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SAME Deutz-Fahr India Private Limited: Summary of Rated Instruments Instrument Rated Amount (Rs. Crore) Rating Action
SAME Deutz-Fahr India Private Limited: Summary of Rated Instruments Instrument Rated Amount (Rs. Crore) Rating Action
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.
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.
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.
V.S.Ranganathan
+91 9787897158
[email protected]
Relationship Contact
Jayanta Chatterjee
+91 80 4332 6401
[email protected]
Corporate Office
Mr. Vivek Mathur
Mobile: +91 9871221122
Email: [email protected]
Building No. 8, 2nd Floor, Tower A, DLF Cyber City, Phase II, Gurgaon 122002
Ph: +91-124-4545310 (D), 4545300 / 4545800 (B) Fax; +91- 124-4050424
Mumbai Kolkata
Mr. L. Shivakumar Mr. Jayanta Roy
Mobile: +91 9821086490 Mobile: +91 9903394664
Email: [email protected] Email: [email protected]
3rd Floor, Electric Mansion A-10 & 11, 3rd Floor, FMC Fortuna
Appasaheb Marathe Marg, Prabhadevi 234/3A, A.J.C. Bose Road
Mumbai—400025, Kolkata—700020
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Fax +91-33-22870728
Chennai Bangalore
Mr. Jayanta Chatterjee Mr. Jayanta Chatterjee
Mobile: +91 9845022459 Mobile: +91 9845022459
Email: [email protected] Email: [email protected]
907 & 908 Sakar -II, Ellisbridge, 5A, 5th Floor, Symphony, S.No. 210, CTS 3202, Range
Ahmedabad- 380006 Hills Road, Shivajinagar,Pune-411 020
Tel: +91-79-26585049, 26585494, 26584924; Fax: Tel: + 91-20- 6606 9999; Fax: +91-20-25561231
+91-79-25569231
Hyderabad
Mr. Jayanta Chatterjee
Mobile: +91 9845022459
Email: [email protected]