Nova AgriTech Limited

Nova AgriTech Limited -IPO DETAILS 

Company Overview 

Nova AgriTech is an agri-input manufacturer specializing in soil health management, crop nutrition, and crop protection. The company provides technology-based solutions and nutritionally balanced products with a focus on ecological sustainability. In addition to soil management and crop nutrition, Nova AgriTech offers bio-stimulants, bio-pesticides, and integrated pest management and crop protection products. The company has a strategic agreement with a Taiwanese company for the import and distribution of the formulation of Emamectin Benzoate Technical 95% in India for a period of 5 years. Emamectin Benzoate is an insecticide used to control pests in various crops, vegetables, and cotton. 

Nova AgriTech operates through a vast dealer network comprising 11,722 dealers across Andhra Pradesh, Telangana, Maharashtra, Madhya Pradesh, Karnataka, Rajasthan, and several other states. The majority of the company's revenue is generated from the state of Telangana, with Andhra Pradesh and Karnataka contributing significant proportions. The company has dedicated research and development facilities to support the development of new products, with an on-site process improvement and incubation center. Nova AgriTech has taken up 67.13 acres of land in Andhra Pradesh for its R&D initiative to evaluate the efficacy of its products on various crops. 

Objective of the IPO 

Here are a few quick reasons why company is going public:  

1. Rs. 14.2 Crore: Investment in Nova Agri Sciences Pvt Ltd for the establishment of a formulation plant. 

2. Rs. 10.48 Crore: Capital Expenditure for the expansion of the existing plant. 

3. Rs. 26.65 Crore: Funding the working capital requirements of the Company. 

3. Rs. 43.35 Crore: Funding the working capital requirements of its subsidiary, Nova Agri Sciences Pvt Ltd. 

Company Financials 

Key Performance Indicator 

Pros 

1. Nova AgriTech provides a comprehensive range of products related to crop protection and soil nutrition, positioning itself as a one-stop solution for farmers.  

2. The company operates a robust distribution network comprising 11,722 dealers, with a significant number actively selling its products in the fiscal year 2023 (FY23). 

3. The NKSK program is a farmer outreach initiative that conducts grassroots-level workshops, engaging with farmers to understand their challenges and provide customized solutions. 

4. The company is led by experienced professionals, including promoter Kiran Kumar Atukuri, who brings over 23 years of expertise in agri-chemicals, seeds, and fertilizer companies. 

Cons 

1. Over the last three years, the company has predominantly reported negative net cash flows. Although there was a positive cash flow reported in one instance, it was driven by using cash to pay off borrowings for deleveraging the balance sheet. 

2. The nature of the business requires Nova AgriTech to constantly apply for licenses for each product it sells. With a product portfolio consisting of 720 items and the potential for further expansion, the company may face higher costs associated with obtaining and maintaining licenses. 

3. Being a supplier of products to farmers, Nova AgriTech is exposed to the risk of high defaults, especially in unfavorable farming years. As of H1FY24, the company had trade receivables of Rs. 129 Crore, of which it made provisions for approximately 10%. This indicates an expectation that a portion of the receivables may not be recovered. 

4. The agricultural sector relies on government support in the form of subsidies. Any alterations to regulations or policies may lead to a reduction or elimination of subsidies, potentially impacting Nova AgriTech's business significantly. 

How to Apply for this IPO 

1. Go to https://ipo.adityatrading.in/ 

2. Enter your Client ID 

3. Enter the OTP received in your registered mobile number. 

4. Choose the IPO and click on apply button. 

5. Enter the UPI ID, Quantity, and Cut off the price. 

6. Click on submit button 

7. Confirm the mandate request received on your phone by entering the UPI Pin. 

You can also watch our youtube video on “How to Apply on IPO” by clicking on the link “https://www.youtube.com/watch?v=1qOI8dCpl1I&ab_channel=ATS”