December 04, 2017

SAME Deutz-Fahr India Private Limited

Summary of rated instruments
Instrument* Rated Amount Rating Action
(Rs. crore)
LT – Fund based Facilities 80.0 [ICRA]AA- reaffirmed;
outlook revised from stable to positive
ST – Fund based (sublimit) (80.0) [1] [ICRA]A1+; re-affirmed
ST – Non Fund based (62.0) [1]
(sublimit)
Total 80.0
[1]
combined utilisation capped at Rs. 80.00 crore
*Instrument details are provided in Annexure-1

Rating action
ICRA has re-affirmed the long-term rating outstanding on the Rs. 80.00 crore long term fund based
facilities of SAME Deutz-Fahr India Private Limited (SAME India) at [ICRA]AA- (pronounced ICRA
double A Minus)1. The outlook on the long term rating is revised from ‘stable’ to ‘positive’. ICRA has re-
affirmed the short term rating outstanding on the Rs. 80.0 crore fund based sub-limits and the Rs. 62.0
crores non fund based sub-limits of SAME India at [ICRA]A1+ (pronounced ICRA A one plus).

Rationale
The positive outlook factors in SAME India’s robust revenue growth during FY2017 and YTD FY2018,
supported by higher sourcing by the parent, the favorable domestic demand for tractors, and introduction
of new tractor models.

The ratings derive significant comfort from the strong parentage (SAME Deutz-Fahr Italy / SDF Group- a
leading global tractor manufacturer)) and the parent’s commitment exhibited through timely financial and
operational support to SAME India. In recent years, SAME India’s operations have become increasingly
integrated with that of its parent; SAME India is a key low-cost sourcing hub for engines, Completely
Knock Down units (CKD) and Fully Built Units (FBU) for the SDF group. This aided in increased
capacity utilisation for the Indian operations and improvement in the company’s financial profile; the
company has healthy capitalization, strong coverage indicators and adequate liquidity in the form of
sanctioned undrawn lines of working capital credit. However, the company witnessed a sharp fall in
operating margins during FY2017, owing to unfavourable forex movement.

The company also suffers from high customer concentration, with significant part of the total revenues
derived from the SDF Group; however the strong operational linkage and the strategic importance of
SAME India to the SDF Group provide adequate comfort to the revenues. Further, to mitigate the
customer concentration risk, the company has increased focus on the domestic market.

Considering SAME India’s exposure to the global demand (through its parent sourcing), global demand
for tractors could impact volume off take. Global demand for agricultural equipment will remain
vulnerable to cyclical swings due to shifts in: government support programs for the farming sector;
weather patterns; and commodity prices. Notwithstanding regional cyclicality, the long-term
fundamentals within the farm equipment market are good. Demand for equipment will be supported by:
continuing population growth; growing middle class; improving diets in many emerging economies; the

1
For complete rating scale and definitions, please refer to ICRA’s website (www.icra.in) or other ICRA rating publications
growing need for high-yield farming techniques to meet rising food demand; and global grain stocks
that remain relatively low compared to consumption.

Going forward, higher penetration of SAME India in the domestic tractor industry, recovery of the
global agriculture equipment market from the cyclical downturn and success of the new product for the
EU markets will remain key determinants for improvement in the financial profile of the company.

Key rating drivers

Credit strengths
 Strong parentage of the SDF group - SDF group is one of the top 10 players in the global agri-
equipment industry.

 Integrated operations with the parent group improving utilization levels - SAME India’s
operations have become increasingly integrated with that of its parent following the global sourcing
of SDF group’s engines and several ranges of tractors from India.

 Comfortable financial profile characterised by comfortable capital structure and debt

protection metrics

 Favourable long term demand outlook for the global agricultural equipment industry

Credit weaknesses
 Competitive pressures in key markets from large global and regional incumbent players: SAME
India and the SDF group as a whole are facing rising competitive pressures both domestically and in
the international markets. Global trade barriers (like ADD on exports to Turkey) could hamper
growth. However, the SDF group has supported volumes for the Indian subsidiary by sourcing other
tractors for different parts of Europe.
 High direct customer concentration – During FY2017, the company derived significant revenues
from its parent and other companies in the SDF Group. However, the importance of the company as
a sourcing export hub for the SDF group provides comfort to the revenues.

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

Links to applicable criteria:

Corporate Credit Rating Methodology
Rating Methodology for Tractor Industry

About the company:

Incorporated in the year 1999, SAME-Deutz Fahr India Private Limited (SAME India) is part of the
Europe based SAME-Deutz Fahr group (SDF), a large global manufacturer of tractors, combine Company
was initially marketing high HP tractors (>50 hp) in the domestic market for its parent under the brand
name SAME. In 2002, the SDF group bought out the Thapar Group’s 51% stake in the Company for a
consideration of USD 5 million and renamed the Company as SAME DEUTZ-Fahr India Private Limited.
Currently, the SDF Group’s global holding company (SAME Deutz Fahr Group SpA, Italy) and the
Group’s flagship company (SAME Deutz Fahr Italia SpA) hold the entire stake in SAME India. The
Company’s assembly plant is located in Ranipet (near Chennai, Tamil Nadu) for manufacture of Tractors,
Diesel Engines and Agricultural equipments. The company’s penetration in the domestic market, although
low, improved during FY2017 to 1.7%.
In FY2016, the company reported a net profit of Rs Rs. 70.9 crore on an operating income of Rs. 786.7
crore, as compared to a net profit of Rs. 55.5 crore on an operating income of Rs. 971.8 crore in FY2017.

Key Financial Indicators (Audited)

FY2016 FY2017
Operating Income (Rs. crore) 788.5 986.4
PAT (Rs. crore) 70.9 55.2
OPBDIT/ OI (%) 13.0 10.6
RoCE (%) 26.0 17.5

Total Debt/ TNW (times) 0.2 0.2

Total Debt/ OPBDIT (times) 0.9 0.9
Interest coverage (times) 34.5 36.8
NWC/ OI (%) 47.7% 45.6%
OI: Operating Income; PAT: Profit after Tax; OPBDIT: Operating Profit before Depreciation, Interest,
Taxes and Amortisation; ROCE: PBIT/Avg (Total Debt + Tangible Net-Worth + Deferred Tax Liability -
Capital Work - in Progress);
NWC: Net Working Capital

Status of non-cooperation with previous CRA: Not applicable

Any other information: Not applicable

Rating history for last three years:
Table:
S. Instrume Current Rating (FY2018) Chronology of Rating History for
No. nt the past 3 years
Type Amount Amount Date & Date & Date & Date &
Rated O/s Rating Rating in Rating in Rating in
(Rs. (Rs FY2017 FY2016 FY2015
crore) Crore) Dec 2017 May’ Nov’ Mar’
2016 2015 2014
1 CC Long 80.00 - [ICRA] [ICRA] [ICRA] [ICRA]
Term AA- AA- A+ A+
(Positive) (Stable) (Stable) (Stable)
2 Letter of Short (62.00) -
Credit/ Term
Bank [ICRA] [ICRA] [ICRA] [ICRA]
Guarantee A1+ A1+ A1+ A1+
(sub-
limit)
3 Purchase Short (80.00) -
Bill Term
Discounti [ICRA] [ICRA] [ICRA] [ICRA]
ng A1+ A1+ A1+ A1+
(sub-
limit)

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
Annexure-1
Instrument Details
ISIN No Instrument Date of Coupon Maturit Amount Current Rating and
Issuance Rate y Date Rated Outlook
/ (Rs. crore)
Sanction
- CC - - - 80.0 [ICRA]AA-(Positive)
- Letter of Credit/ - - - (62.00)
Bank Guarantee [ICRA]A1+
(sub-limit)
- Purchase Bill (80.00)
Discounting [ICRA]A1+
(sub-limit)
Source: SAME India
 Contact Details
Analyst Contacts
Subrata Ray Pavethra Ponniah
+91 22 2433 1086 +91 44 4596 4314
[email protected] [email protected]

V.S.Ranganathan
+91 9787897158
[email protected]

Relationship Contact
Jayanta Chatterjee
+91 80 4332 6401
[email protected]

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