Established in 2011, the company has been operational for a decade. The key promoters, Sunil Garg & Mr. Mohit Agarwal have more than 2 decades of experience in the business. The long standing experience of the promoters and long track record of operations has helped them to establish comfortable relationships with key suppliers and reputed customers across the continents. Acuité derives comfort from the long experience of the management and believes this will benefit the company going forward, resulting in steady growth in the scale of operations.
- Steady scale of operations
The company has achieved revenues of Rs. 300.02 Cr in FY2022 as compared to revenues of Rs. 281.18 Cr in FY2021. The turnover of the company has been growing at y-o-y of more than 6.76 per cent. Further the company has already achieved revenue of around Rs.190.38 Cr. till Sep’22 (Provisional). ATCPL has an unexecuted healthy order book position to the tune of about Rs.219.00 crores as on 30th Sep,2022 which will be executed shortly in 6-7 months, thus providing moderate revenue visibility over the medium term.
The operating margin of the company declined to 3.35% in FY2022 from 4.45% in FY2021, as the freight costs have increased along with unavailability of the containers. The margins also remain susceptible to volatility in tea prices of the auction centres. The PAT margins also declined to 1.26 per cent in FY2022 as against 1.65 per cent as on FY2021. The prices of tea are linked to the auctioned prices and further to prices of tea in the international market. Significant price movements in the international market may affect the company’s profitability margins. The Return on Capital Employed (ROCE) of the company stood comfortable at 11.05 per cent as on FY2022 as compared to 15.38 per cent as on FY2021. Acuite believes that going forward, the profitability margins are expected to improve over the medium term.
- Repeat orders from overseas client
Acuité draws comfort from the company’s diversified geographical presence with exports to countries such as the Kazakhstan, Russia, UAE, China, Iran, Saudi Arabia and Germany and so on. It has a global presence in five to six nations. Having been in business for almost a decade ensures a positive relationship with consumers. Tealand Branch of RG Brand(Kazakistan) and Fuzhou Lianshengfeng International Trade Co. Ltd (China) are two of the company's most important clients accounting for ~64 per cent of its revenues. However, the company enjoys an established relationship with these customers, which have been awarding it with repeat businesses. |
- Working capital intensive nature of operations
The working capital intensive nature of operations is marked by moderate GCA days of 125 days as on March 31, 2022 as compared to 120 days as on March 31, 2021. The high GCA days are high primarily on account of a high other current assets consisting of other receivables and recoveries. However, the debtor period remained moderate at 66 days as on March 31, 2022 similar as previous year. Further, the inventory holding period which stood comfortable at 36 days as on March 31, 2022 as compared to 42 days as on March 31, 2021. Acuité believes that the working capital operations of the firm will remain almost at the same levels as evident from efficient collection mechanism and comfortable inventory levels over the medium term.
- Moderate financial risk profile
The company’s financial risk profile is marked by modest networth, moderate gearing and average debt protection metrics. The tangible net worth of the company stood at Rs.36.25 Cr as on 31st March, 2022 as compared to Rs.32.47 Cr as on 31st March, 2021due to accretion of profits. Gearing of the company stood moderate at 1.97 times as on March 31, 2022 as against 1.84 times as on March 31, 2021. The Total Outside Liability/Tangible Net Worth (TOL/TNW) stood at 2.17 times as on March 31, 2022 as compared to 2.25 times in the previous year. The average debt protection metrics of the company is marked by Interest Coverage Ratio of 1.96 times and Debt Service Coverage Ratio at 1.54 times as on March 31, 2022. Net Cash Accruals/Total Debt (NCA/TD) stood at 0.06 times as on March 31, 2022 as against 0.09 times as on March 31, 2021. Acuité believes that going forward the financial risk profile of the company will remain moderate backed by gradually improving accruals and no major debt funded capex plans.
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