Shiva Global Agro Industries Ltd.

Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 56.80 Crs. of Shiva Global Agro Industries Ltd.

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (19 Oct 2021)	Present
Fund Based	35.05	42.28	Long Term	BWR BBB- /Stable Reaffirmation	BWR BBB - /Stable Reaffirmation
Non Fund Based	18.00	14.52	Short Term	BWR A3 Reaffirmation	BWR A3 Reaffirmation
	(6.00)	(6.00)
	(6.00)	(6.00)
Grand Total	53.05	56.80	(Rupees Fifty Six Crores and Eighty lakhs Only)

#Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank Loan facilities,consolidation or instruments are provided in Annexure

RATING ACTION / OUTLOOK

This rating pertains to an assignment received prior to 6th October, 2022

BWR reaffirms the ratings of BWR BBB-, Stable / A3 for the bank loan facilities of Rs. 56.80 of Shiva Global Agro Industries Ltd (SGAIL). The reaffirmation in the ratings of the company factors in a y-o-y steady growth in revenues, with improved profit margins , coupled with improvement in its overall financial risk profile.Going further, revenues are expected to improve in FY23 supported by higher demand from the rural areas. Profitability is expected to decrease due to increase in raw material prices. Improvement in overall scale of operations is likely to lead to better fixed cost absorption. SGAIL’s increasing penetration in rural markets is likely to further sustain improvement in its business risk profile, and consequently a stronger financial risk profile. The ratings continue to reflect the company’s established market position in fertilizers and seeds, wide distributor network and strong financial risk profile.

These strengths are partially offset by its exposure to intense competition from peers, substitute products, exposure to fluctuations in the subsidy rates from the government and vulnerability to changes in agro-climatic conditions and government regulations.

Rating Outlook: Stable

BWR believes that SGAIL’s business risk profile will be maintained over the medium term. The 'Stable' outlook indicates a low likelihood of rating change over the medium term. The rating outlook may be revised to 'Positive' in case of substantial improvement in operating parameters. BWR may revise its outlook from 'Stable' to 'Negative' in case there is a deterioration in the financial parameters over the medium term.

In arriving at the ratings, BWR has considered the audited financial statements of the company up to FY22, projected financials for FY23 and FY24 information received from the management of the company as well as its bankers, and information available in the public domain.

KEY RATING DRIVERS

Credit Strengths:

Experienced promoters and management team :
The main promoter of SGAIL, Mr. Omprakash Gilda has vast experience of more than three decades in agriculture and fertilizer business. He is the Managing director of the Company and the other directors of the Company are also associated with SGAIL for more than two decades and are actively involved in the day to day business operations of SGAIL.
Long Track record and established brand in the market :
SGAIL is involved in the manufacturing of fertilizers for nearly 29 years. Over the years, the Company has developed a wide distribution network of more than 300 dealers across Maharashtra and has successfully established its brands ‘TRISHUL’, ‘VARDAN’ and ‘BHUMATA’ in the state of Maharashtra.
Moderate financial risk profile :
- In FY22, on standalone basis, the TOI of the Company has increased to Rs.204.98 Crs from Rs.175.14 Crs in FY21 due to increase in subsidy rate.The same is further projected to increase to Rs. 205 Crs in FY23 and Rs. 210 Crs in FY24
- Due to increase in total debt, there is a slight increase in Total Debt/TNW of the Company at 0.47x as on March 31, 2022, as against 0.32x as on March 31, 2022, and is further projected to increase to 0.76x in FY23 and 0.69x in FY24
- Due to increase in subsidy rate and manufacturing activity, the operating profit margin has almost doubled from 4.30% in FY21 to 9.88% in FY22 and is further projected to decrease to 5.89% FY23 and 6.59% in FY24.
- In FY22, the PAT of the Company significantly increased to Rs.12.11 Crs from Rs.4.03 Crs in FY21 and projected to decrease to Rs. 5.46 Crs in FY23 and Rs.6.62 Crs in FY24.

Credit Risks:

Vulnerability to changes in agro-climatic conditions and government regulations :
The demand for Company’s products are generated in the agriculture sector which itself is vulnerable to various agro-climatic factors like intensity and timeliness of monsoon, government MSP changes, timely availability of agriculture credit, timely accessibility to market etc. Besides these, the fertilizer industry has been highly regulated in India with regulations spanning from production capacity to prices at which the industry can sell the fertilizers in the market. Also, the subsidy on fertilizers keeps changing every year depending on the government budget.
Decrease in DSCR and Current ratio :
- DSCR for FY22 is comfortable at 2.61x in FY22 but has reduced significantly as compared to 4.02x in FY21. Further it is projected to remain almost stable at 2.00xx in FY23 and 2.18x in FY24.
- Current ratio of the Company has decreased to 1.86x in FY22 as compared to 2.62x in FY21.The same is projected to remain alost stable at 1.79x n Fy23 and 1.85x in FY24.

ANALYTICAL APPROACH - Standalone

BWR has relied upon standalone audited financials of the Company upto FY22 and projected financials upto FY24, publicly available information and clarifications/information provided by the management.

RATING SENSITIVITIES

Positive: The ability of the Company to improve its profit margins and scale of operations would be positive for the ratings.

Negative: Decline in scale of operations and any further decrease in profit margins would be negative for the ratings.

LIQUIDITY INDICATORS - Adequate

The liquidity position of the Company is adequate as its current ratio as on March 31, 2022, is comfortable at 1.86x and it had a cash & bank balance of Rs.1.93 Crs. The average CC utilization for the last 15 months is 63.17% and the Company has cash accruals of Rs.13.13 Crs and Rs.6.54 Crs (projected) respectively in FY22 and FY23 as against principal debt repayment of Rs.1.23 Crs and Rs.1.23 Crs respectively.

ABOUT THE ENTITY

Shiva Global Agro Industries Ltd. (SGAIL) is a Nanded, Maharashtra based company incorporated in 1993 and engaged in manufacturing of fertilizers and trading of fertilizers as well as seeds. SGAIL was listed on BSE in 1995. The Company manufactures Single Super Phosphate (SSP) & granulated NPK mix fertilizers, Beneficiated Rock Phosphate and Bio-mass Briquettes, with two manufacturing plant, one for SSP and one for NPK fertilizers manufacturing with installed capacity of 1,20,000 MTPA and 72,000 MTPA respectively.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 21-22 (Audited)	FY 20-21 (Audited)	FY 22-23 (Unaudited - Others(Q2))
Operating Revenue	Rs.Crs.	204.98	175.14	55.95
EBITDA	Rs.Crs.	20.25	7.54	1.84
PAT	Rs.Crs.	12.11	4.03	1.18
Tangible Net Worth	Rs.Crs.	70.40	58.88	Not Available
Total Debt/TNW	Times	0.47	0.32	Not Available
Current Ratio	Times	1.86	2.62	2.52

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

Date- July 29, 2021, CRA Name- ICRA, Rating financial instrument- Medium Term -Fixed Deposit Rating amount - Rs.2.00 Crs , Rating action- "MB- (Stable); ISSUER NOT COOPERATING; Withdrawn",

RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)

Facilities	Current Rating (2023)			2022		2021		2020
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	42.28	BWR BBB-/Stable (Reaffirmation)	NA	NA	19Oct2021	BWR BBB- Stable (Reaffirmation)	14Oct2020	BWR BBB- Stable (Assignment)
Non Fund Based	ST	14.52	BWR A3 (Reaffirmation)	NA	NA	19Oct2021	BWR A3 (Reaffirmation)	14Oct2020	BWR A3 (Assignment)
NFB SubLimit	ST	(6.00)	BWR A3 (Reaffirmation)	NA	NA	NA	NA	NA	NA
		(6.00)	BWR A3 (Reaffirmation)	NA	NA	NA	NA	NA	NA
Grand Total		56.80	(Rupees Fifty Six Crores and Eighty lakhs Only)

Rating Advisory, as on 20Oct2022
Press Release, as on 02Nov2022
This rating pertains to an existing assignment received prior to 6 October 2022

COMPLEXITY LEVELS OF THE INSTRUMENTS - Simple

BWR complexity levels are meant for educating investors. The BWR complexity levels are available at www.brickworkratings.com / download / ComplexityLevels.pdf. Investors queries can be sent to info@brickworkratings.com.

Hyperlink/Reference to applicable Criteria

Analytical Contacts
Prajwal Biraj Ratings Analyst prajwal.b@brickworkratings.com	Anuradha Gupta Director - Ratings anuradha.g@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

Shiva Global Agro Industries Ltd.

ANNEXURE-I

Details of Bank Facilities rated by BWR

SL.No.	Name of the Bank/Lender	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)
1	Union Bank of India	Cash Credit - Sanctioned	40.00	_	40.00
2	Union Bank of India	Foreign Letter of Credit (FLC) - Sanctioned	_	14.00	14.00
	Sub-Limit (Bank Guarantee) - Sanctioned		(6.00)
	Sub-Limit (Inland LC) - Sanctioned		(6.00)
3	Union Bank of India	Credit Exposure Limit (CEL) - Sanctioned	_	0.52	0.52
4	Union Bank of India	GECL - Sanctioned	2.28	_	2.28
Total			42.28	14.52	56.80
TOTAL (Rupees Fifty Six Crores and Eighty lakhs Only)

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