­Acuite has considered the consolidated business and financial risk profiles of Galva Deco Parts Private Limited (GDPPL) and Galva Gmbh (a wholly owned subsidiary of GDPPL) together referred to as the ‘Galva Group’ (GG). The consolidation is in view of the common management, similar line of business and strong operational & financial linkages between the entities. 

Experienced management and established track record of operations

Established  as a proprietorship concern in 1979 by Mr. Bhawanji Chheda, GDPPL has an operational track record of more than four decades. Mr. Hardik Chheda joined the company in 1998. GDPPL was converted into a Private Limited Company in 2007. GDPPL’s operations are managed by Mr. Bhawanji Chheda and Mr. Hardik Chheda. The Group has been able to establish three plants in Gujarat and one in Tamil Nadu, two customer support warehouses and one marketing arm in Germany (GDG). The group has reputed clientele such as Tata, Seoyon E-HWA Automotive (Hyundai), Plastic Omnium Auto Exteriors and among others. Further, the process and the products of the group are certified by International Organization of Standardization (ISO). GDPL is also a tier 2 supplier of Hyundai and KIA.

Acuité believes that the extensive experience of the management along with its established track record of operations and relationships with its clients will strengthen the business risk profile over the medium term.

Steady improvement in revenues albeit decline in profitability

The group's revenue remained rangebound at Rs. 267.05 crore in FY2024, compared to Rs. 258.54 crore in FY2023. This was due to a moderation in sales and orders from its customers. GDPPL generates approximately 75 per cent of its revenue from plating and tooling, 22 per cent from molding, and the remaining 4 per cent from aluminium anodizing of logos. The company has an outstanding order book worth Rs. 309.74 crore as of March 2025. Revenue from Galva Decoparts GmbH accounts for around 5 per cent of GDPPL's total operating income. The group's operating margins remained rangebound at 13.65 per cent in FY2024, compared to 13.35 per cent in FY2023. The moderation in margins was due to an increase in overall operating expenses, such as employee costs and power costs. However, the group's PAT margin declined to -0.90 per cent in FY2024 from 1.62 per cent in FY2023, due to higher depreciation and interest costs. Additionally, the group recorded a revenue of Rs. 285.27 crore (Prov.) as of March 31, 2025, with an estimated operating margin of approximately 15.19 per cent and a net profit margin of around 2.29 per cent.

Acuite believes that the group's ability to sustain growth in revenues and profitability margins on the back of capex would remain a key rating monitorable.

Average Financial Risk Profile

The financial risk profile of the group stood average, marked by moderate net worth, high gearing and low debt protection metrics. The tangible net worth of the group stood at Rs. 36.70 crore as on 31st March 2024 as against Rs. 39.29 crore as on 31st March, 2023. The total debt of the group stood at Rs.196.88 crore which consists of short-term debt of Rs. 68.49 crore, long term debt of Rs. 81.48 crore, unsecured loans of Rs. 17.12 crore and maturing debt repayment obligations of Rs. 29.79 crore as on 31st March, 2024. The gearing (debt-equity) of the group stood high at 5.36 times as on 31st March 2024 as compared to 4.26 times as on 31st March, 2023. Interest Coverage Ratio of the group stood at 1.98 times for FY2024 as against 2.34 times for FY2023. Debt Service Coverage Ratio (DSCR) of the group stood at 0.88 times in FY2024 as against 1.06 times in FY2023. Net Cash Accruals to Total Debt (NCA/TD) of the company stood at 0.08 times for FY2024 as against 0.11 times in FY2023.

Stabilization of Capex 

In FY23, GDPPL invested ~Rs. 49 crore in the Chheyar Project, TN, where the company has set up aluminium anodizing logo manufactuing projects primarily for Hyundai and Kia Motors. The project was funded with bank loan of Rs. 39 crore and Rs. 10 crore from internal accruals. Although the project commenced in July 2023, its stabilization took longer than expected. As of FY25, capacity utilization has not been fully realized; however, the project has the potential to generate up to Rs. 4 crore per month of revenue on an average at full capacity. 

Acuite believes that the financial risk profile of the group would improve on account of no major debt funded capex and repayment of term loans over the medium to long term.

Working Capital Intensive Operations

The group's working capital operations remain intensive, as evidenced by its GCA days of 216 days in FY2024, compared to 212 days in FY2023. This is primarily driven by high inventory days, which stood at 156 days in FY2024, up from 120 days in FY2023. The average inventory holding period is around 90 days. Additionally, debtor days were 62 days in FY2024, down from 82 days in FY2023, although the group provides a credit period of 60 to 90 days to its customers. Creditor days increased to 128 days in FY2024, from 123 days in FY2023, while the average credit allowed by suppliers is around 45-60 days. Consequently, the average bank limit utilization for the six months ending February 2025 is approximately ~96.41 per cent for the fund-based limits. Acuite believes, the working capital operations of the group would remain intensive over the medium term on the back of high inventory holding. 

Customer and sectoral concentration risk
The group majorly supplies to automobile and FMCG sectors. The group caters to an established clientele including Seoyon E-HWA Automotive (Hyundai), Tata, LS Automotive, Kia, Skoda, Bajaj and Volkswagen.

Profitability is susceptible to volatility in raw material prices in a highly fragmented and competitive nature of the industry

The automotive components industry is highly competitive and fragmented in nature. The profitability of the group is susceptible to volatility in the raw material prices. Acuité believes that sustained improvement in the group’s profitability margins over the medium term shall be instrumental in improving the company’s business and financial risk profile.