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
Acuité has reaffirmed and withdrawn its long-term rating of ‘ACUITE BBB-’ (read as ACUITE triple B minus) on the Rs.11.75 Cr. bank facilities and the short-term rating of ‘ACUITE A3’ (read as ACUITE A three) on the Rs.0.25 Cr. bank facilities of Rathi Dye Chem Private Limited (RDCPL). The withdrawal is on account of request received from the issuer and no objection certificate (NOC) received from the lenders.
The withdrawal is in accordance with Acuité's policy on withdrawal of rating as applicable to the respective facility / instrument.
Rationale for rating
The rating reaffirmation takes into account the established track record of operations along with experienced management and moderate financial risk profile. Further, the rating also considers the stagnant scale of operations in FY25 and further lowering of top line in FY26(Est.) due to subdued demand from the end user industry along with US tariff implications and the ongoing geopolitical issues affecting the sales. Also, rating factors the intensive working capital nature of operations, high competition and susceptibility to profitability on account of fluctuations in the raw material prices which is linked to crude oil.
About the Company
Established in 1976, Pune based Rathi Dye Chem Private Limited (RDCPL) is engaged in manufacturing of dispersing dyes and solvent dyes having an installed capacity of 1,740 MT. Dispersing dyes have application in textiles, clothes; and solvent dyes are used in plastics, glass coating, ink production industries, granite, decorative things, etc.
The present directors of the company Mr. Sunil Harinarayan Rathi and Mr. Nilesh Harinarayan Rathi.
Unsupported Rating
Not applicable.
Analytical Approach
Acuité has considered the standalone business and financial risk profile of RDCPL to arrive at the rating.
Key Rating Drivers
Strengths
Established track record of operations and experienced management
RDCPL has a well-established presence in the industry, with a proven track record spanning over four decades. The company is led by Mr. Harinarayan Rathi, who has been associated with RDCPL since its inception and brings more than forty years of industry experience. The senior management team is further strengthened by a qualified and experienced second line of management. Additionally, RDCPL serves a diverse range of end-use industries, including textiles, garments, plastics, inks, and others, which supports diversification of its revenue profile as well. Moreover, the company has presence in exports markets like Middle East, Europe, Japan, USA, Vietnam, Indonesia, etc contributing to ~30% of the total revenue.
Moderate financial risk profile
The financial risk profile of RDCPL stood moderate marked by moderate net worth, low gearing and moderate debt protection metrics. The tangible net worth stood at Rs.66.48 Cr. as on 31st March 2025 against Rs.65.08 Cr as on 31st March 2024. The total debt of the company for FY25 stood at Rs.30.39 Cr. against Rs.23.56 Cr. in FY24. Additionally, RDCPL carries out regular capex towards machinery upgradation to the extent of ~Rs.3-4 Cr through internal accruals.
However, the gearing (debt-equity) stood below unity at 0.46 times as on 31st March 2025 (0.36 times as on 31st March 2024). The debt protection metrics also stood moderate with interest coverage ratio of 3.51 times and debt service coverage ratio of 1.88 times respectively in FY25.
Weaknesses
Modest scale of operations
RDCPL’s revenue in FY25 stood stagnant at Rs.75.53 Cr. in comparison to Rs.75.76 Cr. during FY24 on account of subdued demand from the end user industry having application in wood coatings, leathers, inks, etc. Also, the margins also stood moderated with EBITDA margin of 12.82% in FY25 (13.89% in FY24) and PAT of 1.89% in FY25.
In FY26, the scale of operations further declined to ~Rs.67 Cr. due to tariff implications by the United States which led to postponed purchase by the customers and resulted in lower volumes as well for all kind of dyes. Resulting which the EBITDA margin has also deteriorated to nearly 11% during the year. Additionally, w.r.t current geopolitical issues, the demand continues to remains affected.
Intensive working capital management
RDCPL’s working capital operations are intensive in nature, marked by high gross current assets (GCA) of 197 days in FY25 (155 days in FY24), driven by debtor and inventory of 123 days and 75 days in FY25 respectively. The debtors’ receivable period is of 60 days for solvent dyes and ~90-120 days for disperse dyes. The creditors days stood at 53 days in FY25 against 19 days in FY24. The average bank limit utilization for fund-based limits stood moderate at ~79% for the past 6 months ended March 2026.
Susceptibility of profitability to raw material prices and presence in a competitive industry
The company operates in a highly competitive industry characterized by the presence of numerous players, which limits the pricing power and bargaining strength of mid-sized firms. Also, the growth of the industry is closely tied to the performance of downstream industries such as textiles and chemicals. Further, the profitability remains vulnerable to fluctuations in raw material prices, as key inputs are derived from crude oil and its derivatives. Any sharp movement in crude oil prices can directly impact procurement costs and margins as well.
Rating Sensitivities
Potential triggers (individual or collective) for an upward rating action:
Not applicable.
Potential triggers (individual or collective) for a downward rating action:
Not applicable.
Liquidity Position
Adequate
RDCPL has an adequate liquidity position marked by sufficient net cash accruals of Rs.6.40 Cr. in FY25 against repayment obligation of Rs.2.07 Cr. during the same period. The current ratio stood moderate at 1.34 times as on 31st March 2025. The company maintained unencumbered cash and bank balance of Rs. 0.14 Cr. as on 31st March 2025. Moreover, the average bank limit utilization for fund-based limits stood moderate at ~79% for the past 6 months ended March 2026.
Outlook: Not Applicable
Other Factors affecting Rating
None.
Particulars
Unit
FY 25 (Actual)
FY 24 (Actual)
Operating Income
Rs. Cr.
75.53
75.76
PAT
Rs. Cr.
1.43
2.24
PAT Margin
(%)
1.89
2.95
Total Debt/Tangible Net Worth
Times
0.46
0.36
PBDIT/Interest
Times
3.51
3.84
Status of non-cooperation with previous CRA (if applicable)
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.
Contacts
List of instruments and names of regulators of the instruments
