Press Release March 17, 2025 Ajinkya Chemtech Private Limited Rating Assigned

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
Bank Loan Ratings	31.00	ACUITE BB | Stable | Assigned	-
Total Outstanding	31.00	-	-
Total Withdrawn	0.00	-	-

Rating Rationale

Acuité has assigned long-term rating of 'ACUITE BB (read as ACUITE double B) on the Rs. 31.00 Cr. bank facilities of Ajinkya Chemtech Private Limited (ACPL). The outlook is ‘Stable’.   Rationale for Rating The rating assigned reflects the established track record and industry experience of the directors of the company in this line of business. The rating also factors in the moderate working capital operations of the company. However, the rating is constrained by moderate scale of operations and margins, below average financial risk profile and regulatory risk.

About the Company

Incorporated in 1994, Ajinkya Chemtech Private Limited (ACPL) is engaged in the manufacturing of organic farming input solutions like Bactericide, Nematicides, Miticides, Plant Growth Regulators, Organic Fertilizers like Granules & Seaweed Extract, Micronutrients & Water-Soluble Fertilizers. ACPL sells ~60 per cent of products under its own brands and rest to the wholesalers. ACPL sells through 300-400 dealers’ network across various states. ACPL is promoted by Mr. Harshanan V Patil and Mrs. Manjusha H Patil. The company has a manufacturing unit located at Pune.

Unsupported Rating

­Not Applicable

Analytical Approach

Acuité has considered standalone business and financial risk profile of ACPL to arrive at the rating.

Key Rating Drivers

Strengths

Experienced management and long operational track record ACPL was incorporated in 1994 and promoted by Mr. Harshanan V Patil and Mrs. Manjusha H Patil.  The company is engaged in manufacturing of organic farming input solutions which are used to to improve the crop yield in the farms, improve quality and growth of the crop, protect the soil from erosion and increased disease resistance of crop. The promoter of the company has been engaged in the same industry for around three decades. Further, the company have been supported by qualified management. The extensive experience of the promoters is reflected through the established relationship with its customers and suppliers. Acuite believes, the company will benefit from the extensive experience of the promoters in maintaining long standing relations with suppliers and customers. Moderate working capital management The working capital operations of the company are moderate in nature, marked by a GCA of 129 days in FY 2024, as compared to 153 days in FY 2023. Debtor days stood at 68 days as of March 31, 2024, compared to 97 days as of March 31, 2023. The inventory days for the company stood at 41 days in FY 2024, compared to 33 days in FY 2023. Additionally, creditor days stood at 1 day in FY 2024, compared to 3 days in the previous year. Furthermore, reliance on working capital limits remained high, with utilization at around 91 percent over 12 months ending January 2024. Acuité believes that the working capital operations of the company will continue to remain moderate.

Weaknesses

Moderate scale of operations and profitability margins ACPL has moderate scale of operations as indicated by operating income of Rs. 119.51 Cr. for FY2024, compared to Rs. 77.50 Cr. for FY2023 and Rs. 64.32 Cr. for FY2022. The company recorded a revenue of Rs.113.07 Cr. in 10M FY2025. The operating margins remained moderate but declined to 2.73 percent in FY2024 from 3.38 percent in FY2023 on account of heavy marketing expenses. The Profit After Tax (PAT) margins deteriorated to 0.19 percent in FY2024 as against 0.68 percent in FY2023. ACPL is set to launch 21 new products to its existing pipeline by April 2025, this would help improve the operating scale of the company to an extent however the additional product launch cost is expected to put pressure on margins further. Acuité believes that the company's ability to register significant growth in its revenues while improving its profitability would be key a rating sensitivity. Below Average financial risk profile The financial risk profile of ACPL is below average, marked by low net worth, high gearing, and average debt protection metrics. The net worth of the company stood at Rs. 8.97 Cr. as of March 31, 2024 compared to Rs. 7.51 Cr. as of March 31, 2023, this includes Rs. 0.84 Cr. of unsecured loans from promoter’s considered as part of quasi-equity in FY24 based on the undertaking given by the company. The gearing of the company is high at 3.18 times as of March 31, 2024, compared to 2.78 times as of March 31, 2023. Further, debt protection metrics are average, with the debt service coverage ratio (DSCR) at 0.93 times in FY 2024, compared to 1.32 times in the previous year. Total outside Liabilities/Tangible Net Worth (TOL/TNW) stood at 3.84 times as of March 31,2024, compared to 3.46 times as of March 31, 2023. The Net Cash Accruals to Total Debt (NCA/TD) stood at 0.01 times in FY 2024, compared to 0.03 times in the previous year. Acuite believes, the financial risk profile of the company would remain below average on account of low net worth base. Regulatory Risk The fertilizer industry is highly regulated with profitability largely dependent on government policies with regard to subsidy and pricing. Any changes in regulations, may impact the profitability of the company adversely.

Rating Sensitivities

Consistent Improvement in scale of operation and profitability margins. Deterioration in working Capital cycle Changes in Financial Risk Profile

Liquidity Position

Stretched

The company's liquidity position is stretched, marked by low net cash accruals of Rs. 0.29 Cr. in FY2024 against its debt obligations of around Rs. 0.48 Cr. Further, the company is expected to generate adequate cash accruals in the range of Rs. 1.13 – 2.04 Cr., compared to maturing repayment obligations of around Rs. 0.24 Cr. – 0.49 Cr. over the medium term. The cash and bank balance as of FY24 stood at Rs. 0.02 Cr., compared to Rs. 1.01 Cr. in FY23. The working capital limit utilisation is high at 91 per cent ending January 2025.

Outlook

­Stable

Other Factors affecting Rating

­None

Key Financials

Particulars	Unit	FY 24 (Actual)	FY 23 (Actual)
Operating Income	Rs. Cr.	119.51	77.50
PAT	Rs. Cr.	0.23	0.53
PAT Margin	(%)	0.19	0.68
Total Debt/Tangible Net Worth	Times	3.18	2.78
PBDIT/Interest	Times	1.24	1.47

Status of non-cooperation with previous CRA (if applicable)

­None

Interaction with Audit Committee anytime in the last 12 months (applicable for rated-listed / proposed to be listed debt securities being reviewed by Acuite)

Not applicable

Any other information

­None

Applicable Criteria

• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm • Manufacturing Entities: https://www.acuite.in/view-rating-criteria-59.htm • Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm

Note on complexity levels of the rated instrument

­In order to inform the investors about complexity of instruments, Acuité has categorized such instruments in three levels: Simple, Complex and Highly Complex. Acuite’s categorisation of the instruments across the three categories is based on factors like variability of the returns to the investors, uncertainty in cash flow patterns, number of counterparties and general understanding of the instrument by the market. It has to be understood that complexity is different from credit risk and even an instrument categorized as 'Simple' can carry high levels of risk. For more details, please refer Rating Criteria “Complexity Level Of Financial Instruments” on www.acuite.in.

Rating History :

­Not Applicable

Annexure - Details of instruments rated

Lender’s Name ISIN Facilities Date Of Issuance Coupon Rate Maturity Date Quantum (Rs. Cr.) Complexity Level Rating Bank of Maharashtra Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 31.00 Simple ACUITE BB | Stable | Assigned

Contacts

Mohit Jain Senior Vice President - Rating Operations Amay Gupta Analyst - Rating Operations	Contact details exclusively for investors and lenders Mob: +91 8591310146 Email ID: analyticalsupport@acuite.in

About Acuité Ratings & Research

Acuité is a full-service Credit Rating Agency registered with the Securities & Exchange Board of India (SEBI). The company received RBI Accreditation as an External Credit Assessment Institution (ECAI) for Bank Loan Ratings under BASEL-II norms in the year 2012. Acuité has assigned ratings to various securities, debt instruments and bank facilities of entities spread across the country and across a wide cross section of industries. It has its Registered and Head Office in Kanjurmarg, Mumbai. Disclaimer: An Acuité rating does not constitute an audit of the rated entity and should not be treated as a recommendation or opinion that is intended to substitute for a financial adviser's or investor's independent assessment of whether to buy, sell or hold any security. Ratings assigned by Acuité are based on the data and information provided by the issuer and obtained from other reliable sources. Although reasonable care has been taken to ensure that the data and information is true, Acuité, in particular, makes no representation or warranty, expressed or implied with respect to the adequacy, accuracy or completeness of the information relied upon. Acuité is not responsible for any errors or omissions and especially states that it has no financial liability whatsoever for any direct, indirect or consequential loss of any kind, arising from the use of its ratings. Ratings assigned by Acuité are subject to a process of surveillance which may lead to a revision in ratings as and when the circumstances so warrant. Please visit our website (www.acuite.in) for the latest information on any instrument rated by Acuité. Please visit https://www.acuite.in/faqs.htm to refer FAQs on Credit Rating. Note: None of the Directors on the Board of Acuité Ratings & Research Limited are members of any rating committee and therefore do not participate in discussions regarding the rating of any entity.