Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.21.80 Crs. of H.V. Equipments Pvt. Ltd.
ParticularsFacilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||||
---|---|---|---|---|---|---|---|
Fund Based | |||||||
Cash Credit Sanctioned | 04.05 | Long Term | BWR | ||||
Sub Total | 4.05 | ||||||
Non-Fund Based | |||||||
Bank Guarantee Sanctioned | 17.00 | Long Term | BWR | ||||
Letter of Credit Proposed | 00.75 | Short Term | BWR | ||||
Sub Total | 17.75 | ||||||
Grand Total | 21.80 | (Rupees Twenty One Crores and Eighty lakhs Only) |
BWR assigns the Long Term Rating of BWR B+ Stable and Short term rating of BWR A4 to H.V. Equipments Pvt Ltd. The rating draws strength from the extensive experience of the promoters and moderate credit risk profile. However, the rating of the company is constrained by working capital intensive operations, tender based nature of operations and Covid 19 effect.
BWR believes that H.V. Equipments Pvt. Ltd. business risk profile will be maintained over the medium term. The 'Stable' outlook indicates a low likelihood of rating change over the medium term. The rating outlook may be revised to 'Positive' in case the revenues and profit show sustained improvement. The rating outlook may be revised to 'Negative' if financial credit risk profile deteriorate including the liquidity.
KEY RATING DRIVERS
Credit Strengths:
The business is promoted by Mr. S.S. Verma who is ably assisted by his family members Mr. Amit Verma and Mr. Anil Verma. Mr. S.S. Verma is having more than five decades of industrial experience with him along with two decades of experience of other directors.The company is engaged in manufacturing of pneumatic conveying system (mill reject handling system/ash handling system) has strong relationship with customers like BHEL, NTPC, Tata Projects Ltd, Larsen and Toubro Power Ltd etc.
There has been an increase in revenues of the company to Rs.20.05 crs in FY19(A) from Rs.18.01 crs in FY18(A). The company has incurred profits of Rs.0.72 crs in FY19 (A) & Rs.0.64 crs in FY18 (A) respectively. Tangible net worth also remained at modest level at Rs.6.74 crs in FY19. Total debt/TNW stood at 0.89x in FY19 as compared to 1.10x in FY18. ISCR at 1.85x has improved in FY19 as compared to 1.73x in FY18 owing to increase in operating profits.
Credit Risks:
Conversion cycle, at 147 days as on March 31, 2019, is on a higher side. It is a working capital intensive unit which has resulted into stretched liquidity position.
The company participates in tenders and there is uncertainty of orders, thus exposing the firm to demand side risk.
Due to Covid 19 effect, the revenue visibility is challenging in the medium term however the company has projected revenue of Rs.25 crs in FY21 as has orders in hand worth Rs. 52 crs alongwith running orders. Though the operations were closed in April and May 2020 due to Covid 19 lockdown, the company managed to generate revenue of Rs. 6 crs from June'20 till date.
For arriving at its ratings, BWR has applied its rating methodology as detailed in the Rating Criteria detailed below (hyperlinks provided at the end of this rationale).
RATING SENSITIVITIES
Going forward, the ability of the company to improve its revenues and financial risk profile would remain the key rating sensitivities.
Positive: Rating may be upgraded in case of substantial improvement in revenues and profit margins of the company.
Negative: Rating may be downgraded in case there is deterioration in financial risk profile of the firm including the liquidity of the company.
LIQUIDITY INDICATORS -
The company has no associate or group concern. Cash and cash equivalents stood at Rs. 0.24 crs in FY19. Long term borrowings are on account of unsecured loans from directors of Rs. 0.65 crs, vehicle loans of Rs. 0.21 crs and business loans of Rs. 0.47 crs in FY19 from ICICI bank, RBL Bank and Deutsche bank. The company generated cash surplus of Rs. 0.92 crs as against CPLTD of Rs. 1.03 crs in FY19. Current Ratio stands at 1.32x along with ISCR of 1.85x and DSCR of 0.87x in FY19. Conversion cycle of 147 days as on March 31, 2019, is on a higher side resulting in stretched liquidity. CC utilisation stands at 90% as on date. Taking into account the above, the liquidity position is considered to be Stretched.
ABOUT THE ENTITYH.V. Equipments Private Limited, incorporated in 1984, installs ash handling and mill reject systems (waste disposal of coal) for public sector enterprises. It mainly manufactures dense phase pneumatic conveying systems used for thermal power and cement plants, and paper mills. The company has a fabrication and design unit in Sector 63, Noida where approx 40%-50% of the equipment is manufactured. The company is promoted by Mr. S. S. Verma alongwith his family members Mr. Amit Verma and Mr. Anil Verma. The company has customers like BHEL, NTPC, L&T etc. It is a tender based business.
KEY FINANCIAL INDICATORS (Standalone)Key Parameters | Units |
FY 18-19 (Audited) |
FY 17-18 (Audited) |
---|---|---|---|
Operating Revenue | Rs.Crs. | 20.05 | 18.01 |
EBITDA | Rs.Crs. | 2.26 | 2.20 |
PAT | Rs.Crs. | 0.72 | 0.64 |
Tangible Net Worth | Rs.Crs. | 6.74 | 6.02 |
Total Debt/Tangible Net Worth | Times | 0.89 | 1.10 |
Current Ratio | Times | 1.32 | 1.38 |
CRA Name | Date | Amount | Rating |
---|---|---|---|
CRISIL | 10 Jul 2019 | 21.00 | CRISIL B Stable/A4 |
ACUITE | 06 Aug 2019 | 21.00 | ACUITE B+ Stable/A4 |
BWR complexity levels are meant for educating investors. The BWR complexity levels are available at www.brickworkratings.com / download / ComplexityLevels.pdf. Investors queries can be sent to info@brickworkratings.com.
Analytical Contacts | |
---|---|
Shweta Tandon Rating Analyst Board : +91 11 2341 2232 shweta.t@brickworkratings.com |
V.K.Kukreja Associate Director - Ratings Board : +91 11 2341 2232 kukreja.vk@brickworkratings.com |
1-860-425-2742 | media@brickworkratings.com |
SL.No. | Type Of Facilities | Long Term(Rs.Crs.) | Short Term(Rs.Crs.) | Total(Rs.Crs.) |
---|---|---|---|---|
1 | Cash CreditSanctioned | 4.05 | _ | 4.05 |
2 | Bank GuaranteeSanctioned | 17.00 | _ | 17.00 |
3 | Letter of CreditProposed | _ | 0.75 | 0.75 |
Total | 21.80 | |||
TOTAL (Rupees Twenty One Crores and Eighty lakhs Only) |
Instrument | Issue Date | Amount (Rs.Crs) | Coupon Rate | Maturity Date | ISIN Particulars |
---|---|---|---|---|---|
NA | NA | NA | NA | NA | NA |
Name of Entity | % Ownership | Extent of consolidation | Rationale for consolidation |
---|---|---|---|
NA | NA | NA | NA |
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Brickwork Ratings (BWR) has assigned the rating based on the information obtained from the issuer and other reliable sources, which are deemed to be accurate. BWR has taken considerable steps to avoid any data distortion; however, it does not examine the precision or completeness of the information obtained. And hence, the information in this report is presented "as is" without any express or implied warranty of any kind. BWR does not make any representation in respect to the truth or accuracy of any such information. The rating assigned by BWR should be treated as an opinion rather than a recommendation to buy, sell or hold the rated instrument and BWR shall not be liable for any losses incurred by users from any use of this report or its contents. BWR has the right to change, suspend or withdraw the ratings at any time for any reasons.