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
Acuite has reaffirmed the long term rating of 'ACUITE BB' (read as ACUITE double B) on the Rs. 35.50 Cr bank facilities of Rungta Industries Private Limited (RIPL). The outlook is 'Stable'
Rationale for reaffirmation The rating reaffirmation takes into account improving but modest scale of operations, moderate financial risk profile. The rating also draws comfort from the long track record of operations and experienced management of RIPL coupled with efficient working capital management. The rating remains constrained on account of the low net cash accruals, thin profitability margins and the susceptibility of profitability to fluctuation in commodity prices.
About the Company
Incorporated in 1992, Rungta Industries Private Limited (RIPL) is engaged in solvent extraction business with the operations commencement from 2005. The company is involved in manufacturing of rice bran oil and de-oiled rice bran holds a capacity of 350 MTPD. The manufacturing facility of the company is located in Gorakhpur, Uttar Pradesh. Mr. Rajesh Kumar Rungta and Ms. Renu Rungta are the present directors of the company.
Unsupported Rating
Not Applicable
Analytical Approach
Acuité has considered the standalone financial and business risk profile of RIPL to arrive at this rating.
Key Rating Drivers
Strengths
Established track record of operations and experienced management
RIPL has an operational track record of over two decades in the solvent extraction industry. The company was incorporated in 1992 by Mr. Rajesh Rungta and Mrs. Renuka Rungta, with commercial operations commencing in 2005. Currently, the business is managed by the second generation of the promoter family. The management's understanding of industry dynamics and its focus on expanding operations and strengthening market presence is expected to support the company's growth and sustain its market position.
Efficient working capital operations
The operations of RIPL are efficient, with low gross current assets of (GCA) of 77 days in FY2026 (Prov.). The GCA are mainly driven by the inventory and debtor days. The inventory days stood at 47 in FY2026 (Prov.) as against 41 days in FY2025. The debtors days stood at 23 days in FY2026 (Prov.) as against 31 days in FY2025. On the other hand, the creditor days stood at 2 days for the last three years ended March 2026 (Prov.). Since most of the purchases are on immediate payment basis, the company relies on working capital limits to fund them. The average bank limit utilization stood at ~72 percent for the last six months ended June 2026.
Weaknesses
Improving, but modest operating performance
RIPL generated a revenue of Rs. 172.01 Cr. in FY2026 (Prov.) from Rs. 159.27 Cr. in FY2025 and Rs. 145.26 Cr. in FY2024. Although, overall sales volumes declined during the year due to lower production, increased price realizations led to growth in the topline of the company. In FY2026, the company had undertaken cost optimization measures, which had led to an improvement in the operating margins, which stood at 2.59 percent in FY2026 (Prov.) from 1.86 percent in FY2025. However, operating margins remain low. Further, PAT margin stood at 0.99 percent as against 1.02 percent in FY2025. Going forward, improvement in the operating revenue while sustaining the profitability margins will be a key monitorable.
Moderate financial risk profile
The financial risk profile of RIPL is moderate with moderate networth, low gearing and moderate debt protection metrics. The tangible networth of the company stood at Rs. 33.94 Cr. on March 31, 2026 (Prov.). The gearing though increased, stood below unity at 0.75 times in FY2026 (Prov.) from 0.47 times in FY2025 due to increase in the debt levels of the company. The TOL/TNW levels, continue to remain below unity at 0.90 times in FY2026 (Prov.). The coverage indicators remain adequate with interest coverage ratio (ICR) and DSCR at 2.28 times in FY2026 (Prov.). However, the Debt-EBITDA levels stood high at 5.68 times in FY2026 (Prov.)
Susceptibility of profitability to raw material availability and commodity price volatility
Rice bran is the major raw material for rice bran oil and de-oiled rice bran cakes. The availability of rice bran is affected by several factors such as rice production, climatic conditions, government policies, etc. The quality of rice bran also plays a major role in the extraction process, as low quality of rice bran may affect the output quantity. Further, the demand and price for rice bran oil is sensitive to alternate edible oil prices and the prices of oil seeds. The prices of edible oil is also influenced by other factors such as government policies, climatic conditions, oil seed availability, global demand, etc. Additionally, the company faces intense competition from unorganized players, which further limits its pricing flexibility. Exposure to these factors results in volatility in profitability margins.
Rating Sensitivities
Potential triggers (individual or collective) for an upward rating action:
Improvement in operating performance with net cash accruals higher than 3-4 Cr.
Improvement in Debt-EBITDA levels
Potential triggers (individual or collective) for a downward rating action:
Deterioration in operating performance with net cash accruals declining below Rs. 1 Cr.
Significant increase in debt levels, impacting the financial risk profile
Elongation in the working capital cycle
Liquidity Position
Adequate
The liquidity position of RIPL is adequate supported by generation of net cash accruals (NCAs) of Rs. 2.50 Cr. against nil repayment obligations in FY2026 (Prov.). Going forward, NCAs are expected to remain in the range of Rs. 2.50 – 3.00 Cr. against repayment obligations of Rs. 0.70 Cr. each for FY2027 and FY2028. The current ratio stood at 1.54 times in FY2026 (Prov.). The average bank limit utilization stood at ~72 percent for the last six months ended June 2026. The company had an unencumbered cash and bank balance of Rs. 0.57 Cr. on March 31, 2026 (Prov.)
Outlook: Stable
Other Factors affecting Rating
None
Particulars
Unit
FY 26 (Provisional)
FY 25 (Actual)
Operating Income
Rs. Cr.
172.01
159.27
PAT
Rs. Cr.
1.70
1.63
PAT Margin
(%)
0.99
1.02
Total Debt/Tangible Net Worth
Times
0.75
0.47
PBDIT/Interest
Times
2.28
3.76
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
