Agristo Masa Pvt. Ltd.

Brickwork Ratings affirms the long-term rating for the bank loan facilities amounting to Rs. 125 Cr of Agristo Masa Private Limited

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (28 Oct 2020)	Present
Fund Based	125.00	125.00	Long Term	Provisional BWR BBB- /Stable	BWR BBB - /Stable Affirmation
Fund Based	(0.00)	(40.00)	Long Term	Provisional BWR BBB- /Stable	BWR BBB - /Stable Affirmation
Grand Total	125.00	125.00	(Rupees One Hundred Twenty Five 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 (BWR) has affirmed the rating of BWR BBB- /Stable for its buyer's credit facility of Rs. 45 Cr and a term loan facility of Rs. 80 Cr sanctioned in Dec 2020. Earlier, a Provisional rating of BWR BBB-/ Stable was assigned on 28 Oct 2020. BWR has received the final documents with respect to the covenants mentioned in the sanctioned letter. As per the sanctioned letter, the terms with respect to the interest rate, repayment schedule, margin requirements, etc, have been changed which has been taken into consideration while doing its current credit rating assessment. Despite changes in the covenants, its average DSCR is expected to remain adequate for future periods and hence, BWR has affirmed its outstanding rating.

The rating also factors in the Company's strong parentage, besides expectations that the project would be completed and commence operations within the estimated timelines, given the foreign promoter’s long-term international experience in the manufacturing of potato flakes and other related products. As per the sanctioned letter submitted, the group entities also extended their corporate guarantees to ensure the timely servicing of the bank facilities availed. It also draws strength from the strategic location of the project, in the heartland of the potato growing belt in UP, thus being in close proximity to raw material availability. It is also eligible for various fiscal benefits such as the tax holidays, central and state government subsidies for capex etc. The ratings are, however, constrained by project execution risks, as its construction work is at a nascent stage. Further, its business operations and profitability margins are vulnerable to agro-climatic changes which are likely to have an impact on the potato crop and its prices, besides regulatory risks.

KEY RATING DRIVERS

Credit Strengths:

Financial closure achieved :
The Company has achieved financial closure as the term loan of Rs. 80 Cr has been sanctioned by the lender for its project, out of which ~ Rs. 26 Cr has been disbursed. As informed by the management, the documents with respect to the corporate guarantees were also executed as on date.
Experienced promoters :
Agristo NV, foreign partner, established in 1986 with its headquarters at Harelbeke Belgium, is one of the largest frozen potato flake manufacturers. It has established large-scale production units in the Netherlands at Nazareth, Wielsbeke and Tilburg, from where it offers a wide range of potato fries and other specialty products. It has the capacity of over 700,000 MT to process potatoes into quality products which get exported to 115 countries. Agristo NV has a dedicated R & D department which keeps cross interaction with the farmers cultivating potatoes in Belgium. Imsto NV, Belgium (a subsidiary of Agristo NV) has provided an undertaking to offer their expertise and technical know-how to AMPL and support its agenda in the export of produce from the AMPL’s proposed unit in accordance with its business plan.
Parental support :
The assigned rating derives the explicit support provided by both Wave Industries Private Limited (part of the Wave Group) and Agristo NV, Belgium (foreign partner) in the form of corporate guarantees for the Company's rated bank loan limits, in order to ensure timely servicing of the said facilities.
Strategical location of the project :
The company’s proposed unit is located in the state of Uttar Pradesh, areas with high potato acreage and quality crop, which provides proximity to the required quality raw material and contract-farm potatoes from local farmers.
Eligible for various fiscal benefits :
The company’s proposed unit falls under the priority sector of the food processing industry and thus is eligible for various fiscal benefits in terms of central government aid for capex, income tax holiday, GST refunds etc.

Credit Risks:

Project Execution Risks :
The company’s proposed unit is at nascent stages and thus faces project execution risks. Any delays in achieving the financial closure will impact its project implementation schedule and thus may lead to delays in completing the proposed capex program resulting in time and cost overruns.
Vulnerability of operations to agro-climatic conditions, volatility of raw material prices and other regulatory risks :
The company’s operations remain vulnerable to the agro-climatic risks related to quality potato production and seasonality associated with it. Further, any changes in the government regulations with respect to its raw material prices and other related policies may impact the company’s business plan going forward.

ANALYTICAL APPROACH - Standalone

For arriving at its ratings, BWR has considered the projected standalone financials of the company. BWR also factors in the explicit support provided by its both promoter entities to ensure timely servicing of its proposed bank limits. Please refer to the details in the Rating Criteria (hyperlinks provided at the end of this rationale). Further, BWR has also taken the support of parent entity Agristo NV, Belgium and the WAVE Group for arriving at the rating.

RATING SENSITIVITIES

BWR noted that it has achieved its financial closure and thus, the management is proposing to complete the project as per the business plan submitted earlier.

Positive: The company’s ability to complete the said proposed project as per the given business plan besides continued operational and financial support from both the promoter's entities, as and when required.

Negative: If it fails to complete the said proposed project in a timely manner. Further, the inability to infuse temporary unsecured loans by the promoters in orders to cover the cash shortfall during its first year of operations (i.e. FY23) as per the TEV report submitted, remains the key rating sensitivities.

LIQUIDITY INDICATORS - Adequate

The liquidity position of the Company is adequate considering that it has achieved the financial closure to set up a potato processing plant. The lenders have confirmed that it has disbursed a total amount of ~ Rs. 26 Cr out of the total sanction of Rs. 80 Crs till date. Further, as informed by the management, the promoters have already invested over Rs. 50 Cr out of the total required promoters contribution in the proposed project. The term loan repayments are proposed to start from FY24 for which it expects to generate adequate cash accruals from its operations. As per the projections submitted, the average DSCR is estimated to be 2.11x.

ABOUT THE ENTITY

AMPL was incorporated in Oct 2019 and is a 50:50 joint venture between Masa Global Food Pvt Ltd (part of Wave Group) and IMSTO NV, Belgium (subsidiary of Agristo NV, Belgium). The company has proposed to set up a potato processing unit at District Bijnor, Uttar Pradesh. The said project will be implemented in various phases. The unit will be 80% Export Oriented Unit (EOU).

In Phase I, the company has proposed to set up a unit to manufacture potato flakes & frozen potato snacks with a capacity of 9000 MTPA. It is also setting up a cold storage facility with a capacity of 10,000 MT. It will be an integrated plant to process the farm potatoes of different sizes into various kinds of ready-to-cook and eat products with value addition. Expected commencement date of its operations (COD) for Phase I is FY22. After the implementation of Phase I, it is proposed to manufacture frozen potato specialties (FPS) by setting up a new unit with a capacity of 9,000 MTPA. Expected COD for Phase II is FY23. The estimated total cost of the project is Rs. 195.35 Cr which is proposed to be funded through debt of Rs. 125 Cr, promoters’ unsecured loans/equity of Rs. 50.35 Cr and remaining through the central government grant-in-aid of Rs. 20 Cr. Out of the total cost of Rs. 195.35 Cr, the company has already invested over Rs. 50 Cr from its own funds as on date, as informed by the management.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 20-21 (Projected)	FY 19-20 (Audited)
Operating Revenue	Rs.Crs.	Not Available	0.36
EBITDA	Rs.Crs.	Not Available	-1.46
PAT	Rs.Crs.	Not Available	-1.47
Tangible Net Worth	Rs.Crs.	38.73	18.53
Total Debt/Tangible Net Worth	Times	1.46	0.01
Current Ratio	Times	Not Available	1.86

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

Facilities	Current Rating (2021)			2020		2019		2018
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	125.00	BWR BBB-/Stable (Affirmation)	28Oct2020	Provisional BWR BBB-/Stable ()	NA	NA	NA	NA
FB SubLimit	LT	(40.00)	BWR BBB-/Stable (Affirmation)	NA	NA	NA	NA	NA	NA
Grand Total		125.00	(Rupees One Hundred Twenty Five 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

Analytical Contacts
Peeush Middha Manager - Ratings Board : +91 172 5032 295 / 6 peeush.m@brickworkratings.com	Ashwini Mital Director - Ratings Board : +91 172 5032 295 / 6 ashwinimital@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

Agristo Masa Pvt. Ltd.

ANNEXURE-I

Details of Bank Facilities rated by BWR

SL.No.	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)
1	Buyer's Credit - Sanctioned	45.00	_	45.00
2	Term Loan - Sanctioned	80.00	_	80.00
Sub-Limit (LC for capital goods) - Sanctioned	(40.00)
Total		125.00	0.00	125.00
TOTAL (Rupees One Hundred Twenty Five Crores Only)

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