Aries Agro Limited

AAL commenced commercial operations in 1969 and has a successful track record of more than four decades in micronutrients industry. The company is founded and managed by Mirchandani family, holding 52.66% equity stake in AAL as on March 31, 2019. Dr. Rahul Mirchandani, Chairman and Managing Director, spearheads the overall operations of AAL having more than two decades of experience in agrochemical industry. Diversified product portfolio catering to all stages of agricultural activities

The company manufactures and trades in wide range of products expanded over the years which include chelated micronutrients, specialty fertilizers, secondary nutrients and water soluble fertilizers, and currently, owns more than 65 brands. The product portfolio finds application at various stages of farming including application of nutrients during soil preparation, multi-stage usage of nutrients/fertilizers during the entire crop cycle (2-3 applications), and crop protection

The company’s strong distributorship emanates from strong network of more than 1,250 dealers, 7,000 distributors and 70,000 retailers making AAL’s products available across 2, 00,000 villages in India.

AAL sells its products to dealers/distributors who in turn offer credit period to the farmers as per the crop cycle, thus leading to high receivable days. On account of seasonality in sales and to ensure product loyalty, AAL holds a huge stock of inventory thus leading to high inventory days. Thus, AAL’s operations are working capital intensive as is evident from operating cycle 1 Complete definition of the ratings assigned are available at www.careratings.com and other CARE publications

AAL has two subsidiaries in UAE namely Golden Harvest Middle East FZC (GHM) and Amarak Chemicals FZC (Amarak). Operations in GHM ceased in FY16 due to change in duty structure. Operations in Amarak (step-down subsidiary of GHM), were disrupted in FY18 (no operations till December 2019) on account of challenges in sourcing of major raw material i.e. sulphur and on the lack of availability of power. An amount of Rs. 86.57 Crore (as on March 31, 2019) is outstanding as

AAL reported a Total Operating Income of Rs. 268.61 Crore in FY19 (decline of 8% in comparison to the previous year). The decline is mainly attributed to rainfall deficit and dampened farmer sentiment. AAL’s operations are highly dependent on agricultural activity in the country and thus directly linked to monsoon and climatic conditions. As is evident from the TOI, AAL’s scale of operations is modest. CARE notes that in 9MFY20 operating income has grown by 15% on a yoy basis although,

The debt composition of AAL mainly consists of working capital borrowings which is used to fund its operating cycle. Overall gearing stood at 0.81 times as on March 31, 2019 (0.93 times in March 31, 2018). The debt coverage indicators like Total Debt to GCA and Interest Coverage weakened during FY19 on account of high finance cost on back of persistently high debt coupled with lower cash accruals. Inherent risk of the industry along with intense competition

The industry derives sales from the agriculture sector which is highly dependent upon monsoons as well as fungal/pest attack on crops. One of the other major restraints to growth of the agriculture micronutrients market is the lack of awareness among farmers in developing countries regarding appropriate dosage and proper application of micronutrients, thereby limiting its demand. The company faces stiff competition from unorganized players in the market. The industry is