| Apis India Limited | ||||||
| Ratings Reaffirmed | ||||||
| Rating Action | ||||||
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| Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||||
| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has reaffirmed its ‘CRISIL BBB-/Stable/CRISIL A3' ratings on the bank facilities of Apis India Limited (AIL).
The ratings reflect the improving business risk profile of the company, with revenue increasing to Rs 333 crore in fiscal 2023 from Rs 292 crore in fiscal 2022. Operating margin was modest in the past few fiscals owing to high selling and employee expenses towards brand building, which led to cash burn in the business to consumer (B2C) segment, but improved to 7.15% in fiscal 2023 from 6.3% in fiscal 2022. The operating margin is expected above 7.5% in fiscal 2024. Better market penetration and increase in operating profitability in the B2C segment will be key monitorables.
The ratings also factor in the announcement dated May 30, 2023, regarding the merger of two non-operational entities, Apis Natural Products Pvt Ltd (ANPPL) and Modern Herbals Pvt Ltd (MHPL) with AIL. ANPPL held 1.07% and MHPL held 2.61% of shareholding in AIL as on March 31, 2023. After the merger, the 3.68% of shareholding will be transferred to the promoters in fiscal 2024.
AIL had non-convertible, non-cumulative redeemable preference shares amounting to Rs 3.5 crore as on March 31, 2022, from ANPPL and MHPL, which ceased to exist effective fiscal 2023. CRISIL Ratings believes this transaction will not have a material impact on the business and financial risk profiles of AIL.
The ratings continue to reflect the extensive experience of the promoters in the honey business, the diversified product profile of the company and its healthy capital structure. These strengths are partially offset by exposure to intense competition. |
Key Rating Drivers & Detailed Description Strengths: Extensive experience of the promoters and established market position Presence of more than two decades and strong relationships with stakeholders have helped the promoters to achieve revenue of Rs 333 crore in fiscal 2023; revenue is expected over Rs 370 crore in fiscal 2024. Over the years, AIL has diversified its product profile by introducing dates, cornflakes, soya, vermicelli, pickles and jam. This reduced its dependence on honey to around 60% in fiscal 2023 from 85% in 2018. The company has also launched flavours and varieties in honey and dates, which will support growth.
Healthy capital structure Gearing and networth were strong at 0.8 time and Rs 98 crore, respectively, as on March 31, 2023 (1.2 times and Rs 87 crore, respectively, as on March 31, 2022). Debt protection metrics remained adequate, as reflected in interest coverage and net cash accrual to adjusted debt ratios of 3.4 times and 0.19 time, respectively, in fiscal 2023. In the absence of any major debt-funded capital expenditure, the financial risk profile is likely to remain stable in the near term.
Weakness: Exposure to intense competition constraining profitability Low entry barrier has resulted in high fragmentation in the honey market. The company’s profitability has taken a hit in the export and domestic B2B (business-to-business) segments. Furthermore, with increased focus on the B2C division, AIL has to compete with large players such as Dabur and Zandu, constraining profitability. |
Liquidity: Adequate Expected cash accrual of Rs 13-20 crore per annum will comfortably cover debt obligation of Rs 3-4 crore in fiscals 2023 and 2024; the remaining accrual will cover incremental working capital requirement. Current ratio was healthy at 1.75 times as on March 31, 2023. Bank limit utilisation averaged 84% for the 12 months through January 2023. Cash and bank balance was modest at Rs 1.18 crore as on March 31, 2023. |
Outlook: Stable AIL will continue to benefit from the extensive experience of its promoters in the fast-moving consumer goods business. |
Rating Sensitivity Factors Upward factors:
Downward factors:
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About the Company AIL was set up in 1924 and acquired by the late Mr Deepak Anand and his family members in 2006. The company is currently headed by his son, Mr Amit Anand. It processes honey for domestic and global markets. It is also expanding in the B2C market and has introduced products such as dates, ginger garlic paste, pickles and jam. It is listed on the Bombay Stock Exchange. |
Key Financial Indicators
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Status of non-cooperation with previous CRA AIL has not cooperated with Brickwork Ratings which has classified the company as non-cooperative through release dated April 6, 2023. The reason provided by Brickwork Ratings is non-furnishing of information for monitoring the rating. |
Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of instrument(s)
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| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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* - Issuer did not cooperate; based on best-available information
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| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||||||||||||||||||
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Criteria Details
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