Note:- For activities or ratings of instruments falling under the purview of Financial Sector Regulators other than SEBI, the grievance / dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available.
Rating Rationale
Acuite has reaffirmed the long-term rating of ‘ACUITE A+’ (read as ACUITE A plus) and the short term rating at 'ACUITE A1' (read as ACUITE A one) on the Rs. 196.00 Cr. bank facilities of Gem Aromatics Limited (GAL). The outlook is revised from 'Stable' to 'Negative'.
Rationale for rating and outlook revision
The outlook revision is on account of significant deterioration in the operating performance of the group in FY2026. The FY2026 performance of the group was largely impacted by external factors namely; US tariff imposition, GST rate revision, West Asia crisis. The rating reaffirmation, however, takes into account the healthy financial risk profile of the group. The rating also draws comfort from the established track record of operations and the experience of the management in the fragrance industry. However, timely commencement of operations of the phenol vertical remains susceptible to the ongoing West Asia crisis and will remain a key monitorable.
About the Company
Incorporated in 1997 by Mr. Vipul Parekh and Mrs. Kaksha Parekh, Mumbai based, Gem Aromatics Limited (Erstwhile Gem Aromatics Private Limited) is engaged in manufacturing of essential oils and aroma chemicals. Their product portfolio includes mint & clove along with its derivatives, phenol, etc. which is catered to diversified industries including oral care, flavour and fragrance formulation houses, cosmetic manufacturers, food and beverages industries, incense sticks manufacturers, pharmaceutical, wellness & nutraceutical industries within India and worldwide. The manufacturing facilities of the company are located in Silvassa and Budaun.
About the Group
Krystal Ingredients Private Limited
Mumbai based Krystal Ingredients Private Limited (KIPL) is a 100% subsidiary of Gem Aromatics Limited. The company has set up a manufacturing facility in Dahej with a total installed capacity of 10,871 MTPA which commenced commercial operations on February 26, 2026. The product portfolio will include clove and clove derivatives, cooling agents, phenol derivatives and citral chemistry.
Gem Aromatics LLC
Gem Aromatics LLC is a 100% subsidiary of Gem Aromatics Limited established to focus on the North American market. It acts as a distributor of essential oils for Gem Aromatics Limited.
Unsupported Rating
Not Applicable
Analytical Approach
Extent of Consolidation
•Full Consolidation
Rationale for Consolidation or Parent / Group / Govt. Support
Acuite has considered the consolidated financial and business risk profile of GAL including its subsidiaries. The consolidation is in view of common promoter group, significant financial and operational linkages between the entities.
Key Rating Drivers
Strengths
Established track record and experienced management
GAL was formally established in 1997 by Mr. Vipul Parekh and Mrs. Kaksha Parekh, who bring in more than two decades of experience in the flavour and fragrance sector. They are ably supported by Mr. Yash Parekh who joined the business in 2011 and has expanded the company’s presence in international markets, contributing to the increased export orders. The group has a diversified global customer base across multiple markets.
Acuite believes that, the promoters' experience in industry, will continue to drive the business over the medium term.
Healthy financial risk profile
The financial risk profile of the group has remained healthy despite moderation in the operating performance in FY2026. The networth stood at Rs. 449.64 Cr. on March 31, 2026, post infusion of equity through IPO proceeds. These proceeds were utilized for partial prepayment of long term debt and working capital limits. The gearing improved and stood low at 0.34 times on March 31, 2026 from 0.79 times on March 31, 2025. The TOL/TNW levels also remain low at 0.41 times on March 31, 2026. The Debt-EBITDA levels, however increased to 3.65 times in FY2026 from 2.49 times in FY2025.
The financial risk profile is expected to improve over the medium term on account of no further debt funded capex plans.
Weaknesses
Moderation in the operating performance
The operating revenue of the group declined to Rs. 366.47 Cr. in FY2026 from Rs. 503.95 Cr. in FY2025. The operating performance was affected due to imposition of US tariffs, revision in GST rates, which had affected the overall sales volumes. Further, increase in the material costs led to moderation in the profitability margins. Also, due to the ongoing West Asia crisis prices of raw materials for the newly established phenol division have increased significantly, thereby leading to operational challenges in the same. However, despite moderation, the EBITDA margin stood healthy at 11.12 percent in FY2026. Going forward, improvement in the overall operating performance with increase in volumes of existing business and timely ramp up of operations in the new manufacturing facility will be a key monitorable.
Intensive working capital cycle
The working capital cycle of the group remains intensive, with high GCA (gross current assets) of 355 days in FY2026 as against 248 days in FY2025. These are majorly driven by the high inventory levels, which stood at 262 days in FY2026, up from 146 days in FY2025, majorly due to stock up for the new manufacturing facility. Post commencement of operations in the new manufacturing facility, the inventory levels are expected to moderate. Further, debtor days stood improved at 76 days in FY2026 as against 104 days in FY2025. On the other hand, the creditor days stood 25 in FY2026 as against 22 days in FY2025.
Profitability susceptible to volatility in raw material prices and foreign exchange fluctuation risk
The group's operating profitability is exposed to volatility in prices of key raw materials— notably mint, eucalyptus, clove—sourced both domestically and from suppliers in countries such as Indonesia and Madagascar and phenol being a petrochemical making it's prices highly volatile to changes in crude prices. Further, its export sales to markets including the USA, Germany and Brazil create foreign-exchange risk that can affect realized margins. However, this exposure is partly offset by a natural hedge from import–exports and the group also has a hedging mechanism in place.
Rating Sensitivities
Potential triggers (individual or collective) for an upward rating action:
Improvement in operating performance with revenues reaching above Rs. 700-800 Cr at stable operating margins
Improvement in working capital cycle
Potential triggers (individual or collective) for a downward rating action:
Further deterioration in the operating performance with net cash accruals falling below Rs 40 Cr
Increase in debt levels leading to deterioration of the financial risk profile
Liquidity Position
Adequate
The adequate liquidity position of the group is supported by generation of sufficient net cash accruals of Rs.24.01 Cr. against repayment obligations of Rs. 12.12 Cr. in FY2026. Going forward, the NCAs are expected to remain in the range of Rs. 40 – 60 Cr. against expected repayments of Rs. 5 - 6 Cr in FY2027 and FY2028. The current ratio stood healthy at 2.07 times on March 31, 2026. The company had an unencumbered cash and bank balance of Rs. 8.15 Cr. on March 31, 2026.
Outlook: Negative
Other Factors affecting Rating
None
Particulars
Unit
FY 26 (Actual)
FY 25 (Actual)
Operating Income
Rs. Cr.
366.47
503.95
PAT
Rs. Cr.
1.43
53.38
PAT Margin
(%)
0.39
10.59
Total Debt/Tangible Net Worth
Times
0.34
0.79
PBDIT/Interest
Times
3.28
11.15
Status of non-cooperation with previous CRA (if applicable)
ACUITE A+ | Stable
(Upgraded from ACUITE A | Stable)
Cash Credit
Long Term
66.00
ACUITE A+ | Stable
(Upgraded from ACUITE A | Stable)
Cash Credit
Long Term
40.00
ACUITE A+ | Stable
(Upgraded from ACUITE A | Stable)
Bills Discounting
Short Term
33.00
ACUITE A1
(Reaffirmed)
Bills Discounting
Short Term
17.00
ACUITE A1
(Assigned)
Packing Credit
Short Term
20.00
ACUITE A1
(Reaffirmed)
12 Jul 2024
Working Capital Demand Loan (WCDL)
Long Term
20.00
ACUITE A | Stable
(Reaffirmed)
Cash Credit
Long Term
66.00
ACUITE A | Stable
(Reaffirmed)
Cash Credit
Long Term
40.00
ACUITE A | Stable
(Reaffirmed)
Bills Discounting
Short Term
33.00
ACUITE A1
(Reaffirmed)
Packing Credit
Short Term
20.00
ACUITE A1
(Reaffirmed)
Bank Guarantee (BLR)
Short Term
1.00
ACUITE Not Applicable
(Withdrawn)
Proposed Long Term Bank Facility
Long Term
0.65
ACUITE Not Applicable
(Withdrawn)
26 Apr 2023
Working Capital Demand Loan (WCDL)
Long Term
12.00
ACUITE A | Stable
(Reaffirmed)
Working Capital Demand Loan (WCDL)
Long Term
8.00
ACUITE A | Stable
(Assigned)
Secured Overdraft
Long Term
20.00
ACUITE A | Stable
(Reaffirmed)
Cash Credit
Long Term
36.00
ACUITE A | Stable
(Reaffirmed)
Cash Credit
Long Term
30.00
ACUITE A | Stable
(Assigned)
Proposed Long Term Bank Facility
Long Term
0.65
ACUITE A | Stable
(Reaffirmed)
Cash Credit
Long Term
40.00
ACUITE A | Stable
(Assigned)
Bank Guarantee/Letter of Guarantee
Short Term
1.00
ACUITE A1
(Reaffirmed)
Bills Discounting
Short Term
25.00
ACUITE A1
(Reaffirmed)
Bills Discounting
Short Term
8.00
ACUITE A1
(Assigned)
24 Mar 2023
PC/PCFC
Long Term
12.00
ACUITE A | Stable
(Upgraded from ACUITE A- | Stable)
Working Capital Demand Loan (WCDL)
Long Term
12.00
ACUITE A | Stable
(Upgraded from ACUITE A- | Stable)
Secured Overdraft
Long Term
20.00
ACUITE A | Stable
(Upgraded from ACUITE A- | Stable)
Cash Credit
Long Term
22.00
ACUITE A | Stable
(Upgraded from ACUITE A- | Stable)
Cash Credit
Long Term
2.00
ACUITE A | Stable
(Upgraded from ACUITE A- | Stable)
Proposed Long Term Bank Facility
Long Term
0.65
ACUITE A | Stable
(Upgraded from ACUITE A- | Stable)
Bank Guarantee/Letter of Guarantee
Short Term
1.00
ACUITE A1
(Upgraded from ACUITE A2+)
Bills Discounting
Short Term
25.00
ACUITE A1
(Upgraded from ACUITE A2+)
01 Feb 2023
PC/PCFC
Long Term
12.00
ACUITE A- | Stable
(Reaffirmed)
Working Capital Demand Loan (WCDL)
Long Term
12.00
ACUITE A- | Stable
(Reaffirmed)
Secured Overdraft
Long Term
20.00
ACUITE A- | Stable
(Reaffirmed)
Cash Credit
Long Term
22.00
ACUITE A- | Stable
(Reaffirmed)
Cash Credit
Long Term
2.00
ACUITE A- | Stable
(Reaffirmed)
Proposed Long Term Bank Facility
Long Term
0.65
ACUITE A- | Stable
(Reaffirmed)
Bank Guarantee/Letter of Guarantee
Short Term
1.00
ACUITE A2+
(Reaffirmed)
Bills Discounting
Short Term
25.00
ACUITE A2+
(Reaffirmed)
Lender’s Name
ISIN
Facilities
Listing Status
Regulated By
Date Of Issuance
Coupon Rate
Maturity Date
Quantum (Rs. Cr.)
Complexity Level
Rating
CITI Bank
Not avl. / Not appl.
Bills Discounting
Unlisted
RBI
Not avl. / Not appl.
Not avl. / Not appl.
Not avl. / Not appl.
50.00
Simple
ACUITE A1 | Reaffirmed
AXIS BANK LIMITED
Not avl. / Not appl.
Cash Credit
Unlisted
RBI
Not avl. / Not appl.
Not avl. / Not appl.
Not avl. / Not appl.
66.00
Simple
ACUITE A+ | Negative | Reaffirmed | Stable to Negative
H D F C Bank Limited
Not avl. / Not appl.
Cash Credit
Unlisted
RBI
Not avl. / Not appl.
Not avl. / Not appl.
Not avl. / Not appl.
40.00
Simple
ACUITE A+ | Negative | Reaffirmed | Stable to Negative
ICICI BANK LIMITED
Not avl. / Not appl.
Packing Credit
Unlisted
RBI
Not avl. / Not appl.
Not avl. / Not appl.
Not avl. / Not appl.
20.00
Simple
ACUITE A1 | Reaffirmed
DBS Bank Ltd
Not avl. / Not appl.
Working Capital Demand Loan (WCDL)
Unlisted
RBI
Not avl. / Not appl.
Not avl. / Not appl.
Not avl. / Not appl.
20.00
Simple
ACUITE A+ | Negative | Reaffirmed | Stable to Negative
Note:- For activities or ratings of instruments falling under the purview of Financial Sector Regulators other than SEBI, the grievance / dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available.
*Annexure 2 - List of Entities (applicable for Consolidation or Parent / Group / Govt. Support)
Sr. No.
Company Name
1
Gem Aromatics Limited
2
Krystal Ingredients Private Limited
3
Gem Aromatics LLC
Contacts
List of instruments and names of regulators of the instruments
