| KN Agri Resources Limited | ||||||
| Ratings reaffirmed at 'Crisil BBB+/Stable/Crisil A2'; Rated amount enhanced for Bank Debt | ||||||
| Rating Action | ||||||
| ||||||
| 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 ratings on the bank loan facilities of KN Agri Resources Limited (KNAGRL) at 'Crisil BBB+/Stable/Crisil A2'.
Rating continues to reflect the established position in the edible oil industry, which is backed by experienced promoters, presence close to raw material sources and large scale of operations. The ratings also factors in healthy financial risk profile. These strengths are partially offset by susceptibility to volatility in raw material prices and intense competition in the market. |
Analytical Approach Crisil Ratings has combined the business and financial risk profiles of KNAGRL, with its subsidiaries, KN Agri Retail Private Limited (KNARPL). These entities, collectively referred to as the Fabtech group, operate in a similar line of business and are wholly owned subsidiaries.
Earlier, Crisil Ratings evaluated the business and financial risk profile of KN Agri Resources Limited on Standalone basis.
Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers & Detailed Description Strengths: Improved scale of operation backed by growing market position and extensive experience of promoters: The promoters of the company have been into the business for more than 3 decades into the industry which has resulted in a established market position in edible oil industry and helping them with strong industry dynamics. Operating revenue has remained on similar lines in fiscal 2025 at Rs 1724 crores on account of stability in prices of soyabean, where improvement in volume sales in fiscal 2025 stands at 8% and expected growth of around 10% during fiscal 2026. Operating margin has also improved in fiscal 2025. Company is in process of diversifying its product profile along with retail expansion. Its impact on the business risk profile of the company will remain monitorable.
Healthy Financial Risk Profile: Financial risk profile continues to be comfortable basis NIL long term debt and limited dependency on working capital limit. Networth of the company has improved from Rs 313.62 crores as of March 2024 to Rs 353.51 crores as on March 31, 2025 backed by steady accretion to reserves.
Adjusted debt to adjusted networth stands at 0.15 times as of March 31, 2025, against 0.35 times as of March 31, 2024. Total outside liability to adjusted networth has reduced from 0.45 times as on March 31, 2024, to 0.26 times as on March 31, 2025. Net cash accruals to adjusted debt expected to be 0.79 times as of March 2025 and expected to be above 1x over the medium term.
Weaknesses: Susceptibility of operations to adverse movements in raw material prices: The operating income and profitability is vulnerable to adverse movements in the prices of raw material, soya seeds. As the major raw materials are agricultural products, seasonal variations because of rainfall, crop diseases and low yield play a vital role in their availability and prices. The government provides the minimum support price for agro commodities every year. On the other hand, prices of refined oils are primarily decided by demand-supply situations, and any significant rise in the price of raw materials may impact on the operating margin. Though DOC, a major contributor to revenue, has seen high demand from the feed industry, ability to pass on increase in raw material price in a timely manner remains critical. Company has managed this risk over the years and is also in process of diversifying its product profile which will partly mitigate the risk.
Exposure to adverse change in government regulations: There is significant government intervention. The industry is vulnerable to government policies in the form of duties imposed on import of refined and crude edible oil, volatility in edible oil prices. Further, Regulatory risks like the ban on import of GMO soya seed (import of Non-GMO seeds is allowed), also adversely affect the operating profitability of soya players, in case of high soya seed prices in the domestic market vis-a-vis international market |
Liquidity: Adequate Bank limit utilisation is low at around 35% to 40% percent for the past 12 months ended June 2025. Cash accrual are expected to be over Rs 50 crore which are sufficient against nil term debt obligation over the medium term. In addition, it will be act as cushion to the liquidity of the company |
Outlook: Stable Crisil Ratings believes KNARL’s operating performance will continue to improve on the extensive experience of its promoters and established market position along with prudent inventory policies. |
Rating sensitivity factors Upward Factors
Downward Factors
|
About the Company KNAGRL was incorporated in 1987 by three brothers Mr. Vijay Shrishrimal, Dhirendra Shrishrimal and Sanjay Shrishrimal. Company is engaged in the solvent extraction and refining of edible oil from soybean and production of soya de-oiled cake (DOC). Company is also engaged in flour milling and trading of commodities like gram, wheat, soya oil and soybeans. Company got listed on March 28, 2022 on SME platform of National Stock Exchange. |
Key Financial Indicators
|
Any other information: Not Applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
|
Annexure – List of entities consolidated
|
| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||
|
|||||||||||||||||||||||||||||||||||||||
| All amounts are in Rs.Cr. | |||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||||||||||||||||||||||||||
|
Criteria Details
|