­Experienced management and established track record of operations.
SAPL is a Mumbai based company incorporated in 2014 and founded by Mr. Balan M Thevar. The promoters Mr. Balan M Thevar and Mr. Anand Mani have an experience of over a decade in the agro industry and are second generation agriculturists from Tamil Nadu with a land of 180 acres in the company’s name. Further, the company also has a processing unit for grams and pulses with a capacity of 70 tonnes per day. Acuité believes that SAPL’s business risk profile will be supported by promoters’ expertise and extensive experience in the industry along with a sufficient capacity available to carry out its operations.

Improving scale of operations:
SAPL’s revenue has improved to Rs.487.39 Cr. in FY2024, nearly with a growth rate of 10 percent on the previous year revenue of Rs.443.50 Cr. This growth is primarily attributed to the increasing orders for processing and trading segments coupled by increased capacity utilization in the processing segment. The revenue from processing segment and trading segment has grown by 35 percent and 8 percent respectively during FY2024. Further, the operating profit margin continued to show marginal Y-o-Y improvement for the fourth consecutive year. The operating profit margins stood at 4.73 percent in FY2024, compared to 4.33 percent in FY2023 and 4.26 percent in FY2022, attributed to improving realizations for its products. PAT margin also improved to 3.18 percent in FY2024 from 2.85 percent in FY2023. During the 9MFY2025, SAPL registered revenue of Rs.408.69 Cr, which is ~19 percent higher than 9MFY2024 revenue and expected to end the FY2025 with revenue in the range of Rs.580-590 Cr. The growth in current year’s revenue is due to increased orders in trading segment and higher capacity utilization in processing segment. The operating profit margin is expected to remain stable FY2025 as well.
Acuite believes that, the revenue of the company is expected to improve over the medium term on account of increasing orders and increased capacity utilization.

Moderate financial risk profile:
The financial risk profile of the company is moderate, marked by moderate net worth, moderate gearing and healthy debt protection metrics. The net worth of the company stood at Rs.79.04 Cr. as on March 31, 2024 as against Rs.63.55 Cr. as on March 31, 2023. The improvement in networth is due to accretion of profits to the reserves. Despite the increase in total debt levels (majorly  short term debt) to Rs.73.61 Cr. as on March 31, 2024 from Rs.53.58 Cr. as on March 31, 2023, the gearing levels remained moderate at 0.93 times. Further, the total outside liabilities to tangible networth (TOL/TNW) also stood moderate at 1.27 times as on March 31, 2024 against 1.22 times as on March 31, 2023. The debt protection metrics stood healthy with DSCR and ICR of 2.88 times and 4.10 times respectively as on March 31, 2024 against 2.79 times and 3.73 times as on March 31, 2023. Debt to EBITDA has marginally deteriorated at 3.18 times as on March 31, 2024 against 2.79 times as on March 31, 2023.
Acuite believes that the financial risk profile of the company will improve over the medium term due to its conservative leverage policy and absence of any debt funded capex plans.

Moderately intensive working capital operations:
SAPL’s working capital operations are moderately intensive as reflected by the gross current days (GCA) days of 105 days in FY2024 compared to 93 days in FY2023. The elongation in GCA days is due to higher debtor days. SAPL allows a credit period of 90 days to its customers and does majority of the sales during the Q4 leading to build up of debtors in the last quarter. The company enjoys a credit period of 15-30 days from its suppliers and maintain inventory as on when received orders from customers leading to lower inventory days of 14 days in FY2024 compared to 12 days in FY2023.
Acuite believes that the working capital operations of the company will remain moderately intensive over the medium term owing to nature of business.

Thin margins from trading segment
The operating margins (EBIDTA) stood at 4.73 percent in FY2024 compared to 4.33 percent in FY2023. The Profit after tax margins (PAT) stood at 3.18 percent in FY2024 against 2.85 percent in FY2023. Majority of the profitability is contributed by core agricultural activity and the trading activities, while profitability from the value addition activity i.e. from processing is observed to be marginal. With presence in trading and processing of agricultural products, the company's profitability is expected to remain thin over the medium term.

Highly competitive and fragmented industry
The agro processing industry is highly competitive and fragmented with several organised and unorganised players. The intense competition and low value addition in the agro processing industry have resulted in low operating margins.