| Established management and long track record of operations
Ruhatiya Group is promoted by Mr. Shivprakash Ruhatiya, Mr. Ajayprakash Ruhatiya and Mr. Shriprakash K Agarwal. The promoters have an experience of over two decades in the agro-based industries. The day to day operations of the company are managed by the promoter along with experienced senior management team who are ably supported by a strong line of mid-level managers. NSPL is engaged in the business of extraction of crude soya bean oil and soya bean de oiled cake and KFPPL is engaged in refining of soya bean oil, sunflower oil and groundnut oil. Further, the management of the group, over the years, has built a healthy relationship with major customers such as Adani Wilmar Limited, Godrej Agrovet Limited and Krishi Nutrition Company Private Limited among others. This has further helped them to improve the revenue by ~20 percent in FY22. The revenue of the group stood at Rs.791.70 crore in FY22(Prov) as against Rs.657.20 crores in FY21. The increase is majorly due to increase in price realization. The group has thin margins which is a trait of the edible oil industry.
Acuité believes that the group will continue to benefit through the promoters’ extensive industry experience in the medium term.
Working capital efficient operations
The operations of the group are managed efficiently marked by low GCA days of 89 days for FY22(Prov) as against 122 days for FY21. The low GCA days is majorly on account of low inventory levels of 13 days for FY22(Prov) compared against 54 days for FY21. The inventory majorly consists of the soyabean oil, deoiled cakes and the other packing materials. The debtor days of the group improved and stood at 55 days in FY22 as against 62 days in FY21. The average credit period allowed to customers is around 60 days. The creditor days of the group stood at 22 days for FY22 as against 37 days for FY21. The average credit period available is around 8-15 days. The average utilization of the working capital limits of the group also remains moderate at ~54 percent in last six months ended August’ 22 for KFPPL and ~67 percent in last six months ended August’ 22 for NSPL.
Acuité believes that the working capital management of the company will continue to remain a key rating sensitivity going ahead.
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| Moderate financial risk profile
The group has a moderate financial risk profile marked by tangible net worth of Rs.53.57 crore as on 31 March, 2022(Prov) as against Rs.57.95 crore as on 31 March, 2021. The gearing level of the group stood at 1.89 times as on 31 March, 2022(Prov) as against 1.78 times as on 31 March, 2021. The total debt outstanding of Rs.101.39 crore consists of working capital borrowings of Rs.84.75 crore, long term loan of Rs.6.70 crore as on 31 March, 2022(Prov) and unsecured loans of Rs.7.05 crores. The loans majorly consists of the GECL loan taken from HDFC Bank. The coverage ratios of the group remained moderate with Interest Coverage Ratio (ICR) of 2.86 times for FY22(Prov) against 2.11 times for FY21. Also, the Debt Service Coverage Ratio (DSCR) stood at 1.30 times for FY22 against 1.70 times for FY21. The total outside liabilities to tangible net worth (TOL/TNW) of the group stood at 2.88 times as on March 31, 2022(Prov) against 3.06 times as on March 31, 2021.
Acuité believes that the financial risk profile of the group will remain moderate in the near to medium term.
Susceptibility to fluctuations in raw material price
The group's operations are exposed to inherent risks associated with the agriculture-based commodity business, such as availability of raw materials, fluctuations in prices, and changes in government regulations. The group is engaged in the extracting and refining of edible oil. The prices of crude edible oil are volatile in nature; hence, the profitability is highly susceptible to the ability of the group to pass on the same to its customers. The low margin nature of the industry, dependence on climatic factors for good harvest results in vulnerability of profitability in a volatile pricing scenario.
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