Established track record along with experienced management
Incorporated in 1989, CSPL has an established track record of operations of more than 30 years in manufacturing and trading of food preservatives. Further, the directors of the company Mr. Arun Kumar, Mr. Ayush Agarwal and Mr. Amit Agarwal has extensive experience in the aforementioned line of business. Therefore, the vast experience of the management has helped the company to forge long standing relationships with reputed customers like Hindustan Unilever Limited, Nestle India Limited, ITC Limited, Britannia Industries Limited and others. Also, the company has established relationship with suppliers like Volac International Limited, Cargil Food Ingredients, JRS Silvateam Food Ingredients among others. The company also focuses on expansion and diversification as witnessed from the recent commencement of the protein beverage bottling plant and ongoing capex of paneer manufacturing funded at total cost of Rs. 12.00 Cr. (funded through debt – Rs 9.31 Cr. and balance internal accruals).

Acuite believes that extensive experience of the promoters and established track record of operations along with longstanding relationship with reputed clientele will continue to support CSPL’s business operations over the medium term.

Improving operating performance
Post significant dip in FY2023, the revenue of CSPL improved to Rs.381.02 Cr. in FY2025 (Prov.) against Rs,297.23 Cr. in FY2024 and Rs.273.38 Cr. in FY2023. The revenue growth is primarily driven by a surge in orders from both existing and newly acquired customers and is expected to be further supported by the recent capex i.e., bottling plant for protein beverages which became operational in Q4FY2025. Also, the upcoming capex of paneer manufacturing facility to be completed by H2FY2026 is expected to further boost the revenue, which shall be key rating monitorable. The operating profit margin of the company for FY2025 (Prov.) stood at 7.66 percent against 6.82 percent in FY2024 and 6.27 percent in FY2023. The PAT margin for FY2025 (Prov.) stood at 3.08 percent against 2.10 percent in FY2024 and 1.82 percent in FY2023.

Moderate financial risk profile
CSPLs financial risk profile is moderate marked by moderate net worth, gearing and debt protection metrics. The net worth improved to Rs.69.70 Cr. as on March 31, 2025 (Prov.) (including USL of Rs.10.14 Cr.) as against Rs. 57.83 Cr. as on March 31, 2024 on account of accretion of profits into reserves. Therefore, while the debt increased marginally due to the ongoing capex, the gearing improved to 1.41 times as on March 31, 2025 (Prov.) as against 1.65 times as on March 31, 2024. Further, the interest coverage ratio & debt service coverage ratio stood comfortable at 2.57 times and 1.56 times in FY2025 (Prov.) respectively.

Acuite’ believes that financial risk profile of CSPL is expected to improve further in near term on account of expected improvement in the operating profitability despite debt funded capex.

Working capital intensive operations
CSPL’s working capital operations are intensive in nature marked by gross current asset days of 153 days in FY2025 (Prov.) as against 183 days in FY2024. This is primarily driven from high inventory days of 75 days in FY2025 (Prov.) (85 days in FY2024) owing to dealings in multiple products. Further, the debtor days stood at 49 days in FY2025 (Prov.) as against 62 days in FY2024. The creditors days also stood low at 19 days in FY2025 (Prov.) (6 days in FY2024). Therefore, the bank limit utilization for fund based limits stood at moderate at 83.33% and for non-fund based limits it stood at 80.08% in the last 12 months ended April 2025.

Acuite’ believes that working capital operations of company may continue to remain intensive considering the nature of business.

Susceptibility of operating margins to volatility in prices
The operating margins are susceptible to fluctuations in raw material prices, which are inherently tied to global demand and supply dynamics. However, the company mitigates this risk by periodically adjusting prices, passing cost increases on to customers to maintain stability in profitability. Further, the company faces intense competition from a lot of unorganized players as well reputed brand labels.