Agarwal Industrial Corporation Ltd: manufacturer and trader of bituminous products

Agarwal Industrial Corporation Ltd: manufacturer and trader of bituminous products


 

Strengths:

  • Established market position in the bitumen industry: 
    • AICL group benefits from the extensive business experience of the promoters of over four decades, their understanding of the dynamics of the local and global bitumen market, and established relationships with suppliers and customers. 
    • The group’s strategically located manufacturing facilities and storage units has helped in reduction of transportation cost.

 

  • Diversified revenue profile with established clientele: 
    • Apart from being a manufacturer and trader of bituminous products, AICL group provides integrated solution to its customers in terms of transportation. 
    • AICL group is also engaged in transportation of LPG cylinders, power generation through windmill and ship chartering business. 
    • The parent company - AICL’s freight expenses are expected to be moderated to the extent of 60-70% in the form of freight revenue from this ship chartering business. 
    • In FY2024 AICL transported 60% of bitumen through its own vessels.
    • The profitability from ship chartering business offsets for the moderate margins in the Bitumen trading segment. 
    • In addition, the group benefits from the established customer and supplier network in domestic and international markets which supports repeat business across segments.

 

  • Strong financial risk profile: 
    • With continuous accretion to reserves AICL group has built a net worth of Rs. 506 crores as on March 31, 2024 as compared to Rs 398 as on March 31, 2023. 
    • The gearing and total outside liabilities to adjusted net worth (TOLANW) is 0.68 time and 1.20 time, respectively, as on March 31, 2024. 
    • Despite proposed debt funded capex for procuring vessels the capital structure is expected to be comfortable in the medium term with expected Gearing and total outside liabilities to adjusted networth (TOLANW) in range of 0.4-0.5 time and 0.7-1 time, respectively in medium term. 
    • AICL group’s debt protection metrics is healthy with interest coverage of 8.33 times and net cash accruals to total debt (NCATD) of 0.39 time respectively, for fiscal 2024. The debt protection metrics are expected to remain at healthy over the medium term backed by healthy profitability.

 

  • Prudent risk management strategies: 
    • AICL group has prudent risk management strategies marked by moderate credit extended to customers and low inventory holding. 
    • The average inventory maintained over the past 3 years ended fiscal 2024 is low at around 16-24 days. 
    • Majority of the purchases are order backed while certain inventories are maintained in order to cater to urgent demand from its customers. 
    • Counterparty risk is mitigated to some extent by a large and diversified clientele and established long relationship of 3-4 decades with major clients. 
    • It is also able to pass on its foreign exchange exposure to customers.

 Thank you for contacting Rounaq! Please let us know how we can help you. 

Whatsapp: 7838491131

SEBI registered RA : Rounaq Bakshi
Waheguru

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