| Established track record of operations and experienced management
Coimbatore-based, Havukal Group (HG) was established in 1976; thus, the group has an operational track record of over four decades in the tea industry. The promotors of the group, Mr. Anandkumar Rengaswamy, Mr. Ramaswami Nandakumar, Mr. Thangavelu Jayaraman, Mr. Karthik Narayan Jayaraman, Mr. Thangavelu Raghuraman and R. Ajaykumar have over three decades of experience in the aforementioned line of business. The long track record of operations and experience of the management have helped the group develop healthy relationships with its customers. Acuite believes that the group will continue to benefit from its established track record of operations and experienced management.
Efficient working capital operations
The group’s working capital operations are efficiently managed marked by Gross Current Asset days (GCA) of 62 days in FY25 against 64 days in FY24. The inventory days stood at 28 days in FY25 against 31 days in FY24. The inventory holding policy depends on the market conditions. Generally, the group maintains inventory holding maximum of 1 month. The debtors’ days stood at 20 days in FY25 as against 22 days in FY24, which is corresponding to normal terms with the customers. The average fund-based bank limit utilization is 47.75 percent for Havukal Tea and Produce Company Private Limited and 46.65 percent for Maris Agro Products Private Limited during the last 6 months period ending February 2026.
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| Decline in scale of operations with subdued profitability
The group has witnessed the decline in the revenue from operations by ~13.93 percent which stood at Rs. 46.52 Cr. in FY25 against Rs. 54.05 Cr. in FY24 due to a decline in orders. The group faced difficulty in procuring raw materials, due to intense competition, the group sometimes purchases raw materials at higher rates. The operating margins declined to (0.92) percent in FY25 from 2.87 percent in FY24. The decline in revenue and operating margins is primarily due to increased wages in the tea division albeit absence of any increase in tea price realization. Therefore, PAT margin stood at (6.36) percent in FY25 as against (3.23) percent in FY24. The group has achieved the revenue of ~Rs. 50.33 Cr. till February 26, 2026 and expected to close fiscal year ~ Rs. 53.00- 58.00 Cr. The group has incurred a net loss of Rs. (1.66) Cr. till February 26, 2026 due to higher depreciation costs and employee costs. Further, it is estimated to incur net loss for FY2026 as well due to depreciation and low order book. Going forward, the group’s revenues are expected to remain range-bound, given the prevailing industry dynamics and operational constraints and operating profit margin are expected to improve marginally due to expected reduction in production costs.
Below Average financial risk profile
The group’s financial risk profile remained below average in FY25 with average net worth, low gearing levels and low debt protection metrics. The net worth of the group has declined to Rs. 16.25 Cr. as of March 31, 2025, from Rs. 19.07 Cr. as of March 31, 2024, due to net loss reported during the year. The gearing remained at 0.57 times as of March 31, 2025 against 0.47 times as of March 31, 2024. Total outside Liabilities/Tangible Net Worth (TOL/TNW) remained low at 0.61 times as of March 31, 2025 against 0.57 times as of March 31, 2024. Interest coverage ratio (ICR) and debt service coverage ratio (DSCR) deteriorated significantly and stood at (0.49) times and 0.50 times respectively, as of March 31, 2025 against 1.95 times and 1.32 times respectively, as of March 31, 2024. The net cash accruals to total debt (NCA/TD) declined and stood at (0.03) times in FY2025 from 0.15 times in FY2024. Acuite believes, the financial risk profile would remain below average due to low net worth base.
Susceptibility of profitability to volatility in raw material prices and climatic risk
The operating margins of the group are highly depended on raw material prices. Further, raw material price depends on various factors such as exposure to agro-climatic risk which could affect the availability of tea leaves in adverse weather conditions. Thus, inadequate rainfall could affect the tea plantation, further adverse change in the raw material price due to supply-demand scenario can lead to fluctuation in operational margins of all the players across the industry. As tea is a seasonal product, its yield depends on weather conditions. Production could be hampered significantly in case of any variation in rains, humidity, and temperature. In case of poor weather conditions, decline in production and quality levels causes volatility in realisations. Moreover, plantation operations are fixed cost in nature, with labour accounting for 50-60% of total cost. Presence of several labour laws and unions restrict the scope to reduce manpower.
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