- Promoters’ extensive experience in industry; Established regional player in Chhattisgarh
RIL is promoted by Mr. Anil Jain and his family members. Mr. Jain has been associated with RIL since its inception; this has helped RIL to establish strong market presence in the state of Chhattisgarh, Maharashtra and Tamil Nadu. Mr. Jain has over 23 years of experience in heading various business operations and is actively involved with various trade bodies such as The Associated Chambers of Commerce and Industry in India (ASSOCHAM) and the National Solar Energy Federation of India (NSEFI). Mr. Jain looks after the day -to-day operations of RIL and is assisted by team of experienced professionals down the line. RIL’s operations are divided into 5 business segments i.e. Coal business, Ash Handling, Refrigerant gases, Sale of services and Solar Power. The revenue mix in FY2024 of RIL consists of revenue from Coal, ash Handling & trading of Rs. 945.58 Cr. (69 percent), Refrigerant Gas of Rs.72.31 Cr. (5.28 percent), Sales of Service of Rs.55.64 Cr. (4.06 percent) Solar energy of Rs.10.36 Cr. (0.76 percent) Module trading Rs.5.77 Cr. (0.42 percent) and power trading Rs.280.90 Cr. (20.05 percent) . Acuité believes that RIL will continue to derive benefits from its promoter’s experience, its established presence and diversified geographical coverage and business segments providing moderate revenue visibility in medium term.
- Moderate scale of operations :
The operating income of RIL in FY2024 stood at Rs. 1370.56 Cr. with de-growth of 15.87 percent as compared to previous year FY2023 Rs. 1629.15 Cr. The deterioration in the revenues is mainly on account of lower realizations for coal trading segment in FY2024 (i.e, Fluctuation in coal prices, witnessed a downward price correction in the wake of sluggish market conditions and ample inventory level, disrupting the supply/demand equilibrium) for coal trading segment in FY2024. Nevertheless, company has shown significant improvement in terms of volume(Quantity) in coal & ash segment which can be observed in Q1 of FY2025. The company recorded Rs. 589.52 Cr. till Q1 of FY2025. The operating margin of the company stood stable since last two years ended FY2024 , which stood at 10.86 percent in FY2024 against 10.75 percent in FY2023. The orders received by the company are rotating in nature with new orders being added and delivered on a continuous basis. Going forward, Acuité believes that the operating income and profitability of the company will sustain at a healthy level backed by steady growth in volumes on account of demand and better price realisation.
- Healthy Financial risk profile
RIL’s financial risk profile is healthy, marked by a healthy net worth and gearing along with healthy debt protection metrics. The net worth of the company stood at Rs. 472.61 Cr. and Rs. 314.35 Cr. as on March 31, 2024, and 2023, respectively. The improvement is on account of the healthy accretion of net profit in the reserves and infused equity share capital (Premium) of Rs. 62.50 Cr. In current year (FY2025), the promoter company i.e, Sherisha Technologies private limited has infused capital of Rs. 62.50 Cr. in the company by converting 50,00,000 warrants out of 1,25,75,000 warrants and the balance 75,75,000 warrants will be converted within the prescribed timeline. Further, the company is in the process of raising Rs. 927.81 Cr. (equity shares and warrants) pursuant to the board approval obtained on October 03, 2024 and subject to approval of shareholders in the ensuing extra-ordinary general meeting scheduled to be held on October 26, 2024, out of which Rs. 532-535 Cr. is expected to be infused in FY2025 and remaining amount in FY2026. The net worth of the company is expected to improve to Rs.1285.18 Cr. in FY2025. The gearing of the company stood at 0.20 times as on March 31, 2024, as against 0.26 times as on March 31, 2023. RIL's debt protection metrics is healthy, marked by Interest coverage ratio and debt service coverage ratio stood at 6.32 times and 3.20 times as on March 31, 2024, respectively, as against 9.41 times and 7.05 times as on March 31, 2023, respectively. TOL/TNW stood at 0.58 times and 1.39 times as on March 31, 2024, and 2023, respectively. The debt to EBITDA of the company stood at 0.58 times as on March 31, 2024, as against 0.45 times as on March 31, 2023. Acuité expects the financial risk profile to remain healthy over the medium- to long-term period on account of the healthy capital structure and stable operations of RIL.
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- Intensive working capital cycle
The company has an intensive working capital cycle marked by gross current assets (GCA) days at 132 days in FY2024 as against 116 days in FY2023. There is slight deterioration in GCA days in FY2024; the deterioration is on account of increase in debtor days, however sales are concentrated towards the end of March 2024, with more than 67 percent of debtors pertaining to March 2024, resulting in elevated working capital indicators as on year ending dates. However, the amount is immediately realized in the month of April 2024. GCA days are also marked by an intercorporate deposit extended towards group company “Sherisha Technologies Private Limited” of Rs. 46.59 Cr. and Rs. 14 Cr. for Refex Green Mobility Limited. However, Rs. 46.59 Cr. was repaid to RIL in August 2024. Inventory days stood at 2 days in FY2024 as against 3 days in FY2023. Subsequently, the payable period stood at 16 days in FY2024 as against 49 days in FY2023, respectively. The debtor day stood at 81 days in FY2024 as against 55 days in FY2023. The stretch in debtors because of no due amount. Further, the average bank limit utilization in the last six months ended September, 24 remained at ~52 percent for fund-based facilities.
- Presence of intense competition in the sector; impact of change in regulations
As per the present import policy, coal can be freely imported under the Open General License by the consumers themselves, considering their needs based on their commercial prudence, thus enabling the entry of many players into the sector and leading to intense competition, as evident from the low profitability margins. Acuité believes that any change in regulations and policies could have an impact on the business risk profile of the RIL.
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