- Extensive experience of the promoters
BNFPL, promoted by Mr. Bobby and Mrs. Shiny Bobby, has more than a decade’s experience in the spices & oleoresins industry. The company was incorporated in 2001 and gradually expanded to the present total capacity of 3,000 metric tons per annum (MTPA) for spice oils and 5,000 MTPA for spice oleoresins at its plants situated in Kerala. BNFPL has competent management supported by a team of well qualified and experienced second line personnel. The promoter's experience in the spices and oleoresins industry has helped the company to forge healthy relationships with its suppliers and customers, to ensure a steady raw material supply and large offtake. The company has trade liaisons with customers in countries such as Vietnam, Sri Lanka, Morocco, Guatemala, etc. Exports generally account for around 70 percent of the total sales and the company exports to Europe, Russia, Middle East countries, Brazil & South Africa. Acuité believes that the promoter's extensive industry experience and established relationship with its customers and suppliers will aid BNFPL's business risk profile over the medium term.
- Improvement in operating performance in 9MFY2025 post moderation in FY2024
The operating income and profitability margin declined in FY2024 mainly on account of an unfavourable market for raw materials (i.e., black pepper, cardamom, chili) which are procured internationally. The operating income declined to Rs. 110.73 Cr. in FY2024 from Rs. 136.89 Cr. in FY2023. However, in 9MFY2025, it improved and stood at Rs.135.73 Cr. Further, the operating profit margin improved to ~14.79 percent in 9MFY25 from 12.95 percent in FY2024 and 16.75 percent in FY2023. Acuite believes that going ahead, the operating income and profitability of the company will improve in the near term.
- Healthy financial risk profile
The company’s financial risk profile is healthy, marked by a healthy net worth, low gearing and moderate debt protection metrics. The net worth of the company stood at Rs.66.58 Cr. and Rs.58.80 Cr. as on March 31, 2024, and 2023 respectively. The improvement in net worth is due to the accretion of reserves. The gearing of the company stood at 0.12 times as on March 31, 2024, against 0.42 times as on March 31, 2023. Debt protection metrics – interest coverage ratio and debt service coverage ratio moderated yet remained at moderate levels at 6.33 times and 2.73 times as on March 31, 2024, respectively, as against 10.15 times and 4.22 times as on March 31, 2023, respectively. The deterioration is on account of the decline in EBTIDA. TOL/TNW (Total outside liabilities/Total net worth) stood at 0.25 times and 0.54 times as on March 31, 2024, and 2023 respectively. The debt to EBITDA of the company stood at 0.57 times as on March 31, 2024, as against 1.08 times as on March 31, 2023. Acuité believes that the financial risk profile of the company will continue to remain healthy over the medium term in absence of any major debt-funded capital expenditure and healthy accruals.
|
- Working capital intensive operations
BNFPL’s working capital operations are intensive in nature, marked by high gross current Asset (GCA) at 184 days in FY 2024 as against 166 days in FY2023. The increase in GCA days is on account of increased inventory days. Inventory days stood at 109 days in FY2024 as against 32 days in FY2023. Debtor days stood at 52 days in FY2024 as against 59 days in FY2023. Subsequently, the payable period stood at 31 days in FY2024 as against 14 days in F2023 respectively.
- Susceptibility of margins with respect to volatility in raw materials prices due to government regulations and foreign exchange
BNFPL's operating profitability is susceptible to volatility in raw material prices of black pepper, cardamom, chili and other herbs and spices which are procured internationally, i.e.from Morocco, Guatemala, Vietnam, to name a few, and also locally. Also, since BNFPL is the into both exports and imports of spices, it is regulated by the government (SpicesBoardIndia), thereby exposing the certain degree of regulatory risks. The company also exports around 70-75 percent, which partially mitigates the foreign exchange fluctuation risk. The risk, however, remains as the company does not actively hedge its balanced foreign exchange exposure.
|
