| Ajanta Soya Limited | ||||||
| Rating outlook revised to 'Positive'; Ratings Reaffirmed | ||||||
| Rating Action | ||||||
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| Note: None of the Directors on Crisil Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||||
| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale Crisil Ratings has revised its outlook on the long-term bank facilities of Ajanta Soya Limited (ASL) to ‘Positive’ from ‘Stable’ while reaffirming the rating at ‘Crisil BBB-’. The short-term rating has been reaffirmed at ‘Crisil A3’.
The revision in outlook reflects Crisil’s belief that ASL’s operating profitability will sustain over the medium term along with steady improvement in revenue profile. Operating margins have recovered to 2.8-3% in fiscal 2025 as a result of improvement in palm oil realizations after declining for two fiscals in a row to 0.75% and 0.50%, respectively, in fiscal 2024 and 2023 from 3.8% in fiscal 2022. The revenue is has grown by 30% year-on-year to Rs 1,300 crore in fiscal 2025 aided by healthy volumetric growth of 11% coupled with rise in realizations. Going forward, addition of dealers and value-added products, and bidding for more government orders should drive volumetric growth. The operating margins remain susceptible to volatility in oil prices in the coming fiscals and its sustenance remains a key rating sensitivity factor.
The ratings continue to reflect the established market position of ASL and extensive experience of its promoters in the edible oil industry and the healthy financial risk profile of the company. These strengths are partially offset by volatile operating profitability. |
Analytical Approach Crisil Ratings has evaluated the standalone business and financial risk profiles of ASL. |
Key Rating Drivers & Detailed Description Strengths: Established market position and extensive experience of the promoters: Presence of over three decades in the edible oil industry has enabled the promoters to gain a strong understanding of local market dynamics and build healthy relationships with suppliers and customers. The business risk profile is further supported by association with reputed clients such as Britannia Industries Ltd, Parsons Nutritionals Pvt Ltd (rated ‘Crisil A-/Stable/Crisil A2+’), Surya Food & Agro Ltd, etc. Furthermore, the product portfolio is well-diversified, comprising refined oil (palm oil, palm olein oil, soyabean oil, groundnut oil, mustard oil, etc.), vanaspati and bakery products. Around 50% of revenue is generated from sales under own brands. Resultantly, the company has clocked revenue of Rs 1,300 crore during fiscal 2025. Crisil Rating believes that the company’s established market position of the company and extensive experience of promoters will continue to support the company in healthy business growth.
Healthy financial risk profile: The financial risk profile is expected to remain healthy. Networth is estimated to be in the range of Rs 150-160 crore as on March 31, 2025 (vis-à-vis Rs 130 crore as on March 31, 2024). Prudent working capital management minimizes the reliance on working capital debt, as reflected in negligible gearing estimated below 0.1 time as on March 31, 2025. With rebound in operating margin, interest cover is estimated to be in the range of 8-9 times during fiscal 2025. Going forward, with no plans to incur any major capital expenditure or contract incremental debt, the financial risk profile should remain healthy.
Weakness: Volatile operating profitability: On account of volatility in raw material prices, operating margins significantly declined to 0.75% and 0.50% respectively in fiscals 2024 and 2023 from 3.8% in fiscal 2022. However, improvement and stability in raw material prices has likely benefited the company as operating margins have recovered to 2.8-3.0% for the full fiscal 2025. But given the price-sensitive nature of industry, it remains exposed to availability, changes in government policies in the form of import duties on refined and crude edible oil, and volatility in edible oil prices and foreign exchange (forex) rates as also seen in decline in operating margins to 1.8-2.0% in Q4FY25 from 3.3-3.5% in Q3FY25. Further, the company has started back-to-back procurement of raw material and hedges 60-70% of its forex exposure mitigating risk to some extent. However, going forward the sustenance of operating profitability, amid business growth and the industry scenario, remains a key rating sensitivity factor. |
Liquidity: Adequate Bank limit remained unutilized for the 12 months ending February-2025. Expected net cash accrual of Rs 29-32 crore should suffice to cover liquidity and incremental working capital requirement, in the absence of any term debt obligation over the medium term. Current ratio was healthy at 2.1 times as on March 31, 2025. The company is projected to hold cash and cash equivalents worth Rs 10-11 crore and marketable securities worth Rs 58 crore as on May 31, 2025. |
Outlook: Positive Crisil Ratings believes ASL will continue to benefit from the extensive experience of its promoters in the edible oil industry and their established relationships with clients. |
Rating sensitivity factors Upward factors:
Downward factors:
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About the Company Incorporated in 1992, ASL is engaged in manufacture and refining of oil, vanaspati and bakery products such as biscuits, puffs, pastries, and other applications. The company markets its products through brands such as Dhruv, Anchal, Parv, Nuti 1992, ASL Pure & Fine Fingers. The manufacturing facility is located at Bhiwadi (Rajasthan). Operations are managed by the promoter, Mr Sushil Kumar Goyal and his son. The company has been listed on the Bombay Stock Exchange Ltd since 1993. |
Key Financial Indicators
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Any other information: Not Applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
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| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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* - Issuer did not cooperate; based on best-available information
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| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||
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Criteria Details
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