India Ratings affirms 'IND AA' to NSC's Rs 500 million fund-based working capital

KOLKATA: India Ratings has affirmed National Seeds Corporation Limited's (NSC) Rs 500 million fund-based working capital limits at 'IND AA'. The rating continues to be supported by NSC's classification as a dependent public sector entity by the Indian government. The company's strategic policy is dictated by the government which also monitors and controls its finances. The rating is also underpinned by NSC's strong managerial and operational linkages with and robust financial supervision by the government of India.

NSC is the key seed supplier to Indian farmers and helps the government to achieve food security in India. During FY11, the corporation produced 1.807m quintals of foundation and certified seeds, a 20% rise over FY10. NSC is now concentrating on the production of non-cereals crop seeds such as oilseeds, pulses and vegetables, which have higher profit margins compared with paddy and wheat.

The government holds 100% of the total paid up share capital in NSC and has the power to appoint its directors. As of 31 March 2011, NSC's board comprised five directors, of which two directors are nominees of the government and two independent Directors are appointed by the government.

The company recorded an all-time-high turnover of Rs 6,333.4mn in FY11, a 35% increase over the previous year. However, the profit after tax (PAT) fell to Rs 373.8m in FY11 from Rs 521.8m in FY10 due to lower profit margins for crops like oilseeds and pulses.

NSC is the nodal agency which distributes seeds and mini-kits to farmers for the Integrated Scheme of Oilseeds, Pulses, Oil Palm and Maize (ISOPOM). During FY12, the subsidy for ISOPOM accounted for more than 83% of the subsidies received by NSC from the government.