Press Release UTTAR PRADESH BEEJ VIKAS NIGAM August 31, 2023 Rating Assigned

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
Bank Loan Ratings	100.00	ACUITE A- | Stable | Assigned	-
Total Outstanding Quantum (Rs. Cr)	100.00	-	-

Rating Rationale

Acuite has assigned its long term rating of "ACUITE A-"(read as ACUITE A minus) on the bank facilities of Rs.100 Crore of Uttar Pradesh Beej Vikas Nigam (UPBVN). The outlook is 'Stable'. Rationale for rating The rating assigned is driven by comfort from Government of Uttar Pradesh (GoUP) through more than 90% shareholding and its strategic importance to the GoUP for catering to the seed requirement of the state by supplying seeds to Agriculture department of the state. The rating also considers the support extended by the UP state through infusion of equity in the company. Further, the rating factors in the moderate  revenue base of the company which stood at Rs.184.48 Crore in FY23 against Rs.183.20 Crore in FY 22 and Rs 185.02 Crore in FY21. The rating also favourably factors in the strong liquidity position of the firm with very minimal utilization in short term bank finance and unencumbered cash and bank balance of Rs 75.57 Cr in FY 23. The financial policy of the firm is conservative with nil gearing as on 31st March 2023 and strong debt protection metrics. However, these strengths are partially offset by intensive working capital management reflected by high Gross Current Asset (GCA) days of 599 days as on 31st March 2023 on account of stretched receivables and advances to suppliers.

About the Company

Uttar Pradesh Beej Vikas Nigam is Incorporated in 2002 and is a Govt of Uttar Pradesh owned company and located at Lucknow (Uttar Pradesh). The directors of company are Mr. Satyendra Kumar Singh, Mr. Rajeshwar Singh and Mr. Jitendra Kumar Tomar. Uttar Pradesh Beej Vikas Nigam Limited is engaged in Production of seeds, growing of crops and horticulture.

Analytical Approach

Acuité has taken the standalone view on the business and financial risk profile of Uttar Pradesh Beej Vikas Nigam (UPBVN).

Key Rating Drivers

Strengths

Strategic Importance to GoUP The UPBVN is a 90% owned entity of GoUP and holds a strategic importance to GoUP in terms of Agriculture requirements of the state. The company is engaged in production of seeds, growing of crops and horticulture. The company caters to the seed requirements of UP Agriculture department. The directors of the company are Mr. Satyendra Kumar SIngh, Mr. Rajeshwar Singh and Mr. Jitendra Kumar Tomar who have more than two decades of experience in agriculture industry. The company sells to dealers mostly to S & F and Agri junction. The EBITDA margins of the company is growing on y-o-y basis which stood at 6.55% in FY23 against 4.16% in FY22. Acuité believes that the UPBVN, being a strategically important to GoUP,  shall continue to benefit from Operational and management support of GoUP time to time. Augmentation in business risk profile supported by stable operations The business risk profile of the company has witness continuous improvement over last two years on account of stabilisation in its operations. In FY23, the company achieved revenue of Rs.184.48 crore against Rs.183.20 Crore in FY 22. Company gets requirements of seeds from UP agriculture department a year earlier and accordingly the entire requirement of the year are met as the business is completely depending upon the market demand. Furthermore, the operating margin of the company improved to 6.55% in FY23 against 4.16% in FY2022. The growth was majorly supported by consistent process optimization and reduction in operational expenses. Also, the company has also reported PAT of Rs.11.10 Crore in FY2023 against Rs.4.62 Crore in FY2022. Acuité believes that the scale of operations of the company is likely to show improvement over the medium term. Healthy Financial Risk Profile The Company’s financial risk profile is healthy marked by a moderate Net worth, low gearing and comfortable debt protection metrics. The company’s net-worth stood at Rs.52.83 Crore as on 31st March 2023 against Rs.41.73 Crore as on 31st march 2022. The increase in net worth is majorly on an account of accretion of profit to the reserves. Further, the company  has not availed any term loan from the bank and utilization in short term bank finance also remains very minimal resulting in 0 times debt to equity ratio. The interest coverage ratio and debt service coverage ratio of the company stood at 7.63 times as on 31st March 2023 respectively against 2.50 times as on 31st March 2022 respectively. Also, the TOL/TNW ratio stood at 5.83 times as on 31st march 2023 against 7.49 times as on 31st March 2022. Acuite believes that financial risk profile may continue to remain healthy with no plans of the company to avail additional debt.

Weaknesses

Working Capital Intensive Operations The working capital operations of the company are intensive reflected through high GCA days at 599 days as on 31st march 2023 against 632 days as on 31st March 2022. The high GCA days are on an account of debtor days’ which stood at 197 days as on 31st march 2023 against 203 days as on 31st March 2022. As company’s working capital cycle is different from other industries as commonly known they have two seasons namely Kharif and Rabi. The percentage of collection in advance received is during season and remaining realizations are done after season with extended standard credit period resulting in higher receivable days. On the other hand, the creditor days of the company stood at 228 days as on 31st march 2023 against 225 days as on 31st March 2022. Acuite believes that the operations of the company may continue to remain working capital intensive on an account of nature of the agriculture industry.

Rating Sensitivities

Higher-than-expected Improvement in the scale of operations and profitability as envisaged. Any deterioration in working capital cycle.

All Covenants

­None.

Liquidity Position

Strong

The liquidity profile of the company is strong. The company does have enough net cash accruals in FY23 which stood at 11.57 Crore against no debt repayments obligation. Going forward, the company is expected to generate adequate cash accruals against no debt repayments in near future. The cash and bank balance stood at Rs.75.57 Crore as on 31st March 2023 against Rs.80.83 Crore as on 31st march 2022. The current ratio of the company stood at 1.16 times as on 31st March 2023 against 1.12 times as on 31st March 2022. The average bank limit utilization of the company stood at 20.84% in last 12 months ending March 2023.

Outlook: Stable

Acuité believes that UPBVN rating will maintain a 'Stable' outlook over the medium term on account of its strategic importance to GoUP. The outlook may be revised to 'Positive' if the group registers sustainable improvement in sales volumes and higher-than expected revenues and profitability. Conversely, the outlook may be revised to 'Negative' in case UPBVN registers lower-than expected revenues and profitability or any significant stretch in its working capital management leading to deterioration of its financial risk profile and liquidity

Other Factors affecting Rating

­None

Key Financials

Particulars	Unit	FY 23 (Actual)	FY 22 (Actual)
Operating Income	Rs. Cr.	184.48	183.20
PAT	Rs. Cr.	11.10	4.62
PAT Margin	(%)	6.01	2.52
Total Debt/Tangible Net Worth	Times	0.00	0.00
PBDIT/Interest	Times	7.63	2.50

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

­None

Any other information

­Not available.

Applicable Criteria

• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm • Entities In Manufacturing Sector:- 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 :

­None

Annexure - Details of instruments rated

Lender’s Name ISIN Facilities Date Of Issuance Coupon Rate Maturity Date Quantum (Rs. Cr.) Complexity Level Rating UCO Bank Not Applicable Cash Credit Not Applicable Not Applicable Not Applicable 100.00 Simple ACUITE A- | Stable | Assigned

Contacts

Analytical Details	Contact Details
Aditya Gupta Vice President - Rating Operations Tel: 022-49294041 aditya.gupta@acuite.in Depanshi . Analyst - Rating Operations Tel: 022-49294065 depanshi.mittal@acuite.in	Contact Details Mob: +91 8069217456 Email ID: analyticalsupport@acuite.in Tel: 022-49294011 rating.desk@acuite.in

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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.