Shivalik Crop Sciences Pvt Ltd (erstwhile Shivalik Agro Chemicals)

Brickwork Ratings upgraded the ratings for the Bank Loan Facilities of Rs. 3.60 Crs. of Shivalik Crop Sciences Pvt Ltd (erstwhile Shivalik Agro Chemicals)

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (28 Mar 2022)	Present
Fund Based	9.00	3.60	Long Term	BWR BB+ /Stable ISSUER NOT COOPERATING* /Downgrade	BWR BBB /Stable removal from ISSUER NOT COOPERATING* category/Upgraded
Grand Total	9.00	3.60	(Rupees Three 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
Note: *Issuer did not cooperate; based on best available information.

RATING ACTION / OUTLOOK

BWR upgrades the long term rating to BWR BBB with Stable "Outlook" for the bank loan facilities of Shivalik Crop Sciences Pvt Ltd (erstwhile Shivalik Agro Chemicals).

The rating draws strength from the extensive experience of the promoters with long-standing scale of operations and modest financial risk profile. However, the rating is constrained on account of competition in the industry and inherent risk associated with the agricultural sector.

The rating outlook has been assigned as "Stable" as BWR believes that Shivalik Crop Sciences Pvt Ltd`s business risk profile will be maintained over the medium term. The 'Stable' outlook indicates a low likelihood of rating change over the medium term. The rating outlook may be revised to 'Positive' in case there is an improvement in revenues and profit margins. The rating outlook may be revised to 'Negative' if there is any deterioration in financial risk profile or liquidity issues.

KEY RATING DRIVERS

Credit Strengths:

Extensive experience of the promoters with long standing scale of operations : :
The promoters of the company are qualified and have an extensive experience of over three decades in the agrochemicals industry enabling the entity to develop and introduce a vast portfolio of agrochemicals. The company was initially incorporated as a partnership firm in 1974 and have sailed smooth through numerous business cycles.
Modest financial risk profile : :
The operating income increased by 4.34% from Rs. 227.09 Cr in FY21(A) to Rs. 236.96 Cr in FY22(A) on account of increase in unit price. The firm generated revenue to Rs. 249.75 Cr during April'2022 to February’2023 against the projection of Rs. 250 Cr. for the year FY23. The PAT increased from Rs. 20.21 Cr in FY21(A) to Rs. 26.33 Cr in FY22(A).The tangible Net Worth increased from Rs. 85.19 Cr. in FY21(A) to Rs. 111.52 Cr. in FY22(A). D/E slightly deteriorated from 0.02 times in FY21(A) to 0.03 times in FY22(A). Operating profit margin decreased from 12.34% in FY21(A) to 11.69% in FY22(A) & Net Profit Margin increased from 8.90% in FY21(A) to 11.11% in FY22(A). Interest Service Coverage Ratio (ISCR) is maintained at 1371.59 times in FY22(A) Debt Service Coverage Ratio (DSCR) is maintained at 1403.08 times in FY22(A). The current ratio increased from 1.75 times in FY21(A) to 2.42 times FY22(A).

Credit Risks:

Competition in the Industry: :
Entry barriers in the industry are low on account of limited capital and technology requirement and also low differentiation in the end product leading to intense competition and limiting the pricing power resulting in low profitability.
Inherent risk associated with the agricultural sector : :
The industry is highly regulated with different registration processes and is subject to various environmental rules and regulations. The entity GSP will remain exposed to inherent risks associated with the competitive and regulated agrochemicals industry.

ANALYTICAL APPROACH - Standalone

The company doesn't have any subsidiary or any group company. BWR has principally relied on the standalone audited financial results of FY22, projected financials for FY23 and FY24 and publicly available information/ clarifications provided by the company’s management.

RATING SENSITIVITIES

Going forward, the ability of the company to improve its revenues, and financial risk profile would remain the key rating sensitivities.

Positive triggers

Increase in scale of operations and profits, while maintaining the net profit margin and PAT on a consistent basis.
Increase in the proportion of non subsidy business and maintaining the operating efficiency of the company.

Negative triggers

Decline in operating profit margin due to largely increase in operating expenses.

LIQUIDITY INDICATORS - Adequate

Company is not have any group concerns/ associates or any subsidiary.

The company has Cash & Bank Balance Rs 8.80 Cr in FY 22 (A). The current ratio is 2.42 times in FY22(A). Average OD utilization from June’22 to February’23 is 5.38%. The conversion cycle is 76 days in FY22(A), ISCR is 1371.59 times in FY22(A). DSCR is 1403.08 times in FY22(A). Long term borrowing is zero in FY22(A). There is no long term borrowings projected for FY23.

ABOUT THE ENTITY

Shivalik Crop Sciences Pvt Ltd (‘The company’ or ‘SCSPL’) formerly known as Shivalik Agro Chemicals was incorporated as a partnership firm established in 1974 and changed its constitution as a Private Limited Company on May 14, 2016. The company is engaged in manufacturing of agrochemicals at their two plants located at Mohali, Punjab and Samba, Jammu & Kashmir. The company has 4 directors, Mr. Uday Partap Singh Kairon, Mr. Navkiran Kairon, Mr. Beant Singh and Mr. Komaldeep Singh. The organisation was engaged in formulation of pesticides and was mainly supplying Government agencies under annual rate contract. Gradually, it has added more molecules of Insecticides, Herbicides, Fungicides and Weedicides. The company also entered into Private market in 1988, besides supplying to government. The company supplies its products only through distributors and dealers and not directly to farmers. SCSPL has 15 warehouses across India. They are not in trading business.

The capacity was increased from 8300MT to 17425 MT in FY19-20. The capacity utilization increased from 66.17% in FY21(A) to 74.85% in FY22(A).

They are having 7000 distributers throughout the country. The company only purchases its raw material across the India. It is informed by the company that there is no impact on supply chain on account of Ukraine war but the prices have hardened to some extent.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 21-22 (Audited)	FY 20-21 (Audited)
Operating Revenue	Rs.Crs.	236.96	227.09
EBITDA	Rs.Crs.	27.71	28.03
PAT	Rs.Crs.	26.33	20.21
Tangible Net Worth	Rs.Crs.	111.52	85.19
Total Debt/TNW	Times	0.03	0.02
Current Ratio	Times	2.42	1.75

KEY COVENANTS OF THE FACILITY RATED

Nil.

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

Nil.

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

Facilities	Current Rating (2023)			2022		2021		2020
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	3.60	BWR BBB/Stable (removal from ISSUER NOT COOPERATING* category/Upgraded)	28Mar2022	BWR BB+ Stable (ISSUER NOT COOPERATING* /Downgrade)	01Mar2021	BWR BBBStable (Reaffirmation )	19Feb2020	BWR BBB Stable (Upgrade)
Grand Total		3.60	(Rupees Three 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
Mukul Thakur Rating Analyst mukul.t@brickworkratings.com	V.K.Kukreja Associate Director - Ratings Board : +91 11 2341 2232 kukreja.vk@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

Shivalik Crop Sciences Pvt Ltd (erstwhile Shivalik Agro Chemicals)

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	State Bank Of India (SBI)	Over Draft - Sanctioned	3.60	_	3.60
Total			3.60	0.00	3.60
TOTAL (Rupees Three Crores and Sixty lakhs Only)

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