­Established track record of operations
EPIPL commenced its operation in 1993 and is engaged in trading of iron ores, coal, derivates of iron ore and other steel products, thereby having a long track record of operations of more than 25 years. The promoters of the company Mr Surendra Singh Saluja and Mr Harneet Singh Lamba have rich experience in trading of iron ore and coal. The established presence along with experience management has helped the group to maintain a long and healthy relationship with its customers for more than 5-7 years. The extensive experience of the promoters is also reflected through the healthy and consistent revenue growth.

Acuité believes EPIPL will continue to benefit from its long track of operations, long standing relation with its customers and the rich experience of the management.

Stable Operating Performace
The revenue of the company stood at Rs. 670.40 crore in FY2022 as against Rs. 453.42 crore in FY2021 registering a growth of ~47 percent year-on-year basis. Further, the revenue of the company remained stable and stood at Rs.612.15 crore for 11MFY2023. The growth is driven by both higher realisations and volumes. The growth in FY2022 is driven by both higher realisation and increase in volume sold as in FY 2021, company had sold around 14.55 lacs MT volume of products which has increased to 17.39 MT of volume in FY 22.The operating margin of the company stood at 21.19% in FY2022 as against 19.70% in FY2021. The margins of the company are comparatively higher than the industry average since the company provides end to end service to our customers in terms of sizing, beneficiation, material handling as well as transportation to the customer site.

Healthy Financial Risk Profile
The financial risk profile of the company is healthy marked by healthy tangible networth, low gearing ratio and healthy debt protection metrics. The tangible net worth of the company improved to Rs.302.42 crore as on March 31, 2022 as against Rs. 199.01 crore as on March 31, 2021 on account of accretion of profits to reserves. The company follows a conservative leverage policy as reflected in its peak gearing level of 0.07 times as on March 31, 2022 as against 0.18 times as on March 31, 2021. The total debt of the company stood at Rs. 22.54 crore as on March 31, 2022 which includes vehicle loans of Rs.9.79 crore, unsecured loans of Rs. 2.38 crore and working capital borrowings of Rs. 10.37 crore.The debt protection metrics are healthy marked by healthy coverage ratios as the interest coverage ratio stood at 47.97 times for FY2022 as against 37.21 times for FY2021. The debt service coverage ratio stood at 13.43 times for FY2022 as against 27.98 times for FY2021.

The company is setting up a beneficiation plant with 200 TPH capacity at Jabalpur, Madhya Pradesh. The total cost was expected to be Rs 70 Crore, however on account of some technical changes suggested by the technical team after the trail run, the total cost incurred went upto Rs. 100 crore. The plant is expected to be completely operational by May 2023. The project is funded through a term loan for the benefication plant to the tune of Rs. 40 crore and the remaining amount is funded through internal accruals.

Acuité believes that the financial risk profile of the EPIPL is likely continue to remain healthy on account of conservative financial policy.

Working Capital Intensive Nature of Operations
The operations of the company are of moderate working capital intensive nature marked by GCA of 146 days in FY2022 as against 217 days in FY2021. The improvement in the GCA days is mainly on account of improvement in the debtor days as the debtor days stood at 52 days in FY2022 as against 107 days in FY2021. The inventory days stood at 57 days in FY2022 as against 32 days in FY2021. The payment to suppliers varies from advances to few suppliers to payment terms with suppliers of 30-45 days for domestic purchases and 90-120 days for import purchases. The creditor days stood at 143 days in FY2022 as against 193 days in FY2021. However, the average utilisation of the working capital limits of the bank is on the lower side and stood at 30.34 percent for the six months ended February 2023.

­Intense competition and inherent cyclical nature of mineral industry
Competition in wholesale trading of iron ore and coal is intense due to presence of various organized and unorganized players with limited differentiation in end products. The industry is also exposed to global volatility in the prices of minerals.