| 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. Acuité believes that the group will continue to benefit through the promoters’ extensive industry experience in the medium term.
Moderate financial risk profile
The group has a moderate financial risk profile marked by tangible net worth of Rs.46.71 crore as on 31 March, 2023 as against Rs.41.95 crore as on 31 March, 2022. The reserves also include the quasi equity of Rs.35.17 crores as on 31 March 2023. The gearing level of the group stood at 2.79 times as on 31 March, 2023 as against 2.43 times as on 31 March, 2022. The total debt outstanding of Rs.130.13 crore consists of short-term borrowings of Rs.94.96 crore. The group does not have any long-term borrowings in FY23. The coverage ratios of the group remained moderate with Interest Coverage Ratio (ICR) of 1.91 times for FY23 against 2.50 times for FY22. Also, the Debt Service Coverage Ratio (DSCR) stood at 1.65 times for FY23 against 1.29 times for FY22. The total outside liabilities to tangible net worth (TOL/TNW) of the group stood at 3.68 times as on March 31, 2023, against 3.62 times as on March 31, 2022. Acuité believes that the financial risk profile of the group is likely to remain moderate on account of no debt funded capex plans in the near to medium term.
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| Working capital intensive operations
The working capital operations of the group are intensive marked by GCA days of 93 days for FY23 as against 81 days for FY22. The inventory levels stood at 23 days for FY23 compared against 15 days for FY22. The inventory majorly consists of the soyabean oil, deoiled cakes and the other packing materials. The debtor days of the group stood at 52 days in FY23 as against 54 days in FY22. The average credit period allowed to customers is around 45 days. The creditor days of the group stood at 19 days for FY23 as against 21 days for FY22. The average credit period available is around 30 days. The average utilization of the working capital limits of the group also remains moderate at ~62 percent in last six months ended September’ 23. Acuité believes that the ability of the group to improve the working capital management will remain key rating sensitivity in 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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