| Long operational track record
With over twenty years of operation since 2002, the group, led by key promoters, Mr. Omi Bagadiya, Mr. Anand Kumar Agarwal, Mr. Anurag Agarwal, and Mr. Pankaj Agarwal, boasts more than six decades of collective experience. 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 standing experience of the management and believes this will benefit the group going forward, resulting in steady growth in the scale of operations.
Moderate Financial Risk Profile
The tangible net worth of the group stood at Rs.285.62 Cr. as on March 31, 2024 as compared to Rs.255.73 Cr. as on March 31, 2023 due to accretion to reserves. The gearing of the group stood modest at 1.13 times as on 31 March 31, 2024. The Total Outside Liabilities/Tangible Net Worth (TOL/TNW) stood at 2.05 times as on March 31, 2024 as compared to 1.56 times as on March 31, 2023. The debt protection metrices of the group remain comfortable marked by Interest coverage ratio (ICR) of 2.17 times and debt service coverage ratio (DSCR) of 1.85 times for FY2024. The net cash accruals to total debt (NCA/TD) reduced to 0.12 times in FY2024, on account of lower accruals due to changes in revenue profile of the group. Acuite believes that the financial risk profile of the group will continue to remain healthy on account of modest capital structure and healthy debt protection metrices over the medium term.
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| Volatility in margins with increase in operating income
The group’s revenue grew by 44.44% to Rs 2,001.35 crore in FY2024, driven mainly by higher IOF/IOP volumes, with provisional revenues of Rs 1,254.05 crore till February 2025. After a dip in FY2022 due to container shortages, direct sourcing from Australian miners boosted IOF/IOP sales and exports to Singapore, Dubai, and China for BBSPL. Agricultural product revenues fell sharply in FY2024 due to a ban but resumed in FY2025, contributing ~40% of revenues alongside IOF/IOP. However, at an overall level, FY25 performance on topline has declined due to correction in price realization of IOF/IOP. Operating margins declined to -1.36% in FY2024 due to higher logistics cost reduced from 3.84% in FY23. The profit after tax margin also reduced to 1.96% in FY24 from 4.53% in FY23 owing to higher interest costs. Acuite believes that the group’s profitability is expected to remain stable over the medium term on account of influx of new orders and executing higher margin orders. Also, the operating profit of the company in FY24 stood at negative Rs.27.28 Cr. and the gain from derivatives of Rs.99.81 Cr. has led to profit after tax of Rs.39.24 Cr. Acuite understands that gain/loss from derivative is a part of exceptional item and not operating income as a result of which the operating profit of the group is negative.
Average working capital management
The working capital management of the group is average marked by Gross Current Assets (GCA) of 152 days for FY2024 as compared to 159 days for FY2023. The GCA days is high on account of a high proportion of other current assets consisting of amount receivables from advance to suppliers, other loans and advances and other receivables and recoveries. The inventory days of the group stood at 49 days in FY2024 as compared to 46 days in FY2023 as the group maintains inventories of goods both for IOF/IOP and agricultural commodities for realising bills from customs and timely shipping. The debtor days stood at 21 days in FY2024 against 22 days in FY2023. Payments received from Government of Bangladesh are after 30-40 days from LC at-sight . However, the group did not experience any unpaid bills during the year, and the risk of default is mitigated by the essential nature of parboiled rice for Bangladesh’s Public Distribution System. Days payable outstanding stood at 14 days against 4 days in FY2023. For commodities, payment is on advance basis and once products reach the go-down payment is within 2-3 days. For IOF, the group has to pay advance in cash as it is from mines situated in Odisha (via transit pass permit). Acuite believes that the working capital management of the group is likely to remain at similar levels.
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