By Nitin Yadav

India Ratings and Research (Ind-Ra) has affirmed Criyagen Agri & Biotech Private Limited’s (Criyagen) Long-Term Issuer Rating at ‘IND BB+’. The Outlook is Stable. The instrument-wise rating actions are as follows:

Instrument Type

Date of Issuance

Coupon Rate (%)

Maturity Date

Size of Issue (million)

Rating/Outlook

Rating Action

Term loan

-

-

December 2025

INR9.3 (reduced from INR15)

IND BB+/Stable

Affirmed

Fund-based working capital limits

-

-

-

INR120 (increased from INR70)

IND BB+/Stable/IND A4+

Affirmed

Proposed term loan*

-

-

-

INR150

IND BB+/Stable

Assigned

Proposed fund-based working capital limits*

-

-

-

INR20

IND BB+/Stable/IND A4+

Assigned

 

* unallocated

KEY RATING DRIVERS

Liquidity Indicator - Stretched: The ratings reflect Criyagen’s continued stretched liquidity with the average maximum use of the fund-based limits of 86% during the 12 months ended April 2021 with instances of overutilisation in June and August 2020. The company has capex plans of INR200 million; however, the funding is yet to be tied up. The company’s ability to complete the project within the estimated cost and timeline, along with generating adequate cash flows from the project will remain a key rating sensitivity. The company had cash and cash equivalents of INR2 million at FYE21 (FYE20: INR16 million). The company had availed moratorium on its working capital and long-term facilities over March-August 2020 under the Reserve Bank of India’s COVID-19 regulatory package scheme. Its working capital cycle elongated to 84 days in FY21 (FY20: 37 days, FY19: 73 days) on account of a decrease in the payable period to 179 days (FY20: 223 days, FY19: 198 days). FY21 financials are provisional in nature.

The affirmation reflects Criyagen’s continued small scale of operation despite a significant rise in the revenue to INR802.5 million in FY21 (FY20: INR488 million, FY19: INR337 million), due to an increase in the number of orders received through brand partnership with its key customer Coromandel International Limited (
‘IND AA+’/Stable), which constituted 43% of its total sales. The company achieved around INR180 million of revenue in April 2021.

The ratings continue to factor in Criyagen’s modest credit metrics. The interest coverage (operating EBITDA/gross interest expense) improved to 7.59x in FY21 (FY20: 3.5x, FY19: 1.83x) on account of an increase in the EBITDAR to INR53.35 million (INR37.96 million, INR35.78 million) and reduction in the interest expenses to INR7.08 million (INR10.84, INR10.08 million). However, the net leverage (total adjusted net debt/operating EBITDAR) deteriorated to 2.83x in FY21 (FY20: 1.86x, FY19: 4.21x), on account of an increase in the debt towards the end of the year to INR120 million (INR34.95 million, INR51.07 million). However, Ind-Ra expects the credit metrics to deteriorate over the medium term, owing to the planned capex of INR200 million, which is
  likely to be funded by a term loan of INR150 million and an unsecured loan of INR50 million. The agency will continue to monitor the capex progress and its impact on the credit metrics.

However, the ratings are supported by Criyagen’s healthy operating profitability with a return on capital employed of
14.9% in FY21 (FY20: 9.8%, FY19: 7.5%). However. the EBITDA declined to 6.70% in FY21 (FY20: 7.65%, FY19: 10.08%) on account of increase in raw material prices and freight expenses. Ind-Ra expects the margins to remain volatile over the medium term due to fluctuations in raw material prices. 

The ratings continue to benefit from the promoters’ a decade-long experience in the manufacturing of biochemical fertilisers.


RATING SENSITIVITIES

Positive: An improvement in the liquidity position, along with an increase in the scale of operations while maintaining the overall credit metrics, all on a sustained basis, could lead to a positive rating action.

Negative
Any deterioration in the scale of operations, liquidity along with the interest coverage reducing below 2.0x could be negative for the ratings.


COMPANY PROFILE

Incorporated in 2008, Criyagen manufactures bio fertilisers, phosphate rich organic manure and bio control agents.

FINANCIAL SUMMARY 

Particulars

FY21 (Provisional)

FY20

Revenue (INR million)

802.50

488.35

EBITDAR (INR million)

53.75

37.34

EBITDAR margin (%)

6.70

7.65

Gross interest coverage (x)

7.59

3.45

Net leverage (x)

2.83

2.47

Source: Criyagen, Ind-Ra


RATING HISTORY

Instrument Type

Current Rating/Outlook

Historical Rating/Outlook

Rating Type

Rated Limits (million)

Rating

24 September 2020

20 August 2019

Issuer rating

Long-term

-

IND BB+/Stable

IND BB+/Stable

IND BB-/Stable

Fund-based working capital limits

Long-term/Short-term

INR140

IND BB+/Stable/IND A4+

IND BB+/Stable/IND A4+

IND BB-/Stable/IND A4+

Term loan

Long-term

INR159.3

IND BB+/Stable

IND BB+/Stable

IND BB-/Stable


COMPLEXITY LEVEL OF INSTRUMENTS

Instrument Description

Complexity Indicator

Term loan

Low

Fund-based working capital limits

Low

For details on the complexity level of the instruments, please visit https://www.indiaratings.co.in/complexity-indicators.

 

SOLICITATION DISCLOSURES

Additional information is available at www.indiaratings.co.in. The ratings above were solicited by, or on behalf of, the issuer, and therefore, India Ratings has been compensated for the provision of the ratings. 

Ratings are not a recommendation or suggestion, directly or indirectly, to you or any other person, to buy, sell, make or hold any investment, loan or security or to undertake any investment strategy with respect to any investment, loan or security or any issuer.

ABOUT INDIA RATINGS AND RESEARCH

About India Ratings and Research: India Ratings and Research (Ind-Ra) is India's most respected credit rating agency committed to providing India's credit markets accurate, timely and prospective credit opinions. Built on a foundation of independent thinking, rigorous analytics, and an open and balanced approach towards credit research, Ind-Ra has grown rapidly during the past decade, gaining significant market presence in India's fixed income market. 

Ind-Ra currently maintains coverage of corporate issuers, financial institutions (including banks and insurance companies), finance and leasing companies, managed funds, urban local bodies and project finance companies. 

Headquartered in Mumbai, Ind-Ra has seven branch offices located in Ahmedabad, Bengaluru, Chennai, Delhi, Hyderabad, Kolkata and Pune. Ind-Ra is recognised by the Securities and Exchange Board of India, the Reserve Bank of India and National Housing Bank. 

India Ratings is a 100% owned subsidiary of the Fitch Group.

For more information, visit www.indiaratings.co.in.

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Applicable Criteria

Analyst Names

  • Primary Analyst

    Nitin Yadav

    Analyst
    India Ratings and Research Pvt Ltd DLF Epitome, Level 16, Building No. 5, Tower B DLF Cyber City, Gurugram Haryana - 122002

    Media Relation

    Ankur Dahiya

    Manager – Corporate Communication
    +91 22 40356121