Rating Rationale

Brickwork Ratings (BWR) assigns the long-term ratings of BWR BBB-/Stable for the long-term bank loan facilities of Sri Sathya Agri Bio Tech Private Limited (SSABTPL or Company), amounting to Rs.65.80 crores. The ratings factor in the company’s established track record, promoters’ extensive operating experience in the seeds industry and the company’s established relationships with farmers and distributors along with diversified product portfolio. 

The assessment also considers the company's improved overall financial performance, along with an improvement in revenue at a growth rate of 37% year-on-year with revenue of Rs.164.76 crores and an improved operating margin of 9.66% in FY26 (up from 9.03% in FY25) and Improved Net Margin of 5.05% in FY26 (up from 2.91% in FY25). Operational momentum remains intact, with SSABTPL achieving 90% of its projected revenue by recording revenue of Rs.165 crores as of October 2026 and in line with the projected revenue of Rs.180 crores for FY27. The company maintains healthy capital structure, supported by an improved Tangible Net Worth (TNW) of Rs. 58.26 crores in FY26 (up from Rs.49.94 Crores in FY25) with a gearing ratio of 1.15x as per FY26 and debt protection metrics remained satisfactory, with an ISCR of 3.06 times (up from 2.26 times in FY25) and a DSCR of 2.18 times (up from 1.14 times in FY25) as of FY26.

However, the ratings are constrained by risks associated with the working capital–intensive nature of operations and elongated operating cycle in lean season due to the cyclical nature of the industry and exposed to intense competition in the seed industry from established players and Agro climatic risks including the dependence on monsoon patterns and weather variability, which can affect both yield and demand. In addition, the business is characterized by high inventory requirements due to the long production and storage cycle of seeds, which is inherent to the nature of operations as well as exposure to evolving government regulation and policies. 

The Stable outlook for Sri Sathya Agri Bio Tech Private Limited, reflecting expected improvements in operating performance, profitability, debt coverage and improved liquidity over the medium term supported by the promoter's experience and established relationship with farmers and distributors.

However, a revision to a negative outlook could occur if there is significant underperformance in revenue, deterioration in profitability, a weakening capital structure, deterioration in debt protection metrics or liquidity challenges resulting from an extended working capital cycle. 

The sanction terms include standard covenants generally stipulated for such facilities.

• Established operational track record and extensive industry experience, supported by experienced leadership :

  Sri Sathya Agri Bio-Tech Private Limited, incorporated in 2004, has established a presence of over 20 years in the seed production, breeding, and wholesale agricultural seed industry. Under the leadership of Chairman and Managing Director Mr. Kosana Rama Koteswara Rao, who brings 40 years of industry experience, has consistently helped the company to improve its performance despite intense competition from established market players supported by his son Mr. Ram Kosana continues the management succession for the company. Furthermore, the management established strong relationships with its dealers, financial institutions and 1000+ distributors all over India, demonstrating the credibility of the company and its promoter in mitigating operational risks as a going concern. 

• Improving scale of operations with improved profitability margins, satisfactory debt protection metrics and adequate liquidity :

  The company’s operating scale improved by ~37% Y-o-Y, with revenue reaching Rs. 165 crores in FY26 compared to Rs. 102.67 crores in FY25, achieving a CAGR of 31% over the last three years driven by increased domestic sales and a diversified product mix. As of Oct 2026, the firm recorded revenue of Rs.165 crores with improved operating profitability. The operating margin stood at 9.66% in FY26 compared to 9.03% in FY25, while PAT reached Rs. 8.32 crores in FY26 compared to Rs. 2.98 crores in FY25, with a net margin of 5.05% (up from 2.91% in FY25). For the full year FY27, the company is expected to achieve revenue of Rs.180 crores with an EBITDA of Rs. 20.26 crores (11.31% OPM) and a PAT of Rs. 10.77 crores (5.99% net margin). Debt protection metrics remained satisfactory, with an ISCR of 3.06 times (up from 2.26 times in FY25) and a DSCR of 2.18 times (up from 1.14 times in FY25) as of FY26. Liquidity remains adequate, as EBITDA is sufficient to cover interest and finance charges and net cash accruals are sufficient to cover CPLTD, supported by a current ratio of 1.52 times in FY26. 

• Diversified product portfolio and Research and Development capabilities :

  SSABTPL has developed strong capabilities in plant breeding and research, particularly in the seed segment. The company commenced its high-value, low-volume hybrid crop-focused R&D activities – such as cotton, paddy & maize—with the objective of developing seed varieties suited to diverse agro-climatic conditions across India, successfully developing varieties catering to different segments and regions. Over the years, SSABTPL has established itself as a leading Sathya Seeds brand in the Indian Cotton seed market. While BT Cotton seeds remain the company's key product segment, SSABTPL has also diversified its product portfolio across various field and vegetable crops. Its product offerings include Sunflower, Paddy, Wheat, Maize, Redgram, Mustard, Jowar, Bajra, Chilly, and Vegetable seeds. The diversified portfolio enables the company to cater to a wider farmer base and reduces its dependence on a single crop segment.

  SSABTPL operates a 50-acre DSIR-recognized R&D farm in Guntur District, fully equipped with advanced biotechnology, seed testing laboratories, net houses, and disease/salinity screening facilities recognized by the Department of Scientific and Industrial Research (DSIR).

• Moderate capital structure, gearing and leverage metrics :

  The capital structure of SSABTPL is moderate, with Tangible Net Worth (TNW) improving year-on-year to Rs. 58 crores in FY26 compared to Rs. 49.94 crores in FY25. For a company with a topline of Rs.165 crores, the gearing ratio stood at 1.15 times compared to 0.94 times in FY25, reflecting a slightly stretched position due to increased debt. The leverage ratio stood at 2.02 times in FY26, slightly stretched compared to 1.73 times in FY25, indicating reliance on debt for working capital requirements due to the elongated working capital cyclical nature of the industry. Further reliance on debt is expected to increase, with total debt projected at Rs.88 crores in FY27 and a projected gearing ratio of 1.28 times, which is expected to result in stretched gearing and leverage ratios.

• Working capital intensive nature of operations and elongated operating cycle in lean season due to nature of the industry :

  SSABTPL is engaged in producing, breeding, developing, and commercializing high-yielding hybrid seeds for various crops, including hybrid Bt cotton, maize, paddy, jowar, sunflower, and vegetables.

  The seed business is inherently working capital-intensive, requiring significant inventory holding due to long production cycles and seasonality. Accordingly, inventory holding remained elevated at 267 days in FY26 (240 days in FY25). The working capital cycle remained elongated, with an operating cycle of 306 days as of FY26. This is primarily due to cash outflows for advances to growers (from February to April) and the concentration of annual revenue (60% to 70%) in Q1 and Q2 of every year during the peak Kharif sowing season.

  Furthermore, slow cash collections through Q3 and Q4 during the lean season result in working capital being locked up until the next growing season, creating an elongated operating cycle. This leads to a higher dependence on working capital financing, particularly during peak sowing seasons.

• Exposed to intense competition & susceptible to Agro climate and monsoon conditions :

  Like other Agro commodities, the seed industry is seasonal and largely dependent on the monsoon. Further, the vulnerability of crops to diseases, pests, and weeds exposes the company’s earnings to the risk of crop failures and disease outbreaks. However, the company’s pan-India presence provides partial insulation against region-specific agro-climatic risks. Additionally, intense competition from multinational companies and established Indian players may necessitate continuous research and development and the introduction of new products.

  The company’s operations remain susceptible to uncertainties inherent in the agricultural sector, such as dependence on the monsoon, weather fluctuations, and pest attacks. These factors can influence sowing decisions, farmer demand, and seed offtake, resulting in variations in revenue and inventory levels. Furthermore, the seed industry is competitive and fragmented, with the presence of large domestic players and MNCs, which can limit pricing flexibility and intensify competition. 

• Regulated industry :

  As a priority, agriculture-related cotton seed product enterprise, Sri Sathya Agri-Bio Tech Private Limited operates within a highly regulated environment where compliance with the Seeds Act is mandatory. The company must secure necessary licensing and distribution approvals from individual state governments, and all new hybrid seed varieties must undergo rigorous, state-specific trial runs and periodic testing before being introduced to the market. This includes stringent government oversight regarding biosafety and environmental standards for genetically modified (GM) technologies, particularly BT cotton.

  The economics of contract farming are heavily influenced by broader agricultural policies, specifically the Minimum Support Price (MSP) for commercial crops. While the government does not fix the procurement prices that seed companies pay to their contract growers, annual hikes of 5% to 8% in the MSP for commercial crops raise the opportunity cost of land for farmers. To keep contract farming attractive and retain its partnership with around 1000 contract growers and over 4,045 acres, SSABTPL must offer a premium of 20% to 30% over standard commercial crop returns, which increases direct seed production outlays.

  Furthermore, the company's finished goods pricing is governed by distinct regulatory frameworks depending on the crop category. Cotton seeds fall under the Cotton Seed Price (Control) Order, with the central government capping retail prices—typically between Rs.850 and Rs. 900 per 450g packet of BG-II. This price cap severely limits the company’s ability to pass on rising processing, delinting, and packaging costs to consumers, putting pressure on operating margins. Conversely, non-regulated crops, such as hybrid vegetables and maize, are subject to open-market pricing. This allows the company to adjust prices to absorb inflation, higher grower premiums, and operational expenses, ultimately yielding stronger gross margins for these product segments.

The company’s ability to increase its scale of operations, improve profitability and margins, efficiently manage its working capital requirements with improved operating cycle along with adequate liquidity, debt protection metrics, gearing and strengthen overall credit profile would be the key rating sensitivities. 

Positive Rating Factors: 

• Sustained improvement in the revenue performance with Y-o-Y revenue growth with TOI more Rs.200 crores, supported by enhanced profitability with EBITDA margins exceeding 15%.
• A healthier debt profile, including Total Debt/TNW below 1.00x, TOL/TNW below 2x, debt protection metrics of DSCR and ISCR above 1.30 times and 3 times respectively along with improved liquidity indicator of current ratio above 1.50 times on a sustained basis.

 Negative Rating Factors: 

• The ratings may be downgraded if revenue declines by more than 10% Y-o-Y due to weaker demand or if profitability weakens, with EBITDA margins dropping below 6%. 
• A rising debt burden, accompanied by a decline in key ratios such as Total Debt to Tangible Net Worth (TOD/TNW) above 2 times, Current Ratio (CR), Interest Coverage Ratio (ISCR), and Debt Service Coverage Ratio (DSCR) falling below 1 time.

The liquidity position of Sri Sathya Agri Bio Tech Private Limited is adequate, supported by cash and cash equivalents of Rs.1.11 Crores in FY26, (up from Rs.0.18 Crores in FY25). EBITDA increased to Rs. 15.92 Crores in FY26 (up from Rs. 9.27 Crores in FY25), providing adequate coverage for interest and finance charges of Rs. 5.19 Crores. Net cash accruals improved to Rs.10.33 Crores in FY26 (up from Rs. 5.31 Crores in FY25), against the current portion of long-term debt (CPLTD) of Rs.4.04 Crores in FY26 and Rs.2.14 Crores in FY25. The average utilization of working capital facilities stands at around 92%, reflecting efficient use of sanctioned working capital limits. Liquidity is characterized by an adequate current ratio of 1.52 times, an ISCR of 3.06 times, a DSCR of 2.18 times and projected cash accruals of Rs.13.38 Crores against CPLTD of Rs. 5.74 Crores, along with adequate current and liquid assets. Additionally, liquidity further supported by the promoters with sufficient net worth are expected to continue extending support, if necessary, through unsecured loans to manage any cash flow mismatches. Based on these factors, the overall liquidity position is assessed as "Adequate." 

The company demonstrates an Adequate ESG profile based on its environmental, social, and governance practices.

Environmental (E): 

Sri Sathya Agri-Bio Tech Private Limited integrates environmental responsibility and statutory pollution standards directly into its operational model. Operating out of TSIIC (Telangana State Industrial Infrastructure Corporation)  Agro Processing Park in Banda Mailaram Village, Siddipet District, Telangana, the company occupies a sprawling facility across 12,613.93 square meters with a seed processing capacity of 10000 MT tonnes per annum. The unit operates under valid Consent to Establish (CTE) and Consent to Operate (CTO) clearances issued by the Telangana State Pollution Control Board (TSPCB). Its energy footprint is managed with a regulated maximum installed capacity of 498 HP (500 KVA- covering both regular and standby loads), maintaining balanced industrial resource management and continuous monitoring to minimize environmental impact across all seed processing and manufacturing workflows.

Social (S): 

The company fosters an inclusive, secure, and compliant workplace culture across its manufacturing operations. With an active workforce of 150 employees, the organization maintains a balanced demographic structure comprising 75% male and 25% female staff, promoting gender participation within the agro-industrial sector. Factory operations strictly comply with the Department of Factories, Government of Telangana (Registration/License No. 10587323, Application ID: FAM202400084844), ensuring that all statutory labor standards, occupational health safeguards, and workplace safety protocols are rigorously enforced to maintain an accident-free, protective working environment.

Governance (G): 

Strong ethical oversight, regulatory adherence, and board leadership form the core of the company’s governance framework. Registered under the Companies Act, the enterprise is steered by Chairman & Managing Director Mr. Kosana Rama Koteswara Rao—bringing over 40 years of agricultural seed  industry leadership—supported by a board of directors with decades of combined domain expertise in seed production and distribution networks. Sri Sathya Agri-Bio Tech operates with zero tolerance for fraud, benami transactions, or illicit trade practices. Financial transparency is maintained through strict compliance with Indian Accounting Standards (Ind AS), with accounts and regulatory disclosures independently verified and certified by statutory auditor N. Venkata Durga Rao (UDIN: 26210006IPOWDY5550).

Sri Sathya Agri Bio-Tech Private Limited (Company or SSABTPL) was incorporated on 28 July 2004 under the Companies Act, 1956/2013. It is based out of Hyderabad, Telangana, with its registered office located at Plot No 45-49, Sy No 53, Agro Processing Park, Bandamailaram, Siddipet (Dist), Hyderabad, Telangana, India, 502279 (CIN: U01122TG2004PTC043767).

The company operates in the seed production and distribution segment of the agriculture sector. It develops, produces, and commercializes high-yielding hybrid seeds for various crops, including hybrid BT cotton, maize, paddy, jowar, sunflower, and vegetables, delivering superior seeds across diverse agro-climatic conditions across India.

The company is under the leadership of Mr. Kosana Rama Koteswara Rao- Managing Director, supported by other directors and key managerial personnel.

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Not Applicable

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