Manish Agro Tech Ltd.

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.10.00 Crs. of Manish Agro Tech Ltd.

Particulars

Facility**	Amount (Rs.Crs)	Tenure	Rating*
Fund Based
Cash Credit - Sanctioned	10.00	Long Term	BWR BB (Stable)
Sub Total	10.00
Grand Total	10.00	(Rupees Ten Crores Only)

*Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank facilities are provided in Annexure-I KEY RATING DRIVERS

Credit Strengths:

• Promoter Experience: :

  The ratings also factor in the firm’s 12-year operational track record and its founders-promoters’ experience of over two decades in the edible oil industry.

• Leverage Position: :

  Low gearing (TD/TNW) at 0.91x in FY19 from 0.80x in FY18 . On provisional basis, gearing (TD/TNW) improved to 0.84x in FY20 .

• Moderate Scale of Operations: :

  Total operating income is moderate & stagnant to Rs. 285.76Crs in FY19 from Rs. 286.31 Crs in FY18. On provisional basis, TOI has increased to Rs. 388.00 Crs in FY20.

• Moderate Liquidity: :

  The company has moderate liquidity position, as reflected by current ratio of 1.27 x in FY19 from 1.57 x in FY18. On provisional basis, current ratio stood moderate and reduced marginally to 1.26x in FY20.

• Strategic Location: :

  Locational advantage on account of the proximity to soya bean growing regions .

Credit Risks:

• Debt protection metrics and High working capital requirement: :

  ISCR is low and marginally increased to 1.76x in FY19 from 1.64 x in FY18 and DSCR is also low and marginally increased to 1.04 x FY19 from 0.60 x in FY18. On provisional basis, ISCR and DSCR stood at 1.79x and 0.51x in FY20. Working capital requirement are high with GCA/ Total Sales reported at 44% in FY19 and 28% in FY20 , primarily driven significant receivables being carried out by firm. The working capital intensity is further reflected from fully utilized bank limit.

• Customer and Supplier concentration risk: :

  TThe entity faces high supplier and customer concentration and geographic concentration risk. The only one supplier and one major customer that are catered to the accounting for 100 percent of its purchase and 99% of the revenue in the last few years.

• Intense competition and highly fragmented market: :

  The company is in the edible oil business which is manufactured by a lot of organised and unorganised players locally and also imported at cheap prices from other nations. Thus, MAL faces intense competition from such players in the market which affect the pricing power and hence, puts an impact on the margins.

• Susceptibility to fluctuations in raw material price: :

  The company is engaged in the extracting and refining of edible oil. The prices of crude edible oil are volatile in the nature; hence, the profitability is highly susceptible to the ability of the company to pass on the same to its customers.

• Effects of COVID-19: :

  The Company’s business is correlated with the overall economic activity level of the country. Given the current lockdown, the country's economic activities have come to an almost standstill. The broad picture regarding the fallout of the pandemic is yet to emerge. But, this is most likely to bring down the growth rate of the Indian economy and affect the Company’ business operations due to delay in execution, a possible increase in labour cost due to migrant labourers’ exodus to their native places, the possibility of decline in new projects and an increase in raw materials’ cost due to supply chain disruptions.

ANALYTICAL APPROACH AND APPLICABLE RATING CRITERIA

BWR has factored in the standalone business parameters and financial risk profile of the company to arrive at the rating. Reference may be made to the Rating Criteria hyperlinked detailed below (hyperlinks provided at the end of this rationale).

RATING SENSITIVITIES

Going forward, the ability of the entity to accelerate its scale of operations, increase its profit margins, compliance of bank's sanction terms, efficiently manage its working capital and cash flows for timely servicing of interest/debt obligations and strengthening of overall financial risk profile shall be the key rating sensitivities over short to medium term.

Positive: The rating outlook may be revised to positive or rating may be upgraded if the company is able to sustain its growth and profit margins.  Any additional infusion of share’s capital would help to improve its capital structure of the company.

Negative: The rating outlook may be revised to negative or rating may be downgraded if the entity achieves lower revenue and profit margins than projected. 

LIQUIDITY POSITION

The liquidity position of Manish Agro Tech Ltd. is adequate. The net cash accrual of the entity stood Rs. 1.80 Crs in FY19, Rs. 1.75 Crs in FY20 and projected Rs. 2.62 Crs in FY21. The cash and cash equivalents stood Rs. 0.35 Crs  in FY19. The current ratio of the company stands at 1.27x in FY19. The average utilisation of the working capital stood at 98 %. The funding support from the promoter by way of unsecured loan and ploughing back of profits has supported liquidity and such funding support will be available whenever required.

PROFILE

Manish Agro Tech Limited was incorporated in 1996. It has commenced commercial production in November 2008. It is engaged in manufacturing and trading soya oil and soya de-oiled cake (DOC). The entity is promoted by the Chothwani family, who has 30 years of experience in this industry. The entity has a solvent extraction plant, with an installed capacity of 500 metric tonnes per day, in the Dhar District of Madhya Pradesh.

KEY FINANCIAL INDICATORS

Key Parameters	Units	FY 18-19 (Audited)	FY 17-18 (Audited)
Operating Revenue	Rs.Crs.	285.76	286.31
EBITDA	Rs.Crs.	4.30	5.60
PAT	Rs.Crs.	1.10	1.21
Tangible Net Worth	Rs.Crs.	21.87	20.77
Total Debt/Tangible Net Worth	Times	0.91	0.80
Current Ratio	Times	1.27	1.51

NON-COOPERATION WITH PREVIOUS RATING AGENCY ,IF ANY

RATING HISTORY (INCLUDING WITHDRAWAL AND SUSPENSION)

S.No	Current Rating (2020)				Rating History
	Facilities	Tenure	Amount (Rs.Crs)	Rating	2019	2018	2017
Fund Based
1	Cash Credit - Sanctioned	Long Term	10.00	BWR BB (Stable)	NA	NA	NA
Total			10.00	(Rupees Ten Crores Only)

COMPLEXITY LEVELS OF THE INSTRUMENTS

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
• Trading Entities

For More Information Contact:

Analytical Contacts	Investor Contacts
Ushadevi V Dogra Ratings Analyst D : +91 22 6745 6650 B : +91 22 2831 1426, +91 22 2831 1439 ushadevi.d@brickworkratings.com	Liena Thakur Assistant Vice President - Corporate Communications M : +91 84339 94686 liena.t@brickworkratings.com
Sushil Kumar Chitkara Associate Director - Ratings B : +91 22 2831 1426, +91 22 2831 1439 sushilkumar.c@brickworkratings.com
1-860-425-2742

SL.No.	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)
1	Cash Credit - Sanctioned	10.00	_	10.00
Total				10.00
TOTAL (Rupees Ten Crores Only)