Private Limited, which produces masala powders. The company also has a
manufacturing facility at Gummudipoondi (Tamil Nadu) with an installed processing capacity of 140 tonnes/day for chilli
powder, coriander powder and mixed spices. AMFPL sells masala products, instant ready mixes, pickles, spices, turmeric
powder, whole wheat flour, oil, clarified butter, water bottles, etc.

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Key financial indicators of AMFPL (audited)
FY 2016 FY 2017
Operating Income (Rs. crore) 1,050.1 1,153.2
PAT (Rs. crore) 21.4 31.9
OPBDIT/ OI (%) 6.1% 7.2%
RoCE (%) 18.7% 18.9%

Total Debt/ TNW (times) 1.3 0.9

Total Debt/ OPBDIT (times) 3.0 2.0
Interest coverage (times) 2.3 3.3
NWC/ OI (%) 26.0% 22.0%

Status of non-cooperation with previous CRA: Not applicable

Any other information: None

Rating history for last three years:

Chronology of Rating History for the past
Current Rating (FY2018) 3 years
Date & Date & Date &
Date & Rating in Rating in Rating in
Amount Amount Rating FY2018 FY2018 FY2018
Rated Outstanding November September
Instrument Type (Rs. crore) (Rs Crore) March 2018 2017 2017 May 2017
1 Term Loan Long 1.92 1.92 [ICRA]BBB+ [ICRA]BBB+ [ICRA]BBB+ [ICRA]BBB+
Term (SO) (Stable) (SO) (Stable) (SO) (SO) (Stable)
(Stable)
2 Fund based limits Long 28.00 - [ICRA]BBB+ [ICRA]BBB+ [ICRA]BBB+ [ICRA]BBB+
Term (SO) (Stable) (SO) (Stable) (SO) (SO) (Stable)
(Stable)
3 Non-fund based Short 0.19 - [ICRA]A2 (SO) [ICRA]A2 [ICRA]A2 [ICRA]A2
limits Term (Stable) (SO) (Stable) (SO) (SO) (Stable)
(Stable)
4 Proposed facilities Long 15.00 - Provisional Provisional Provisional Provisional
Term [ICRA]BBB+ [ICRA]BBB+ [ICRA]BBB+ [ICRA]BBB+
(SO) (Stable) (SO) (SO) (SO)
(Stable) (Stable) (Stable)

Complexity level of the rated instrument:

ICRA has classified various instruments based on their complexity as "Simple", "Complex" and "Highly Complex". The
classification of instruments according to their complexity levels is available on the website www.icra.in

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Annexure-1: Instrument Details
Date of
Instrument Issuance / Coupon Maturity Amount Rated Current Rating
ISIN No Name Sanction Rate Date (Rs. crore) and Outlook
[ICRA]BBB+ (SO)
NA Term Loan Mar-2015 NA Mar-2021 1.92
(Stable)
[ICRA]BBB+ (SO)
NA Cash Credit NA NA NA 28.00
(Stable)
[ICRA]A2 (SO)
NA Bank Guarantee NA NA NA 0.19
(Stable)
Provisional
Proposed
NA NA NA NA 15.00 [ICRA]BBB+ (SO)
facilities
(Stable)
Source: Aachi Spices and Foods Private Limited

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ANALYST CONTACTS
Subrata Ray Srikumar K
+91 22 6114 3408 +91 44 4596 4318
subrata@icraindia.com ksrikumar@icraindia.com

Hemamalini S C
+91 44 4596 4311
hemamalini.chandrasekaran@icraindia.com

RELATIONSHIP CONTACT
Jayanta Chatterjee
+91 80 4332 6401
jayantac@icraindia.com

MEDIA AND PUBLIC RELATIONS CONTACT

Ms. Naznin Prodhani
Tel: +91 124 4545 860
naznin.prodhani@icraindia.com

Helpline for business queries:

+91-124-2866928 (open Monday to Friday, from 9:30 am to 6 pm)

info@icraindia.com

About ICRA Limited:

ICRA Limited was set up in 1991 by leading financial/investment institutions, commercial banks and financial services
companies as an independent and professional investment Information and Credit Rating Agency.

Today, ICRA and its subsidiaries together form the ICRA Group of Companies (Group ICRA). ICRA is a Public Limited
Company, with its shares listed on the Bombay Stock Exchange and the National Stock Exchange. The international Credit
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For more information, visit www.icra.in

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