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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 14.00 | ACUITE A | Stable | Assigned | - |
| Bank Loan Ratings | 81.00 | ACUITE A | Stable | Reaffirmed | - |
| Bank Loan Ratings | 919.00 | - | ACUITE A1 | Reaffirmed |
| Total Outstanding | 1014.00 | - | - |
| Total Withdrawn | 0.00 | - | - |
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Rating Rationale |
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Acuite has reaffirmed the long-term rating at 'ACUITE A' (read as ACUITE A) and the short-term rating at 'ACUITE A1' (read as ACUITE A One) on the Rs.1000 Cr. bank facilities of Gandhar Oil Refinery India Limited (GORIL). The outlook is 'Stable'. Rationale for rating
The rating reaffirmation takes into account the stable growth in Gandhar Group's (Group) revenues despite lowering of margins in FY24 and 9MFY25 on account of lowering of per unit realisations, increase in freight rate and delays of import shipment leading to overall increase raw material prices due to the Red Sea issue. The rating also considers the completed and ongoing capex of the group towards capacity expansions which is expected to improve the realizations over the medium term. Further, the rating takes comfort from the group's established track record of operations, relationship with reputed clientele, healthy financial risk profile and strong liquidity. However, the rating is constrained on account of elongation in working capital cycle and susceptibility of profitability to volatility in raw material prices and other global factors.
Additionally, the rating reaffirmation considers no significant impact from company’s announcement on amalgamation of its wholly owned subsidiary namely, Gandhar Shipping and Logistics Private Limited (GSLPL) with GORIL on 4th February 2025 as rating has been derived on consolidated basis. |
| About the Company |
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Incorporated in 1992, GORIL is a Mumbai based company known for its production of specialty oil. The company is majorly engaged in manufacturing of white oils which have applications in consumer and healthcare industries. Further, the company is also engaged in production of other specialty oils and lubricants such as automotive oils, industrial oils, transformer oils and rubber processing oils. The company operates two plants – Taloja (capacity of 2,18,256 KL) and Silvassa (capacity of 1,43,853 KL). |
| About the Group |
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Gandhar Group (Group) includes GORIL, the flagship company, Gandhar Shipping and Logistics Private Limited (GSLPL), Gandhar Foundation (GF) and Texol Lubritech FZC (TLF). GSLPL is a Mumbai-based company incorporated in 2010. It is a fully owned subsidiary of GORIL, engaged in providing logistical support to the parent. GF was incorporated on June 05, 2023, is a non-profit organization focusing on CSR initiative of the group. TLF is a Sharjah-based company that started its operations in 2019, engaged in similar operations as of GORIL with a capacity of 2,35,294 KL. The company was initially a 50:50 JV between GORIL & ESPE Petrochemicals FZC, subsequently GORIL acquired 50.10% of the company w.e.f March 30, 2022. Overall, the total installed capacity of the group is 5,97,403 kilolitres (KL) |
| Unsupported Rating |
| Not Applicable |
| Analytical Approach |
| Extent of Consolidation |
| •Full Consolidation |
| Rationale for Consolidation or Parent / Group / Govt. Support |
| Acuité has consolidated the business and financial risk profiles of GORIL along with its subsidiaries- Gandhar Foundation (GF), Gandhar Shipping and Logistics Private Limited (GSLPL) and Texol Lubritech FZC (TLF). The consolidation is in view of the common management, strong operational & financial linkages between the entities and corporate guarantee extended by GORIL. |
| Key Rating Drivers |
| Strengths |
| Extensive industry and promoter experience with diversified client portfolio Stable revenue growth despite global challenges affecting margins
The consolidated scale of operations stood improved at Rs. 4,113.21 Cr. in FY24 against Rs. 4,079.03 crore in FY23. This is attributable to the sustained demand from international markets specifically from Asia Pacific and America leading to improved overseas sales. However, the increasing freight rates and delays in import shipment of raw materials leading to increase in input cost due to the Red Sea issue affected the operating margin to reduce to 6.81 percent in FY24 against 7.77 percent in FY23.
Further, the ongoing Red Sea issue coupled with softness in global FMCG & Pharma demand leading to reduction in per unit realisation has affected the 9MFY25 operating performance of group resulting into reduced revenue of Rs.2,935.20 Cr. at margin of 4.84% in 9MFY25 as against Rs.3,173.97 Cr. at 7.72% margin in 9MFY24. However, the company has continued its focus to expand the operations, client base and stabilise its margins, which shall be a key rating sensitivity. The company completed its capex expansions of 1,00,000 KL at Taloja in FY24 at a cost of ~Rs.60-70 Cr. Further, expansion of capacity at Silvassa plant by 80,000 KL at a cost of ~Rs 27 Cr. (~Rs.17 Cr completed till 9MFY25) and is expected to be completed in FY25. Healthy financial risk profile The group's financial risk profile has remained healthy, marked by improved tangible net worth of Rs.1,161.68 Cr. as on March 31, 2024 against Rs.734.35 Cr. as on March 31, 2023. This is mainly attributable to the equity receipts of Rs.302 Cr. from initial public offer in November 2023, proceeds of which were utilised towards repayment of loan obligations of TLF, capital expenditure of Silvassa and other working capital purposes. This led to lowering in the gearing to 0.17 times as on March 31, 2024 against 0.23 times as on March 31, 2023. However, increase in the working capital borrowings reduced the interest coverage ratio to 4.89 times in FY24 as against 6.52 times in FY23.
Acuité believes that the debt indicators are expected to improve further on account of the healthy cash accruals and no significant debt funded capex plans, shall be a key rating sensitivity. |
| Weaknesses |
| Elongation in the working capital cycle
The group’s working capital operation is moderately intensive marked by gross current asset days of 137 days in FY24 against 112 days in FY23. This is mainly attributable to the receivable period and inventory days which stood at 55 days and 43 days in FY24 respectively. However, the counter parties that the company deals with are large, reputed companies thus this reduces the risk of debtors turning doubtful.
Further, the fund-based bank limit utilisation is low with utilisation of 26.41% only in the month of October 2024 and the non-fund based limits stood at an average of 55.51% for the last 8 months ended November 2024. Susceptibility to volatility in raw material prices , exposure to forex risk and global disruptions The key component in manufacturing specialty oils and lubricants is base oils which forms nearly 80 percent of the groups’ raw material costs. It is a derivative of crude oil, produced by refining crude, and therefore susceptible to volatility in crude oil prices. However, the group holds the requisite quantity of inventory and has ‘pass through’ clauses in the contracts with the customers to mitigate the risk of volatility in commodity prices, thereby protecting its margins.
The group is also exposed to significant forex risk and global disruptions as it imports 85 percent of its raw materials and overseas sales accounts for 40 percent of the revenue. While some of the foreign exchange risk is mitigated through a natural hedge balanced is managed through hedging. |
| ESG Factors Relevant for Rating |
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The group is committed to improving their performance in Environmental, Social, and Governance (ESG) factors through initiatives like energy-efficient lighting, tree planting, and waste reduction. They promote inclusive growth through employment and training opportunities for all employees, prioritizing their safety and well-being. The group also has a dedicated CSR program that supports community development nationwide. Also, the proactive efforts by group in emission reduction, water and energy conservation, and waste management demonstrate the commitment to minimize the environmental footprint. Further, GORIL has an established risk governance framework that includes Risk Management Committee responsible for business risk and opportunities. On the governance front, GORIL's board comprises mix of experienced and knowledgeable members which includes three executive directors and three independent directors. |
| Rating Sensitivities |
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| Liquidity Position |
| Strong |
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Liquidity position of the group is strong as reflected from sufficient net cash accruals (NCA) of Rs 185.45 Cr. in FY24 against the maturing debt repayment obligations of Rs 3.78 Cr. Besides, the group also had unencumbered cash and bank balances of Rs.71.43 Cr. as on 31st March,2024, providing addition support to liquidity. The current ratio stood at 2.51 times in FY24 as against 1.60 times in FY23. Going forward, company is expected to generate cash accruals in the range of Rs.110-125 Cr. over the medium term, while repayment obligations are expected to be in the range of Rs.1-2 Cr. for the same period. |
| Outlook: Stable |
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 24 (Actual) | FY 23 (Actual) |
| Operating Income | Rs. Cr. | 4113.21 | 4079.03 |
| PAT | Rs. Cr. | 165.32 | 213.93 |
| PAT Margin | (%) | 4.02 | 5.24 |
| Total Debt/Tangible Net Worth | Times | 0.17 | 0.23 |
| PBDIT/Interest | Times | 4.89 | 6.52 |
| Status of non-cooperation with previous CRA (if applicable) |
| Not Applicable |
| Any Other Information |
| None |
| Applicable Criteria |
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• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm • Consolidation Of Companies: https://www.acuite.in/view-rating-criteria-60.htm • Default Recognition: https://www.acuite.in/view-rating-criteria-52.htm • Manufacturing Entities: https://www.acuite.in/view-rating-criteria-59.htm |
| Note on complexity levels of the rated instrument |
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| *Annexure 2 - List of Entities (applicable for Consolidation or Parent / Group / Govt. Support) | ||||||||||
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