The long-term and short-term rating on the credit instruments of the company stands at ‘CRISIL A’ and ‘CRISIL A1’, respectively.
CRISIL Ratings stated that the ratings have been put on watch with developing implications’ following the announcement that Board of Directors of Agro Tech have approved the acquisition of 100% of the issued and outstanding equity shares of Del Monte Foods Pvt. Ltd. (DMFPL) from their existing shareholders.
Post the completion of the transaction, DMFPL will become a wholly owned subsidiary of Agro Tech.
The transaction is expected to be closed in another 3-4 months post the completion of regulatory approvals. CRISIL Ratings will continue to monitor the developments in relation to the completion of this acquisition and will take the appropriate rating action post the completion.
The agency further said that the ratings reflect the company’s established position in the branded edible oil business, with growing contribution of the high-margin food business, and strong financial risk profile.
These strengths are partially offset by exposure to risks inherent in agriculture-based business and modest profitability, with significant sales coming from the competitive edible oil business.
Agro Tech has an established market position in the edible oil and branded food businesses in India; its primary brands are Sundrop, Crystal and ACT II. Over the past few years, the company has diversified its portfolio to focus on high-margin, value-added products. It has strengthened its position in the branded food market by introducing new products such as sweet corn, chocolate spread, extruded breakfast cereals, granola cereals and chocolate confectionery.
The scrip fell 1.47% to currently trade at Rs 924.10 on the BSE.