Established and diversified business profile
The M L Dalmia Group has been in the PP woven sacks segment for around 50 years. The sacks are sold to diverse end-user industries such as cement, food grain and polymer, fertilizer. Its other two group companies, DTPIL and BTCL, are involved in production and processing of tea having their own estates in West Bengal and Assam, respectively. Its promoters have been in the tea manufacturing business for several decades. This has helped the group establish a strong position in the tea industry and maintain substantial growth in revenue. The group will continue to maintain its business risk profile over the medium term aided by its long-standing relationships with reputed customers and suppliers.
Increase in operating income during FY25
The operating income stood at Rs.691.93 Cr. in FY2025 as against Rs.503.92 Cr. in FY2024 backed by increase in sales volume evident from improved capacity utilization and better realizations. Further, the group achieved Rs.299.63 Cr. till August 2025. Acuite expects that the scale of operations will improve in the near to medium term, supported by GST reduction on cement and ongoing expansion in housing and replantation efforts.
Moderate Financial Risk Profile
The group’s moderate financial risk profile is marked by healthy networth, moderate gearing below unity and modest debt protection metrics. The net worth of the group improved to Rs. 480.99 crore as on March 31, 2025, from Rs. 414.27 crore as on March 31, 2024, due to accretion of reserves. Acuite has considered unsecured loans of Rs.173.00 Cr. as on FY25 as against Rs. 123.35 crore as on FY2024 as quasi-equity as the management has undertaken to maintain the amount in the business over the medium term. Gearing of the group has improved and stood below unity at 0.71 times in FY2025 as against 0.85 times in FY2024. The debt protection metrics of the group remains stagnant in FY2025 as reflected from Interest Coverage Ratio (ICR) of 2.20 times and Debt Service Coverage Ratio (DSCR) of 1.00 times. The group has refinanced its term loans and working capital facilities for a tenor of 10 years, which is expected to lower interest costs and improve interest coverage from FY26 onwards. However, debt protection metrics especially DSCR and ICR will remain monitorable. Net Cash Accruals/Total Debt (NCA/TD) stood low at 0.13 times in FY2025. Acuité believes that going forward, despite having continuous capex towards replantation to ride-out the adversity of the age profile of the tea-bushes, the financial risk profile of the group will remain on similar levels over the medium term.
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| Intensive nature of working capital of operations
The working capital cycle has improved but remains intensive as reflected from GCA days of 169 days as on March 31, 2025, as against 202 days as on March 31, 2024. The inventory days of the group which stood at 121 days in FY2025 as against 163 days in FY2024. The inventory levels of the tea companies are usually high as it is a seasonal business, DTPIL and BTCL maintains significant inventory during the year to mitigate the risk of low production. In case of DLL, the company follows a Just-in-Time (JIT) model, maintaining raw materials for 15–20 days based on confirmed orders and logistics considerations. Finished goods are considered as work-in-progress (WIP) until a release order is received after inspection takes place. The debtor days of the group stood at 55 days in FY2025 as against 61 days in FY2024. The creditor days stood at 33 days in FY2025 as against 42 days in FY2024. Going forward, Acuité believes that the working capital cycle will remain at similar levels as evident from efficient collection mechanism and high level of inventory period over the medium term.
Intense competition in the PP woven sacks industry and Exposure to volatility in tea prices and changing weather conditions
The PP woven sacks industry remains intensely competitive and fragmented, with numerous unorganized players limiting scalability for established entities like the M L Dalmia Group. Additionally, the group’s tea operations face inherent risks from volatile weather patterns and fluctuating tea prices, impacting both yield and quality. Despite these challenges, the group has adopted a structured replantation policy and invested in high-yielding clones to sustain productivity.
In FY2025, EBITDA and PAT margins of the group moderated to 12.93% and 2.95%, respectively, from 15.54% and 3.62% in FY2024, primarily due to weather-related disruptions, quality control measures, and a higher share of bought leaf in their overall turnover. However, the cost pass-through model in the bought leaf segment helps mitigate fixed cost risks.
Profitability also remains sensitive to raw material price fluctuations, particularly crude oil derivatives used in industrial plastics, which continues to be a key monitorable. Acuité notes that the group has been taking specific steps to address the same by following a definite annual replantation policy. Also, the yields have been supported by increasing acreage under high-yielding clones and other focused efforts taken towards sustaining productivity.
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