Agra Oil & General Industries Ltd.

Brickwork Ratings reaffirms the long term and short term ratings for the Bank Loan Facilities of Rs. 11.60 Crs. of Agra Oil & General Industries Ltd.

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (09 Aug 2021)	Present
Fund Based	12.50	11.10	Long Term	BWR B+/Stable Assignment	BWR B + /Stable Reaffirmation
Non Fund Based	0.50	0.50	Short Term	BWR A4 Assignment	BWR A4 Reaffirmation
Grand Total	13.00	11.60	(Rupees Eleven Crores and Sixty 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

BWR reaffirms the long term and short term rating of Agra Oil & General Industries Ltd. as BWR B+/A4 with Stable outlook as their business risk profile will be maintained over the medium term. The 'Stable' outlook indicates a low likelihood of rating change over the medium term. It continues to derive comfort from extensive experience of its management in the manufacturing & trading of musturd oil. The ratings also positively factor in its gradual improving of scale of operations, capital structure and moderate debt protection metrics. The rating outlook may be revised to 'Positive' in case the revenues and profit show sustained improvement. The rating outlook may be revised to 'Negative' if the revenues go down and profit margins show lower than expected figures.

KEY RATING DRIVERS

Credit Strengths:

Extensive experience of management and established network :
Mr. Shanti Goyal has five decades of experience of managing a unit of solvent extraction plant of mustard oil. Mr. Krishna Goyal, Mrs. Divya Goyal and Mrs. Gayatri Goyal have an experience of more than two decades into the same line of business. Their adequate acumen about various aspects of business is likely to benefit the Co. in the long run and maintain strong relationship with its clientele.
Positive market outlook :
The Indian edible oil market is the world’s fourth-largest after the USA, China and Brazil. The long-term outlook of mustard oil demand in India is favorable as the market is driven by robust demand for organic health-based products, with increased consumption among health-conscious consumers for high-quality oil and growing demand from various application areas. Thus, the under-penetrated market coupled with positive macro and demographic factors give a favorable market outlook to the industry in long run.
Increasing Scale of Operations :
The total operating income of the Co. improved by 32.84% in FY 22(Prov.) i.e. taking the topline from Rs. 82.61 Crs in FY 21 to Rs. 109.74 Crs in FY 22(Prov.). The revenue further projected to improve by 12.99% in FY 23 i.e. to Rs. 124 Crs.

Credit Risks:

Stretched Capital Structure :
The tangible net worth of the company stands at Rs. 4.98 Crs. for FY22(Prov.) It is further projected to improve at Rs. 5.19 Crs. in FY23. The increase in net worth is on the account of the basis of low net profits and there has been no addition in the share capital during the year. The Gearing ratio (Total Debt/Total Net Worth) stands at 2.25 times for FY22(Prov.)
Low net profit margin and intense competition in the industry :
The net profit margin is thin as it stands at 0.03% in FY21 and 0.09% in FY22(Prov.). The profit margins of oil refiners are low owing to less value addition involved in the business and fragmented nature of the industry due to which the company faces stiff competition from various organized and unorganized players in the market as various varieties of cheaper oils are also available.
Inherent industry risk and agro climatic conditions :
The industry is highly dependent on timely availability of raw material, domestic production of oil seeds, annual rainfall, irrigation facilities, global price fluctuations, and consumer preferences. Moreover, mustard seeds is a sensitive commodity and it is exposed to government regulations as well for prices. Thus, any adversities could impact the volume and the profitability of the company.

ANALYTICAL APPROACH - Standalone

For arriving at its ratings, BWR has applied its rating methodology as detailed in the Rating Criteria detailed below (hyperlinks provided at the end of this rationale)

RATING SENSITIVITIES

Going forward, the ability of the company to further increase its scale of operations by improving its revenue, profitability margins and financial risk profile, as usual maintaining its debt obligations and efficiently managing its working capital will be the key rating sensitivities.

Positive: The ratings may be upgraded if revenue, profitability, tangible net worth, liquidity and overall credit profile show substantial improvement.

Negative: The rating may be downgraded in case there is a significant deterioration in the business and financial risk profile of the company from its current level.

LIQUIDITY INDICATORS - Stretched

Cash & Bank balance is at Rs. 0.02 Crs. in FY21 and FY22(Prov.). It is further increase at Rs. 0.05 Crs. for FY23.
Net Cash Accruals has been improved from Rs. 0.13 Crs. in FY21 to Rs. 0.21 Crs. in FY22(Prov.). It is projected to further projected to Rs. -0.36 Crs. in FY23. The company has no long term debt taken from outside sources, thus CPLTD is NIL.
Debt Protection Matrix (DSCR & ISCR) improved in FY22 from 1.01X & 0.95X in FY21 to 1.12X & 0.97X in FY22(Prov.). They are further projected to decline at 0.67X & 0.61X in FY23 respectively.
The utilization of the CC limit is 96.26%.
Current Ratio of the company stood at 1.29X in FY21 and 1.30 in FY22(Prov.), However projected to improve to 1.40 in FY23.
Hence, the overall liquidity of the company is Stretched.

ABOUT THE ENTITY

Agra Oil and General Industries Limited was incorporated in 1972 and is engaged in the manufacturing and trading of mustard oil and mustard cake. The facility is located in Agra (Uttar Pradesh). It has seed-crushing capacity of 32,000 MTPA. AOGIL is owned & managed by Shri Shanti Swaroop Goyal.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 20-21 (Audited)	FY 19-20 (Audited)
Operating Revenue	Rs.Crs.	82.61	70.55
EBITDA	Rs.Crs.	1.53	1.58
PAT	Rs.Crs.	0.03	0.05
Tangible Net Worth	Rs.Crs.	4.85	4.83
Total Debt/TNW	Times	2.30	2.25
Current Ratio	Times	1.29	1.39

KEY COVENANTS OF THE FACILITY RATED

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

ICRA and CRISIL continues the rating of Agra Oil & General Industries Ltd. under Issuer Non Cooperation as ICRA B+ and CRISIL B/A4 on 16th September 2021 and 28th May 2021 respectively.

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	11.10	BWR B+/Stable (Reaffirmation)	09Aug2021	BWR B+Stable (Assignment)	NA	NA	NA	NA
Non Fund Based	ST	0.50	BWR A4 (Reaffirmation)	09Aug2021	BWR A4 (Assignment)	NA	NA	NA	NA
Grand Total		11.60	(Rupees Eleven Crores and Sixty lakhs 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

Analytical Contacts
Kartik Arora Ratings Analyst kartik.a@brickworkratings.com	Hari Kishan Yadav Associate Director - Ratings hari.ky@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

Agra Oil & General 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	Punjab National Bank	Cash Credit - Sanctioned	11.10	_	11.10
2	Punjab National Bank	ILC/IBG - Sanctioned	_	0.50	0.50
Total			11.10	0.50	11.60
TOTAL (Rupees Eleven Crores and Sixty lakhs Only)

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