Rating Rationale
August 27, 2020 | Mumbai
Shivangi Agro India Private Limited
Rating migrated to 'CRISIL B+/Stable'
 
Rating Action
Total Bank Loan Facilities Rated Rs.20 Crore
Long Term Rating CRISIL B+/Stable (Migrated from CRISIL B/Stable  ISSUER NOT COOPERATING'*)
1 crore = 10 million
Refer to annexure for Details of Instruments & Bank Facilities
*Issuer did not cooperate; based on best-available information
Detailed Rationale

Due to inadequate information, CRISIL, in line with Securities and Exchange Board of India guidelines, had migrated the rating on the long-term bank facilities of Shivangi Agro India Private Limited (SAIPL) to 'CRISIL B/Stable Issuer Not Cooperating'. However, the management has subsequently started sharing the requisite information for carrying out a comprehensive review of the rating.  Consequently, CRISIL is migrating the rating to 'CRISIL B+/Stable' from 'CRISIL B/Stable Issuer Not Cooperating'.
 
The rating reflects susceptibility to climatic conditions and volatility in raw material prices, and a below-average financial risk profile. These weakness are partially offset by the extensive experience of the promoters in the agricultural products industry and efficient working capital management.

Key Rating Drivers & Detailed Description
Weaknesses:
* Susceptibility to climatic conditions and volatility in raw material prices:
The crop yield of agricultural commodities is dependent on adequate and timely monsoon. Thus, the company is exposed to the risk of limited availability of its key raw material during a weak monsoon. Also, production may be impacted by pests or crop infection, leading to higher unpredictability in production and pricing of agricultural commodities and derived products.
 
* Below-average financial risk profile: 
The total outside liabilities to tangible networth ratio was high at 3.63 times as on March 31, 2020. Debt protection metrics have remained weak due to high gearing and low cash accrual from operations. The interest coverage and net cash accrual to total debt ratios were 1.51 times and 0.05 time, respectively, for fiscal 2020. The metrics are expected to improve over the medium term as the entire term loan has been paid off.
 
Strength:
* Extensive industry experience of the promoters:
The promoters have an experience of over three decades in the agricultural products industry. This has given them an understanding of the dynamics of the market, and enabled them to establish relationships with suppliers and customers. Benefits from the experience should continue.
 
* Efficient working capital management:
Gross current assets were less than 60 days over the three fiscals ended March 31, 2020, driven by efficient inventory policy and debtor collection cycle. Inventory and receivables are estimated at 21 days and 31 days, respectively, as on March 31, 2020. Working capital management is likely to remain prudent over the medium term.
Liquidity Stretched

Net cash accrual is estimated at Rs 0.8-1.0 crore in fiscal 2020, and expected at a similar level in fiscals 2021 and 2022. It should be sufficient to meet working capital requirement in the absence of any debt obligation. Cash credit limit utilisation was high at an average of 96% during the 12 months through June 2020. Also, the cash and bank balance was low at Rs 0.50 crore as on March 31, 2020. Liquidity is likely to remain stretched over the medium term.

Outlook: Stable

CRISIL believes SAIPL will continue to benefit from the extensive experience of the promoters.

Rating Sensitivity factors
Upward factors
* Significant improvement in revenue and profitability while maintaining working capital requirement
* Substantial capital infusion, thus strengthening the financial risk profile
 
Downward factors
* Lower-than-anticipated cash accrual or larger-than-expected working capital requirement
* Larger-than-expected, debt-funded capital expenditure, leading to deterioration in the financial risk profile
About the Company

SAIPL was incorporated on February 26, 2010, promoted by Mr Bhagwan Mittal and his sons, Mr Manoj Kumar Mittal and Mr Rajkamal Mittal. The company processes maida, akra, makka, rawa, and bardana. The plant at Bahraich, Uttar Pradesh, has a capacity of 2,500 quintal per day.

Key Financial Indicators
As on / for the period ended March 31   2020* 2019
Operating income Rs crore 160.78 149.18
Reported profit after tax (PAT) Rs crore 0.43 0.09
PAT margin % 0.27 0.06
Adjusted debt/adjusted networth Times 3.56 4.44
Interest coverage Times 1.51 1.23
*Provisional

Status of non cooperation with previous CRA:
SAIPL has not cooperated with Brickwork Ratings which has classified the company as non-cooperative through a release dated March 11, 2020. The reason provided by India Ratings is non-furnishing of information for monitoring of ratings.

Any other information: Not applicable

Note on complexity levels of the rated instrument:
CRISIL complexity levels are assigned to various types of financial instruments and are included (where applicable) in the Annexure -- Details of Instrument in this Rating Rationale. For more details on the CRISIL complexity levels, please visit www.crisil.com/complexity-levels.
Annexure - Details of Instrument(s)
ISIN Name of instrument Date of allotment Coupon rate (%) Maturity date Issue size
(Rs crore)		 Complexity Level Rating assigned
with outlook
NA Cash Credit NA NA NA 18.0 NA CRISIL B+/Stable
NA Proposed Cash Credit Limit NA NA NA 2.0 NA CRISIL B+/Stable
Annexure - Rating History for last 3 Years
  Current 2020 (History) 2019  2018  2017  Start of 2017
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Fund-based Bank Facilities  LT/ST  20.00  CRISIL B+/Stable  14-05-20  CRISIL B/Stable (Issuer Not Cooperating)*  20-02-19  CRISIL B/Stable (Issuer Not Cooperating)*      09-11-17  CRISIL B/Stable  -- 
All amounts are in Rs.Cr.
*Issuer did not cooperate; based on best-available information
Annexure - Details of various bank facilities
Current facilities Previous facilities
Facility Amount (Rs.Crore) Rating Facility Amount (Rs.Crore) Rating
Cash Credit 18 CRISIL B+/Stable Cash Credit 12 CRISIL B/Stable/Issuer Not Cooperating
Proposed Cash Credit Limit 2 CRISIL B+/Stable Proposed Cash Credit Limit 8 CRISIL B/Stable/Issuer Not Cooperating
Total 20 -- Total 20 --
Links to related criteria
CRISILs Approach to Financial Ratios
CRISILs Bank Loan Ratings - process, scale and default recognition
Rating criteria for manufaturing and service sector companies

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