| Extensive experience of the promoters in the logistics industry
Sattva Group was founded by Mr. S. Santhanam who brings over 5 decades of experience in transportation, logistics, and shipping. Prior to this, Mr. Santhanam had a long-standing career in Sanco Trans Limited at various senior-positions and was the key force behind the launch of Sanco CFS in 1986, the first private CFS in India. Mr. Santhanam has held senior positions at various trade bodies including President of Trailer Owners Association Madras, Vice President of the Madras Port Stevedores Association, Chairman of the Customs Sub Committee, President of Tamil Chamber of Commerce and Chairman of the Consultative Committee of City Chamber of Commerce. Currently, the business is looked after by his four sons; the logistics business is looked after by Mr. Narasimhan and Mr. Padmanabhan while Mr. Govindan manages cashew export business and Mr. Seshadri manages the construction and real estate business. The promoter’s experience in logistic industry has helped the company build healthy relationship with the port trusts/various associations along with its reputed customers like Ford India Private Limited, Hyundai Motor India Limited, JSW Steel Limited and Doosan Bobcat India Private Limited among others to ensure a steady flow of services and large offtake. Acuité believes that promoter’s extensive experience in logistic services would aid the business risk profile of the company over the medium term.
Growth in revenue, albeit moderation in operating profit margin:
Sattva group’s revenue improved to Rs.112.45 Cr. in FY2024, reflecting a 10.4 percent growth compared to previous year’s revenue of Rs.101.86 Cr. Further, in 8MFY25, the group has registered Rs.78.91Cr. of revenue, which is 9 percent higher than Rs.72.45 Cr. revenue registered during the same period in previous year. The operating profit margin has marginally declined in FY2024 to 13.35 percent from 14.89 percent in FY2023, due to lower margins in the handling segment. The warehousing segment yields better margins compared to handling segment. However, lower ware housing activity in FY2024 led to marginal decline in operating margins. Consequently, the PAT margin also deteriorated marginally to 3.76 percent in FY2024 from 4.87 percent in FY2023. Acuite anticipates moderate revenue growth for the group, while the operating margins are expected to remain within 13-15 percent range, as the management is expected to adjust the product mix to sustain the profitability.
Healthy financial risk profile:
Sattva group’s financial risk profile is healthy, marked by healthy networth, low gearing and moderate debt protection metrics. The networth of the group stood at Rs.126.27 Cr. as on March 31, 2024 compared to Rs.122.04 Cr. as on March 31, 2023. The improvement in networth is due to accretion of profits to the reserves. The gearing levels remained low at 0.37 times as on March 31, 2024. Further, the total outside liabilities to tangible networth (TOL/TNW) also remained low at 0.55 times as on March 31, 2024 against 0.53 times as on March 31, 2023. The gearing of the company is expected to improve further and remain low over the medium term on account of absence of any debt funded capex plans. The debt protection metrics stood moderate with DSCR and ICR of 1.36 times and 5.77 times respectively as on March 31, 2024. Debt to EBITDA also remained healthy at 3.06 times as on March 31, 2024 against 2.94 times as on March 31, 2023. Acuite believes that the financial risk profile of the company will remain healthy over the medium term due to its conservative leverage policy.
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| Moderately Intensive working capital operations:
The group’s working capital operations are moderately intensive as marked by Gross Current Asset (GCA) days of 252 days over the past three years. The high GCA days are on account of elevated debtors cycle and high other current assets portion in form of advance tax amount. Generally, the group allows 60-90 days’ credit period to its customers. However, due to economic slowdown during FY2024 the group has offered extended credit period to its customers in order to attract sales. Despite this, the dependency on the working capital facilities remained moderate. The fund based working capital facilities were utilized at an average of 54 percent during the past 12 months ending November 2024. Acuite believes that working capital operations of the group will likely remain moderately intensive on account of prolonged debtor days.
Susceptibility to economic slowdown and government regulations:
The group’s revenue growth remains susceptible to the global economic slowdown and the changes in the government’s policies on export-import trade. The variations in exim-trade volumes also impact the overall sales. However, the favourable long-term prospects for container traffic and the Group’s established relationships with all the major shipping lines along with its integrated presence in the logistic chain and port operations mitigate the risk to an extent.
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