| Sikko Industries Limited | ||
| 'Crisil BB+ / Stable' assigned to Corporate Credit Rating | ||
| 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 assigned its ‘Crisil BB+/Stable’ corporate credit rating to Sikko Industries Ltd (SIL).
The rating reflects the extensive experience of its promoters in manufacturing agro chemical products, and the steady operating margin and healthy financial risk profile of the company. These strengths are partially offset by the large working capital requirement and susceptibility to risks inherent in the crop protection industry and low awareness among end-consumers (farmers). |
Analytical approach Crisil Ratings has combined the business and financial risk profiles of SIL and its subsidiary. |
Key rating drivers - Strengths Established track record and extensive experience of the promoters: The three-decade-long experience of the promoters, their strong understanding of the market dynamics, and healthy relationships with customers and suppliers, have helped the company establish its market position in the agro chemical industry. Over the years, SIL has built a large product portfolio, and new products are launched on a regular basis. The company, which caters to clients in the domestic market, has reported revenue of around Rs 54.02 for the first nine months of fiscal 2026. Sustained growth in revenue, along with increase in sales volume from ongoing capital expenditure, remains monitorable.
Healthy financial risk profile: Lower reliance on external debt has been expected to keep gearing and total outside liabilities to adjusted networth ratios below 0.15 time and 0.49 time, respectively, as on March 31, 2026. Debt protection metrics are expected to remain healthy, marked by estimated interest coverage of 12–13 times for fiscal 2026. Debt protection measures are expected to remain at a similar level over the medium term.
Steady operating profitability: Given the volatility in raw material prices, operating margin remains contingent upon the company’s ability to pass on the hike in cost to its customers. The company has demonstrated a track record of passing on price hikes to end-customers. Operating margin has remained steady within the range of 8.4–10.4% over the three fiscals ending March 31, 2025. The margin is estimated to improve to 10–12% in fiscal 2026, driven by better economies of scale and profitability. For the first nine months of fiscal 2026, the company has reported an operating margin of 18.12%. |
Key rating drivers - Weaknesses Susceptibility to risks inherent in the crop protection industry and low awareness among end-consumers (farmers): Demand for agro chemicals is driven by agricultural production, which in turn depends on timely and sufficient monsoon and the level of farm income. Surplus or inadequate rainfall could affect revenue and profitability. As SIL derives bulk of its revenue from the domestic market, it will remain susceptible to cyclicality in agricultural yield. Also, the crop protection sector is highly regulated by specific registration processes and various environment-related rules and regulations. Lack of awareness among farmers in developing countries, about appropriate dosage and proper application of micronutrients, is a major growth constraint. However, with the firm taking aggressive measures to educate farmers, awareness among target customers has increased. Steady growth in awareness amongst farmers should enhance offtake over the medium term.
Working capital-intensive operations: Gross current assets (GCAs) are high, ranging between 230 and 340 days for the three fiscals ended March 31, 2025, driven by sizeable receivables, which remained elevated. Additionally, inventory days remain at 75 to 90 days, due to the need to maintain a larger stock base given the company's diversified product offerings. Further stretch in the working capital cycle will remain a key rating sensitivity factor. |
Liquidity Adequate Bank limit utilisation was low, averaging around 33% for the 12 months ended February 28, 2026. Expected cash accrual of more than Rs 5.50 crore should suffice to cover the negligible term debt obligation of Rs 0.25–0.33 crore over the medium term. |
Outlook Stable Crisil Ratings believes SIL will continue to benefit from the extensive experience of its promoter in the agro chemical industry and the established client relationships. |
Rating sensitivity factors Upward factors
Downward factors
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About the company SIL is engaged in manufacturing of agro chemical products such as pesticides, fertilisers and seeds. |
Key financial indicators
*Consolidated financials |
Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instruments
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Annexure – List of entities consolidated
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| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | |||||||||||||||||||||||||||||||||||||||
Annexure: List of instruments and names of regulators of the instruments As required by SEBI CRA Circular dated Feb 10, 2026, a list of activities or instruments falling under the purview of various FSRs, along with the names of respective FSRs, is being disclosed below:
* Includes securitisation transactions involving assignee payout, acquirer's payout. ~ The rated instrument may involve issuance of different instruments such as debt securities (listed or otherwise), bank loans, commercial paper (listed or otherwise), etc. The regulator of the instrument may accordingly be SEBI, RBI or MCA and can only be determined upon issuance. In PRs subsequent to issuance(s), Crisil Ratings Limited shall separately capture the rated quantum details along with names of respective regulators. ^ Includes bank facilities such as liquidity facility, second loss facility that are part of securitisation transactions. # There is no instrument being rated and hence, Regulator of the Instrument is not applicable. The rating scale and definitions are being followed as stipulated in SEBI Master Circular for CRAs. @ These ratings were assigned during regulatory regime prior to introduction of SEBI CRA Circular dated Feb 10, 2026 and the investor side regulators have accordingly been included.
Note: Kindly note that for activities or instruments falling under the purview of FSRs other than SEBI, the grievance/dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available. |
Criteria Details
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