Apis India Ltd.

Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 84.00 Crs. of Apis India Ltd.

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
	Previous	Present		Previous (24 Dec 2020)	Present
Fund Based	77.50	83.50	Long Term	BWR BBB-/Stable Assignment	BWR BBB - /Stable Reaffirmation
Non Fund Based	0.50	0.50	Short Term	BWR A3 Assignment	BWR A3 Reaffirmation
Grand Total	78.00	84.00	(Rupees Eighty Four Crores 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

Brickwork ratings has reaffirmed the ratings assigned to the bank facilities of Apis India Limited (AIL, or ‘the company’) at BWR BBB- (Stable)/ A3.

The ratings derive strength from the extensive experience of the promoters, company's established market position along with a geographically diversified client base in the domestic as well as overseas market and a wide range of product spectrum. The ratings also derive strength from the healthy scale-up of operations in FY21 and comfortable overall solvency position. The ratings are, however, constrained by the working capital intensive nature of operations and competitive nature of the industry.

Outlook: Stable

BWR believes that the business and financial risk profile of AIL will be maintained over the medium term. The ‘Stable’ outlook indicates a low likelihood of rating change over the medium term. The outlook may be revised to 'Positive' in case revenue and profitability show a sustained improvement leading to an improved financial and liquidity profile. The rating outlook may be revised to 'Negative' in case the profitability generated is much lower than anticipated, there are aggressive debt-funded capex plans, or there is a significant deterioration in the overall liquidity profile of the company.

KEY RATING DRIVERS

Credit Strengths:

• Established market position and promoter experience in honey export business :

  The promoters of Apis India Limited (AIL) have been in the business of honey for more than two decades. They have established strong relationships with various stakeholders in the business. They are one of the major exporters of honey from India. Apis is one of the largest exporters of honey from India to the Gulf, Canada and USA. Apart from that, in India, Apis’s products are available across hypermarkets, e-commerce platforms (including Amazon, Flipkart, Big basket, Grofers, DMart, Hyper City, More, BigBazaar etc) and neighborhood stores across the country. The company’s product range comprises honey and value added honey,green tea ,jam ,pickles, dates ,date syrup, preserves like garlic paste, soups, macaroni, soya chunks, and peanut butter.

• Healthy financial risk profile :

  The overall financial risk profile of the company has continued to remain healthy. AIL reported an improvement in the TOI from Rs. 209.88 Crs in FY 20 to Rs. 273.35 Crs in FY 21 showing a growth of 30.24% during the year. The overall profitability of the company has improved in FY 21 as EBITDA margin and net profit margin improved in FY 21 to 5.70% and 2.17%, respectively, from 5.64% and 1.11%, reported in FY 20, respectively. The company has a satisfactory overall gearing ratio (total debt/ tangible net worth) which stood at 1.01x, as on March 31, 2021 (PY: 0.85x). The company has comfortable debt protection metrics as interest service coverage ratio stood at 2.95x in FY21, which improved from 2.44x, in FY20.

• Growing awareness about health :

  The demand for honey in India is growing due to rising customer preference for natural and healthier alternatives to artificial sweeteners, greater awareness of the benefits of honey, as well as the growing popularity of various honey flavors. Furthermore, due to its proven antibacterial, anti-microbial, and anti-inflammatory properties, honey is anticipated to gain popularity in food and non-food applications throughout the world. Rising popularity of online retail stores,availability of a wide variety of honey products, and its health benefits are other major key drivers of the industry.

Credit Risks:

• Working capital-intensive operations :

  The operating cycle of the company stood at 179 days, as on March 31, 2020, which has improved slightly to 168 days as on March 31, 2021. Honey and dates are seasonal business because honey is procured during December-March, when the company also receives most of its orders. Hence,year-end receivables and inventory levels are high. This, along with limited credit from suppliers has led to high dependence on short-term working capital debt.

• Intense competition in the industry :

  There are numerous players such as Dabur, Patanjali Ayurved Limited, Bharat Honey; etc along with a number of small as-well-as unorganized players who compete in the honey industry due to low entry barriers. AIL has to compete with a large number of players who operate in the same market and target the same customer base.

ANALYTICAL APPROACH - Standalone

BWR has considered standalone financials of Apis India Ltd to arrive at the rating of Bank Loan. For arriving at its ratings, BWR has applied its rating methodology as debited in the Rating Criteria detailed below ( hyperlinks provided at the end of this rationale).

RATING SENSITIVITIES

Positive: The rating may be upgraded upon healthy and sustained improvement in the scale of operations, profitability margins and the overall solvency position.

Negative: The rating may be revised downward in case revenues and profitability of the company deteriorates substantially from the current level. Rating may also be adversely affected in case of significant deterioration in the overall gearing and coverage ratios.

LIQUIDITY INDICATORS - Adequate

Company has Cash Credit facility of Rs. 37.50 crs and its average utilization of the fund-based limits remained at ~79%, of the disbursed limit, over the 10 months ended Jan-2022. The company has a term debt repayment obligation of Rs. 2.79 Cr. in FY22 and Rs. 3.54 Cr. in FY23, which are proposed to be met through the cash accruals. The company had free cash and cash equivalents of Rs.0.15 Crs, as on Dec 31, 2021. The conversion cycle as on March 31, 2020 stood at 179 days, which has improved slightly to 168 days in FY21. The conversion days have remained high as honey and dates are seasonal products and procurement of honey starts from December till March leading to high year-end inventory. The company does not have any major capex plans in the near future.

ABOUT THE ENTITY

Apis India Limited (AIL), acquired by the late Mr. Deepak Anand and his family members in 2006, is currently headed by his son, Mr Amit Anand. The company is listed on the Bombay Stock Exchange, and sells honey and some other products both in the domestic and global markets. Other products sold by the company include dates, ginger-garlic paste, pickles, and jam under its own brand Apis. The company derived the majority of revenue (76% of the total operating income in) from the sale of honey, 15% from dates, 3% from Jam, 6% from pickles, cornflakes, Ginger- garlic paste, soya and other products, in FY21.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 20-21 (Audited)	FY 19-20 (Audited)
Operating Revenue	Rs.Crs.	273.35	209.88
EBITDA	Rs.Crs.	15.59	11.84
PAT	Rs.Crs.	5.93	2.33
Tangible Net Worth	Rs.Crs.	81.88	75.93
Total Debt/Tangible Net Worth	Times	1.01	0.85
Current Ratio	Times	1.46	1.43

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

Facilities	Current Rating (2022)			2021		2020		2019
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	83.50	BWR BBB-/Stable (Reaffirmation)	NA	NA	24Dec2020	BWR BBB-Stable (Assignment)	NA	NA
Non Fund Based	ST	0.50	BWR A3 (Reaffirmation)	NA	NA	24Dec2020	BWR A3 (Assignment)	NA	NA
Grand Total		84.00	(Rupees Eighty Four Crores Only)

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

• General Criteria
• Approach to Financial Ratios
• Manufacturing Companies
• Short Term Debt

Analytical Contacts
Neha Wahi Ratings Analyst Board : +91 11 2341 2232 nehawahi@brickworkratings.com	Sudeep Sanwal Associate Director - Ratings sudeep.s@brickworkratings.com
1-860-425-2742 | media@brickworkratings.com

SL.No.	Name of the Bank/Lender	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)
1	Canara Bank	Packing Credit (PC) - Sanctioned	36.00	_	36.00
2	Canara Bank	Covid -19 Emergency Line Credit - Sanctioned	_	_	0.00
3	Canara Bank	Standby Line of Credit - EPC - Sanctioned	_	_	0.00
4	Canara Bank	ILC/IBG - Sanctioned	_	0.50	0.50
5	Canara Bank	Cash Credit - Sanctioned	5.00	_	5.00
6	DBS Bank India Limited	Packing Credit (PC) - Sanctioned	_	_	0.00
7	Kotak Mahindra Bank	Cash Credit - Sanctioned	10.00	_	10.00
8	Kotak Mahindra Bank	Bill Discounted (BD) - Sanctioned	5.00	_	5.00
9	Standard Chartered Bank	Packing Credit in Foreign Currency (PCFC) - Sanctioned	2.50	_	2.50
10	Standard Chartered Bank	Bill Discounted (BD) - Sanctioned	_	_	0.00
11	Standard Chartered Bank	CC (H)/WCDL - Sanctioned	25.00	_	25.00
Total			83.50	0.50	84.00
TOTAL (Rupees Eighty Four Crores Only)