Crisil Ratings stated that the rating continues to reflect the established presence of the company in the agrochemicals market and healthy financial risk profile.

These strengths are partially offset by large working capital requirement and exposure to risks inherent in the agrochemicals industry.

The agency further said that growth in revenue and improvement in operating margins leading to accruals of over Rs 150 crore on a sustained basis, and improvement in working capital cycle with debtor collection and inventory rationalization, could lead to a positive rating action

Factors that would result in a downward rating action include decline in revenue or operating margin remaining below 9% resulting in lower-than-expected accruals; a further increase in working capital requirement; a larger-than-expected debt-funded capex or acquisition; or a more-than-expected dividend pay-out, weakening the financial risk profile, particularly liquidity.

Heranba Industries (HIL) manufactures formulations and active ingredients for insecticides, fungicides, and herbicides at its three units in Vapi, Gujarat.

The scrip declined 1.49% to currently trade at Rs 265 on the BSE.

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