Rating Rationale
March 04, 2025 | Mumbai
Goyal Salt Limited
'Crisil BBB-/Stable/Crisil A3' assigned to Bank Debt
 
Rating Action
Total Bank Loan Facilities RatedRs.55 Crore
Long Term RatingCrisil BBB-/Stable (Assigned)
Short Term RatingCrisil A3 (Assigned)
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 assigned its ‘Crisil BBB-/Stable/Crisil A3’ ratings to the bank facilities of Goyal Salt Limited (GSL).

 

The ratings reflect the extensive experience of the promoters in the salt manufacturing and trading business, favourable location of the plant, the efficient working capital cycle and healthy financial risk profile of the company. These strengths are partially offset by the moderate scale of operations and vulnerability to climatic changes and natural phenomena.

Analytical approach

Crisil Ratings has evaluated the standalone business and financial risk profiles of GSL.

Key rating drivers & detailed description

Strengths:

  • Extensive experience of the promoters and favourable location of the plant: The two-decade-long experience of the promoters, Mr Parmesh Goyal and Mr Rajesh Goyal, in the salt manufacturing and trading industry, has enabled them to gain a strong understanding of market dynamics and build longstanding relationships with key customers and suppliers. Moreover, the favourable location of the plant in Nawa City near Sambar Lake, Gujarat, facilitates easy access to raw material and minimises transportation cost. Revenue has grown steadily to Rs 118 crore in fiscal 2024, from Rs 60 crore in fiscal 2021, backed by continued diversification in the product profile and customer base, and is projected to be close to Rs 130 crore in fiscal 2025. Furthermore, planned expansion of the manufacturing facility in Gandhidham, Gujarat, along with focus on the business-to-consumer segment and own branded sales should aid healthy revenue growth over the medium term.

 

  • Efficient working capital cycle: Gross current assets stood at 79 days as on March 31, 2024, driven by receivables of 58 days and low inventory of 16 days. Customers are offered moderate credit period of 30-90 days and payments are collected on time. Inventory is maintained as per the seasonal and business requirements and tends to be higher during procurement season but the same is sold by the year end. The working capital cycle is partially supported by credit of up to 60 days offered by suppliers. Working capital cycle should remain efficiently managed over the medium term.

 

  • Healthy financial risk profile: Networth was moderate at Rs 42.2 crore as on March 31, 2024, and has steadily increased due to accretion to reserves and equity infusion of Rs 18 crore through IPO in fiscal 2024. Capital structure is moderate as reflected in total outside liabilities to adjusted networth and gearing ratios of 0.19 time and 0.13 time, respectively, as on March 31, 2024, aided by controlled reliance on external debt for funding capital expenditure (capex) and working capital requirement. Debt protection metrics are adequate as reflected in interest coverage and net cash accrual to adjusted debt ratios of 19.2 times and 1.89 times, respectively, for fiscal 2024.  Financial risk profile should remain healthy over the medium term, backed by healthy profitability, despite the ongoing debt-funded capex.

 

Weaknesses:

  • Moderate scale of operations: Despite longstanding presence in the salt manufacturing and trading business, GSL operates on a moderate scale, as reflected in revenue of Rs 118 crore for fiscal 2024. This constrains scalability and operating efficiency. Timely commencement and ramp up of the new manufacturing facility, yielding incremental revenue, along with healthy demand from the existing plant, remains a key rating sensitivity factor.

 

  • Vulnerability to climatic changes and natural phenomena: As the manufacturing facility is in Rajasthan, the company remains exposed to adverse weather conditions and natural occurrences, and other regulatory, economic, demographic factors. Non-seasonal rainfalls could also affect procurement of the principal raw material, raw salt. Though this risk is mitigated by GSL’s entry into a new state, sudden climatic changes and natural phenomena could impact revenues and profitability and this remains a key monitorable for the medium term.

Liquidity: Adequate

Bank limit utilisation was moderate, averaging over 68% for the 12 months through December 2024.  Cash accrual of Rs 10-12 crore is expected per fiscal, against nil debt in fiscal 2025 and Rs 2.86 crore in fiscal 2026, the excess would cushion the liquidity of the company. Furthermore, the company has unencumbered cash and other equity instruments of Rs 4-5 crore as on September 30, 2024. Low gearing and moderate networth support the financial flexibility and overall liquidity.

Outlook: Stable

Crisil Ratings believes GSL will continue to benefit from the extensive experience of its promoters in the salt manufacturing and trading business, their established relationships with clients.

Rating sensitivity factors

Upward factors

  • Sustained growth in revenue and operating margin, leading to net cash accrual above Rs 14 crore (excluding non-operating income)
  • Sustenance of healthy financial risk profile and prudent working capital management, aiding liquidity

 

Downward factors:

  • Decline in revenue or operating margin, leading to net cash accrual below Rs 5 crore
  • Further stretch in the working capital cycle or larger-than-expected debt-funded capex, weakening liquidity

About the company

GSL, formely Goyal Salt Pvt Ltd, was incorporated in 2010, by Mr Kunj Goyal and reconstituted as a limited company in 2023. The company is engaged in refining raw salts procured from sub-soil brine, for use as industrial salt and edible salt. Products include refined free-flow iodised salt, refined free flow industrial salt, double fortified salt, and refined half dry salt. Operations are managed by second-generation promoters, Mr Parmesh Goyal and Mr Rajesh Goyal.

 

The company is listed on the SME platform of the National Stock Exchange of India Limited.

Key financial indicators

As on/for the period ended March 31

Unit

6MFY2025

2024

2023

Operating income

Rs crore

68.26

117.76

117.69

Reported profit after tax (PAT)

Rs crore

9.32

9.45

3.54

PAT margin

%

15.11%

8.03

3.01

Adjusted debt/adjusted networth

Times

0.20

0.13

0.57

Interest coverage

Times

14.60

19.20

6.37

Any other information: Not Applicable

Note on complexity levels of the rated instrument:
Crisil Ratings` complexity levels are assigned to various types of financial instruments and are included (where applicable) in the 'Annexure - Details of Instrument' in this Rating Rationale.

Crisil Ratings will disclose complexity level for all securities - including those that are yet to be placed - based on available information. The complexity level for instruments may be updated, where required, in the rating rationale published subsequent to the issuance of the instrument when details on such features are available.

For more details on the Crisil Ratings` complexity levels please visit www.crisilratings.com. Users may also call the Customer Service Helpdesk with queries on specific instruments.

Annexure - Details of Instrument(s)

ISIN Name Of Instrument Date Of Allotment Coupon Rate (%) Maturity Date Issue Size (Rs.Crore) Complexity Levels Rating Outstanding with Outlook
NA Bank Guarantee NA NA NA 5.00 NA Crisil A3
NA Cash Credit NA NA NA 30.00 NA Crisil BBB-/Stable
NA Term Loan NA NA 31-Mar-32 20.00 NA Crisil BBB-/Stable
Annexure - Rating History for last 3 Years
  Current 2025 (History) 2024  2023  2022  Start of 2022
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Fund Based Facilities LT 50.0 Crisil BBB-/Stable   --   --   --   -- --
Non-Fund Based Facilities ST 5.0 Crisil A3   --   --   --   -- --
All amounts are in Rs.Cr.
Annexure - Details of Bank Lenders & Facilities
Facility Amount (Rs.Crore) Name of Lender Rating
Bank Guarantee 5 YES Bank Limited Crisil A3
Cash Credit 30 YES Bank Limited Crisil BBB-/Stable
Term Loan 20 YES Bank Limited Crisil BBB-/Stable
Criteria Details
Links to related criteria
Basics of Ratings (including default recognition, assessing information adequacy)
Criteria for manufacturing, trading and corporate services sector (including approach for financial ratios)

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