­Experienced management and an established track record of operations
BOTIPL is promoted by Mr. H L Khushalani and currently being managed by Miss. Raksha Khushalani and family members who collectively possess experience of nealy 5 decades in the same industry. The extensive experience of promotors has helped the company in establishing long-term relationships with its customers and suppliers for repeat orders. BOTIPL's customers include companies includes ONGC, Oil India Limited and many other customers from GCC and MENA, South east Asia, LATAM etc. The extensive industry experience and relations has helped the company in improving its scale of operations over the years. Acuite believes that BOTIPL may continue to benefit from its established track record of operations and longstanding relationships with its customers and suppliers.

Improving scale of operations:
BOTIPL registered revenue of Rs.105.38 Cr. in FY2024 which is 28 percent higher than FY2023 revenue of Rs.82.53 Cr. This improvement in revenue is on account of healthy orders throughout the year. Additionally, till July, 2024 the company registered revenue of Rs.38.34 Cr. which is 115 percent higher than previous year’s revenue of Rs.17.82 Cr. for the same period and expected to register revenue in the range of Rs.130-135 Cr. by the end of FY2025 supported by increasing orders. During FY2024, operating profit margin has improved to 30.20 percent margin compared to 14.28 percent in FY2023. The operating margin has improved to historic levels from a decline observed in FY2021 due to Covid pandemic and FY2023 due to accumulated repairs and maintenance expenses. However, EBITDA margins are susceptible to the composition of material and technology in the machine produced and also the pricing during tendering for the orders. PAT margin has improved to 19.48 percent in FY2024 from 7.10 percent in FY2023. Acuite believes, with the unexecuted order book of Rs. 85.83 Cr. and expected new orders, the scale of operations will improve over the medium term. 

Healthy financial risk profile:
BOTIPL’s financial risk profile is healthy marked by healthy networth, low gearing and healthy debt protection metrics. The networth of the company stood at Rs.83.27 Cr. as on March 31, 2024 compared to Rs.62.67 Cr. as on March 31, 2023. The improvement in networth is due to accretion of profits to the reserves. Despite the increase in overall debt levels to Rs.75.01 Cr. as on March 31, 2024 from Rs.53.17 Cr. as on March 31, 2023, the gearing levels remained low at 0.90 times, while adjusted gearing (net off USL) stood at 0.58 times as on March 31, 2024. Further, the total outside liabilities to tangible networth (TOL/TNW) also remained low at 1.02 times as on March 31, 2024 against 0.99 times as on March 31, 2023. The gearing of the company is expected to improve further and remain low over the medium term on account of absence of any debt funded capex plans. The debt protection metrics stood healthy with DSCR and ICR of 4.28 times and 4.98 times respectively as on March 31, 2024. Debt to EBITDA improved to 2.36 times as on March 31, 2024 against 3.74 times as on March 31, 2023. Acuite believes, the financial risk profile of the company will remain healthy over the medium term due to its conservative leverage policy.

Working capital intensive nature of operations:
BOTIPL’s working capital operations are intensive in nature as reflected through the gross current assets (GCA) of 446 days in FY2024 as compared to 386 days in FY2023. The stretch in GCA days is mainly on account of high inventory days which majorly comprise of working progress. Additionally, receivable period has also stretched in FY2024 to 165 days from 89 days, which further elongating the GCA days. Inventory days remained high at 340 days in FY2024 as against 268 days in FY2023. The high inventory days is the requirement in this business as it takes approximately 7 -8 months for the raw material (which includes 2 months for production of the special metal composition required by the customer coupled with 3-4 months of transportation and 2 months of inspection at receiving port) before it reaches to the company’s warehouse. The carrying cost of the inventory is factored in the quotation while bidding. The intensive working capital operations led to moderate dependency on the fund based working capital limits, which were utilized at an average of 77 percent during the past 10 months ending August. Acuite believes that the working capital operation will be remain intensive with high inventory days.

Vulnerability of profitability forex fluctuations
The essence of fluctuation in prices is present in this industry. However, because roughly half of the raw materials are imported, there is a natural hedge to some extent, as is demonstrated by the fact that the company has not suffered any foreign exchange losses.