Experienced management and long track record of operation

The operations are managed by Mr. Siddhartha Soni and Mr. Saurav Soni, each of whom possesses over a decade of expertise in the industry. The group’s long-standing presence in the sector has enabled it to build and maintain strong relationships with its overseas customers over the years. Going forward, ROL has planned a capex project, expected to be completed by the end of FY27 or early FY28, to expand its industrial garments capacity to around 30–35 lakh pieces annually, which is likely to support higher production levels. Acuité believes that the group’s extensive industry experience, established customer relationships, and planned capacity expansion will support a further improvement in its business risk profile.

Steady scale of operations

The group’s operating income increased to Rs 294.63 crore in FY25 from Rs 240.64 crore in FY24, driven by higher production volumes and improved capacity utilisation. In FY26, revenues witnessed a marginal increase to Rs 297 crore. The growth in FY25 was supported by stable production levels, a ramp-up in output, and better price realisations for industrial gloves and industrial garments. Improved realisations, coupled with strong demand from reputed global retailers , which prioritise consistent quality standards, aided the growth in operating income. Amid ongoing geopolitical issues, the group has also increased sales in the domestic market, providing some diversification to its revenue profile. Higher freight costs exerted pressure on operating margins, leading to a slight decline in EBITDA margin to 12.21% in FY25, compared with 12.98% in FY24. This also remained a key factor behind the continued moderation in margins in FY26. Acuite believes that, despite the near-term pressure on margins due to elevated freight costs, the group’s profitability is expected to remain healthy over the medium term, supported by sustained global demand for leather products and its strong customer base

Healthy financial risk profile

The financial risk profile of the group is marked by healthy net worth, comfortable gearing and strong debt protection metrics. The tangible net worth of the group stood at Rs. 112.78 Cr. in FY25 as against Rs.96.28 Cr. as on March 31, 2024, due to accretion to reserves. However, there was an over-withdrawal of capital amounting to Rs 4.93 crore in Hsiang Li Tannery during FY25. The gearing of the group stood comfortable at 0.41 times as on March 31, 2025, as against 0.45 times as on 31 March 31, 2024. The Total Outside Liabilities/Tangible Net Worth (TOL/TNW) stood at 0.58 times as on March 31, 2025, as against 0.61 times as on March 31, 2024. The debt protection metrices of the group remain strong marked by Interest coverage ratio (ICR) of 14.08 times and debt service coverage ratio (DSCR) of 11.59 times for FY2025. The net cash accruals to total debt (NCA/TD) stood healthy at 0.61 times in FY2025. Going forward, Acuite believes that the financial risk profile will remain healthy over the medium term, supported by healthy internal accrual generation. even though the company is expected to incur capex.

Working capital intensive nature of operation
The working capital management of the group is intensive marked by high gross current asset (GCA) days of 166 days for FY2025 as compared to 156 days for FY2023. The GCA days are mainly on account high debtor days and inventory holding period. Inventory days increased to 84 days in FY25 from 67 days in FY24, largely due to higher production levels and inventory build-up amid geopolitical uncertainties, and are expected to remain elevated over the near term. The debtor days of the group stood at 63 days in FY2025 as against 72 days in FY2024. Further, the GCA days of the group also emanates from the other current asset, which mainly consists of other receivables and recoveries. Against this, creditors stood at 26 days as FY2025, as against 26 days as on FY2024. The Company has established favourable terms with suppliers when procurement is made from tannery with payment terms ranging from 30 to 45 days and this is significantly better than the industry average of 90 days. Acuite believes that the group’s working capital cycle is expected to remain at similar levels over the medium term, considering the continued high inventory holding driven by scale-up in operations and geopolitical factors, partially offset by stable creditor terms and improvement in receivable realisations.