| Experienced management and established track record of operations
WFP was established in 1999, and WFPPL was incorporated in 2016. Thus, both the entities have an operational track record of over two decades. Mr. A.C.B. Nambiar i.e Managing Partner has an experience of around five decades in the flexible packaging industry. The group manufactures plastic pouches and printed rolls for packaging, which are utilized by majorly by FMCG sector and pharmaceutical industries. Hence, long track records of operations and vast experience of management has helped the group diversify its customer base to domestic market and international markets like UK, USA, UAE, Peru, Jordan etc.
Improving margins with moderate revenue growth
The revenue of the group stood at Rs. 223.57 Cr. in FY2024 as against Rs. 217.41 Cr. in FY2023 and Rs. 174.72 Cr. in FY2022. While the volumes increased on y-o-y basis the decline in the realisation prices due to excess supply led to moderate growth in the revenue in FY2024.The major raw material for the group is plastic granules which is affected by volatility in crude oil prices. Therefore, the operating margins continued to improve on account of lower material cost and efficiency in operations. The operating margin stood improved at 8.53 percent in FY2024 as against 7.05 percent in FY2023 and 6.32 percent in FY2022. Further, the PAT margin also stood improved at 1.78 times in FY2024 as against 1.21 percent in FY2023 and 1.53 percent in FY2022. In FY25, the group recorded a revenue of Rs 164.10 Cr. till November 30, 2024.
Acuité believes that group will sustain its existing business profile on the back of established track record of operations and strategic decision by the management to increase its scale of operations which shall remain a key rating sensitivity.
|
| Average financial risk profile
The financial risk profile of the group is average marked with improving networth, moderate gearing and low debt protection indicators. The networth of the group stood improved at Rs. 45.38 Cr. on March 31, 2024 on account of accretion to reserves as well as consideration of unsecured loans from promoters of Rs. 7.43 Cr. as quasi equity. This led to improvement in gearing to 1.95 times on March 31, 2024 from 2.54 times in March 31, 2023. The Debt-EBITDA also improved but stood high at 4.54 times on March 31, 2024 as against 5.76 times on March 31, 2023. The debt protection metrics however stood low with interest coverage ratio at 1.91 times and debt service coverage ratio at 0.99 times in FY2024. The shortfall in the cash accruals was met through the unsecured loans from promoters.
The financial risk profile of the group is expected to improve going forward on account of improvement in the cash accruals as well as absence of any debt funded capex.
Intensive working capital operations
The working capital operations continue to remain intensive with gross current asset (GCA) of 208 days on March 31, 2024 as against 194 days on March 31, 2023. The GCA days is mainly influenced by higher inventory days of 134 days on March 31, 2024 as against 113 days on March 31, 2024. The debtor days stood at 74 days on March 31, 2024 as against 75 days in the previous year. The creditor days stood at 75 days on March 31, 2024 as against 65 days on March 31, 2023. The group provides their debtors an average credit period of 30 – 90 days and receives a similar credit period from its suppliers.
Acuite believes that the working capital cycle shall continue to remain at similar levels considering the nature of industry.
High susceptibility to volatility in input cost and intense competition
The price of plastic granules, the key raw material, is highly volatile as it is a derivative of crude oil which may affect the profitability of the group. Further, the industry comprises of multiple players in unorganised market with low entry barriers which increases the competition thereby affecting both pricing and profitability.
|
