Freshara Agro Exports Limited (FAEL) has achieved a significant milestone by securing credit ratings from CRISIL Ratings Limited for its bank loan facilities. The ratings include CRISIL BBB/Stable for long-term facilities and CRISIL A3+ for short-term facilities, highlighting the company's financial stability and strong market presence in the gherkin exports business.

Key Highlights of the Rating

1. Total Bank Loan Facilities Rated: Rs. 100 crore

   • Long-Term Rating: CRISIL BBB/Stable
   • Short-Term Rating: CRISIL A3+

2. Rationale for the Rating:
   The rating reflects FAEL's:

   • Established Market Position: A decade of leadership in the gherkin export business, offering end-to-end solutions to farmers, enhancing yields, and maintaining detailed cultivation histories.
   • Healthy Financial Risk Profile: Robust debt protection metrics with interest coverage at 9.57x and adjusted debt-to-net worth ratio at 5.18x as of March 31, 2024.

3. Key Challenges:

   • Working Capital Requirements: High receivables and inventory needs result in a working capital cycle of 249 days.
   • Susceptibility to Climate Changes: Dependence on monsoon and irrigation makes gherkin cultivation vulnerable to adverse weather conditions.

Liquidity and Financial Outlook

FAEL's liquidity is adequate, with cash accruals projected at over Rs. 28 crore per annum against term debt obligations of Rs. 1.5–2.5 crore. The company’s liquidity position has been further bolstered by an equity infusion of Rs. 75.39 crore through an IPO, with Rs. 56 crore allocated for working capital and Rs. 7.59 crore for general corporate purposes.

Strengths and Weaknesses

Strengths:

• Established Gherkin Export Business: FAEL’s proven track record and operational efficiencies have solidified its position in international markets.
• Robust Financial Metrics: Interest coverage and net cash accruals indicate strong financial health.

Weaknesses:

• Climate Vulnerability: As a seasonal crop, gherkin cultivation is significantly impacted by unfavorable weather.
• Intensive Working Capital Needs: Operations require extended credit, with gross current assets standing at 249 days.

About Freshara Agro Exports Limited

Founded in 2015 as "Freshera Picklz Exports" and reconstituted in 2023 as a public limited company, FAEL specializes in the procurement, processing, and export of preserved gherkins and pickled products. The company operates two state-of-the-art facilities in Tirupattur, Tamil Nadu, with the second unit becoming operational in January 2025.

Key Financial Metrics:

• FY 2024 Operating Income: Rs. 194.36 crore
• FY 2024 PAT Margin: 11.23%
• FY 2024 Interest Coverage: 9.57x

Future Outlook

CRISIL Ratings maintains a Stable Outlook, anticipating:

• Sustained market leadership in gherkin exports.
• Strong financial performance supported by efficient operations and farmer partnerships.

Potential Risks:

• Revenue decline by 20% or operating margin below 12%.
• Increased debt or working capital stretch impacting liquidity.

For detailed reports or inquiries, visit CRISIL Ratings or contact FAEL directly.

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