| Vidhi Specialty Food Ingredients Limited | ||||||
| Ratings reaffirmed at 'Crisil A- / Stable / Crisil A2+ ' | ||||||
| Rating Action | ||||||
| ||||||
| 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 reaffirmed its ‘Crisil A-/Stable/Crisil A2+' ratings on the bank facilities of Vidhi Specialty Food Ingredients Ltd (VSFIL; a part of the Vidhi group).
The ratings continue to reflect the group’s established market position in the food colour industry and healthy financial risk profile. These strengths are partially offset by large working capital requirement and exposure to fluctuations in raw material prices and large dividend payouts. |
Analytical Approach Crisil Ratings has combined the financial and business risk profiles of VSFIL and its wholly owned subsidiary, Arjun Food Colorants Manufacturing Pvt Ltd (AFCMPL). This is because both these entities, together referred to as the Vidhi group, have a common management and strong operational and financial linkages.
Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers - Strengths Well-established market position: The Vidhi group has established its market position over the past 25 years in the food colour industry on the back of sound operating efficiency. The group has ISO and Kosher certification, and product approvals from customers; it majorly caters to the export market, which contributes 80-90% of its revenue. The clientele includes global food colour vendors such as Univar Inc, UK; Map Technologies Ltd, UK; Proquimac Food & Pharma SA, Spain; among others. The group also has strong relationship with global majors such as Nestle, Mars, Pedigree and Sanofi. Further the company has incurred capacity expansion in fiscal 2025 which has led to healthy growth in manufacturing volume sales by around 40% y-o-y leading to revenues of around Rs 378 crore as compared to Rs 299 crore in fiscal 2024. Scale of operations is expected to increase, driven by healthy demand, new product additions as well increased penetration in existing markets.
Strong financial risk profile: Networth has been strong at Rs 294 crore as on March 31st 2025 driven by steady accretion to reserves. Capital structure is comfortable due to moderate reliance on external debt and creditors to fund the working capital requirement and capex leading to gearing and total outside liabilities to adjusted networth (TOLANW) of 0.2 and 0.3 times as on March 31st 2025. While the company has large dividend payouts, networth would continue to remain strong with steady accretion to reserves. Healthy operating profits and moderate leverage led to robust debt protection metrics. Interest coverage and net cash accrual to total debt ratios stood at 28.1 times and 0.4 times, respectively, for fiscal 2025. It is expected to remain comfortable driven by further improvement in operating margins and continued moderate leverage. |
Key Rating Drivers - Weaknesses Large working capital requirement: Gross current assets were 243 days as on March 31, 2025, driven by receivables of 126 days and inventory of 88 days. The group extends a credit period of 60-120 days to customers leading to high debtor days. The company has to maintain high inventory of 60-90 days to meet customer requirements on time. Working capital cycle is expected to remain large over the medium term.
Susceptibility to fluctuations in raw material prices: Raw material costs accounts for 65-75% of the total operating income and since the key raw materials (naphthalene and aniline) are crude oil based, the prices are volatile in nature. While the group has the ability to pass down any increase in raw material prices to customers, the same is with a time lag and hence any sharp fluctuations in the input cost can impact the operating margin. Operating margins have range in between 14-23% over the past four years through first half of fiscal 2026. |
Liquidity Strong Bank limit utilisation was around 50% for the 12 months through July 2025. The company incurred high dividend payout of Rs 22.5 crore in fiscal 2025. Dividend payouts are expected to remain large in absence of any large capex plans. Despite large dividend outflows, net cash accruals are expected to be Rs 26-30 crore against which the company does not have any repayment obligations. In addition, it will act as cushion to the liquidity of the company. Current ratio was healthy at 2.9 times and cash and bank balance at around Rs 27 crore as on March 31, 2025. Low gearing and moderate net worth support its financial flexibility and provides the financial cushion available in case of any adverse conditions or downturn in the business. |
Outlook Stable The Vidhi group will improve on its already established position in the food colour market, backed by its longstanding associations with customers and suppliers. |
Rating sensitivity factors Upward factors:
Downward factors:
|
About the Company VSFIL, incorporated in 1994 and promoted by Mr Bipin Manek, manufactures synthetic food colours used in the foodstuff, pharmaceutical, confectionery, pet food, healthcare, dairy products, soft drinks and cosmetics industries. The company has also set up a research and development unit near its manufacturing facility in Roha (Maharashtra), which enables the company to test food colours and meet the quality specification set by the US Food and Drug Administration and other regulatory bodies around the world. The company exports its products to countries in Europe, North America, Africa and Australia, with presence in 80 countries globally |
Key Financial Indicators
|
Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
|
Annexure – List of entities consolidated
|
| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||||||||||||||||||
|
Criteria Details
|