| Experienced Management
Gloster Limited has an operational record of around hundred years as the company is operational since 1923. In 1954, Kolkata based Bangur family acquired the company. The group caters to both domestic and overseas markets such as USA, European Union, Middle East countries, Australia, Japan among others. The company has three major product segments namely Hessian & sacking, Yarn, and diversified jute products. Government sacking contributes nearly 30% of total revenue which is a regulated business. The group has wide product profile which caters to various industries such as FMCG, Agricultural products, Fashion Textile etc. The current management has more than six decades of experience in the business which helps them to bring in vast experience in strategy, planning, corporate management and finance. By way of acquisition of FGIL, the management is expected to translate their business acumen and experience in the industrial cable business as well over the medium term.
Expected improvement in scale of operations and profitability margins
The group has achieved a revenue of Rs. 736.51 Cr. in FY25 against Rs. 648.55 Cr. in FY24. The increase of 13.56% is attributed to the commencement of operations in Gloster Nuvo Limited and Fort Gloster Industries Limited. The operating EBITDA margins of the group stood at 6.55% in FY25 as compared to 10.70% in FY24. This was majorly because of the decrease in the realizable value of jute products in the market albeit sustained demand of products in terms of volume. The decline in the overall value of the jute products is primarily because weak demand in export and Govt. demand resulting in price pressure and consequently decreased realisation of Jute goods. Also, the decrease in demand from the sugar industry and other sectors is expected to impact the Jute industry. The PAT margins of the group stood at -1.81% in FY25 as compared to 3.75% in FY24. The decline in PAT was primarily attributable to higher interest expenses resulting from increased utilization of working capital limits after the commencement of operations in Gloster Nuvo Limited and partial commencement of operation of Fort Gloster Industries Limited, as well as additional long-term borrowings undertaken by Fort Gloster Industries Limited and Gloster Nuvo for setting up the new facilities. Additionally, the acquisition of new machinery for setting up the facilities has resulted in increased depreciation expenses. Fort Gloster Industries Limited has also secured a Rs. 1200 Cr. order book from a customer which is expected to be executed over next 2 years. Going forward, the government demand is expected be better in FY26 and the group is likely to improve the business risk profile in the medium term on account of increased production capacities and successful commencement of commercial operations in GNL and FGIL.
Integration of business activities and business diversification plan
The group has entered industrial cable business through FGIL. The group had acquired FGIL from NCLT (National Company Law Tribunal). The group had undertaken a major capex plan of Rs. 517 Cr. to upgrade, modernize and re-start the manufacturing facility of FGIL. This will diversify the group’s overall business profile and improve the revenue mix. Also, the group has successfully commenced operations in GNL which has helped to increase the overall jute manufacturing capacity to 252 TPD and will eventually bring the total jute manufacturing capacity after the completion of the CAPEX to 300 TPD.
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| Declining Financial Risk Profile
The financial risk profile of the group has declined marked by moderate net-worth of Rs. 862.51 Cr. as on 31st March 2025 against Rs. 867.61 Cr. as on 31st March 2024 due to losses incurred during the year. The total debt of the group is Rs. 579.47 Cr. as on 31st March 2025 against Rs. 193.55 Cr. as on 31st March 2024. The increase in debt is related to the CAPEX planned in FGIL and GNL and working capital borrowings. The gearing stands below unity at 0.67 times in FY25 against 0.22 times in FY24. Further, the interest coverage ratio of the group weakened to 3.01 times in FY25 against 31.05 times in FY24. The debt service coverage ratio stood at 2.28 times in FY25 against 25.73 times in FY24. The decrease in the coverage indicators have been noticed because of the increase in the interest costs and debt repayment obligations of FGIL and GNL. GNL has already achieved EBITDA positivity and, both companies are expected to reach their breakeven point by FY26 and subsequently manage their debt repayments independently, without further assistance from Gloster Limited. The TOL/TNW stood at 1.08 times in FY25 against 0.41 times in FY23. Acuité believes that the financial risk profile of Gloster group is likely to remain at similar levels over the medium term albeit further moderation in the debt protection metrices due to the ongoing debt funded capex.
Intensive Working Capital Operations
The working capital operations of the group remained intensive marked by GCA days which stood at 326 days as on as on 31st March 2025 against 136 days as on 31st March 2024. The inventory days of the group stood at 163 days in FY25 as against 97 days in FY24. The increase in inventory has been because of the commencement of operation in FGIL and GNL. The government has implemented a policy to reduce the maximum permissible raw jute stock limit for traders in November 2024, aiming to prevent hoarding and ensure a stable supply of the commodity at reasonable prices. Before the implementation of the policy, the group had strategically opted to maintain higher levels of raw jute inventory, enabling them to secure abundant raw materials at lower costs. The inventory for the jute segment is managed by gradually increasing capacity and maintaining optimal stock levels. They hold 2 to 2.5 months of inventory regularly, with a buffer of 4 months during peak seasons to ensure supply readiness. The group has scaled up operations significantly in FY25, expanding production capacity and workforce. This strategy balances inventory costs with the need to meet demand, support growth, and adapt to market fluctuations. The debtor days of the group stood at 65 days as on 31st March 2025 against 23 days as on 31st March 2024. The increased orders in GNL and FGIL after the commencement of operations has increased the flow of debtors in the group leading to the increase in debtor days. The group has received customer advances totalling Rs. 133.00 Cr. under the specified contract, while vendor advances of Rs. 68.00 Cr. have been paid, which are reflected as liabilities and assets, respectively. This has contributed to an increase in current assets. Additionally, higher balances with government authorities are also augmenting the overall value of current assets leading to increase in the gross current assets. On the other hand, the creditor days of the group stood at 74 days as on 31st March 2025 against 16 days as on 31st March 2024. Acuité believes that Gloster Group is likely to have a slightly increased working capital operations on account of initial phases of operations.
Project Implementation Risk
Gloster group has implemented several CAPEX plans across its group companies (Gloster, FGIL, and GNL), with some projects completed and others still in development. This exposes the group to execution risks, including potential delays and cost overruns. However, these risks are partially mitigated, as the group has already completed partial CAPEX initiatives and has commenced the operations in FGIL and GNL, although at lower capacity level in initial phases.
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