Elektrolites (Power) Pvt. Ltd.

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.34.00 Crs. of Elektrolites (Power) Pvt. Ltd.

Particulars

Facility**	Amount (Rs.Crs)	Tenure	Rating*
Fund Based
Cash Credit - Sanctioned Sub-Limit (PCL/ FDBP/ FUBN/ FUBP (Against Prime Bank LC)) - Sanctioned	10.50 (02.00)	Long Term	BWR BB + (Stable)
Sub Total	10.50
Non-Fund Based
Bank Guarantee - Sanctioned FLC(DA/DP) - Sanctioned	12.00 11.50	Short Term	BWR A4 +
Sub Total	23.50
Grand Total	34.00	(Rupees Thirty Four Crores Only)

*Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank facilities are provided in Annexure-I RATING ACTION / OUTLOOK : Stable

BWR has assigned the long term rating at “BWR BB+'' with “Stable” outlook and short term rating at "BWR A4+" for the bank loan facilities of M/s Elektrolites (Power) Pvt. Ltd. The rating draws strength from the experienced management, moderate financial profile and established client base. However, the rating is constrained on account of competition in the industry and elongated working capital cycle.

The rating outlook has been assigned as "Stable" as BWR believes that M/s Elektrolites (Power) 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 profits show sustained improvement. The rating outlook may be revised to 'Negative' if the financial risk profile goes down.

KEY RATING DRIVERS

Credit Strengths:

• Experienced management :

  Mr. Anil Kumar Saboo, Managing Director, looks after the overall affairs of the company. He is an engineer graduate by qualification and has experience of around 35 years in the industry. Currently, he is the President of IEEMA (Indian Electrical & Electronics Manufacturers Association). The company also has a team of qualified technical personnel to support the management. With the long-standing presence of the promoters in the industry, the promoters have established good clientele base in the industry.

• Moderate Financial Profile :

  Though operating income has decreased from Rs.44.42crs in FY20A to Rs.36.66crs in FY21P which indicates a decline of 17.5%, as, company was focusing on R & D and Collaboration with efficient customers to explore massive opportunities during COVID-19 pandemic which reduced the topline. Company has projected revenues of Rs.50.34crs in FY22 which they plan to achieve ahead by investment & adoption of Technology. TNW has increased from Rs.26.35crs in FY20A to Rs.29.71crs in FY21P. Operating profit margin has increased from 6.61% in FY20A to 10.13% in FY21P and Net Profit Margin has also increased from 1.21% in FY20A to 6.52% in FY21P. ISCR has increased from 1.27x in FY20A to 2.38x in FY21P due to increase in operating profits. DSCR has also increased from 1.65x in FY20A to 2.46x in FY21P. Current Ratio has increased from 1.81x in FY20A to 2.48x in FY21P. Debt Equity Ratio has decreased from 0.49x in FY20A to 0.39x in FY21P and TOL/TNW has decreased from 0.83x in FY20A to 0.58x in FY21P improving the overall gearing of the company.

• Established client base :

  It has long business association with SPUs of Rajasthan, UP, Delhi, Gujarat, Chhattisgarh, MP, Punjab, Orissa and Maharashtra. Company also supplies its products to leading Public Sector Undertakings (PSUs) such as NTPC Limited, Power Grid Corporation of India Limited, Bharat Heavy Electricals Limited (BHEL), Railways, MES, RDSO and all power utilities in India. Further, it sells its products to well-known private organizations like ABB India Limited, Angelique International Limited, Bajaj Auto Limited, Jyoti Structures Limited, HPL India Limited, Godrej Industries Limited, Siemens, Easun Reyrolle, Sterling & Wilson and Larsen & Toubro Limited. Moreover, it exports its product to African as well as South East Asian countries.

Credit Risks:

• Competition in the industry :

  The company is present in the electrical equipment industry which is highly fragmented and competitive in nature with the presence of several domestic players. The high fragmentation restricts the pricing flexibility and bargaining power of players which is further intensified by tender-based nature of the industry. Overall, it restricts profit margins of players. However, with the various government bodies being the primary end users of the products, pre-qualification with the entities like State Power Utilities (SPUs) act as an entry barrier in the industry.

• Elongated working capital cycle :

  Conversion cycle has increased from 190 days in FY20A to 246 days in FY21P due to significant decrease in payable days.

ANALYTICAL APPROACH AND APPLICABLE RATING CRITERIA

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 firm to improve its financial risk profile and maintaining adequate liquidity will remain the key rating sensitivities.

Positive: The rating may be upgraded if the company inter alia, is able to improve its topline and generate profits, or on account of any other favorable factor.

Negative: The rating may be downgraded if inter alia, there is any deterioration in financial risk profile, fails to maintain adequate liquidity or on account of any unforeseen unfavorable events.

LIQUIDITY POSITION

Adequate

The company had cash and cash equivalents balance of Rs.1.97crs as on FY20. The company has outstanding long Term Borrowings of Rs.0.24crs in FY20 which includes vehicle loan from Canara Bank. There are no unsecured loans of the company. CPLTD of Rs.0.05crs is reported in FY20 against net cash accruals of Rs.2.31crs. Average utilization of CC limit is around 65% for the last 7 months during Sept 2020- March 2021. Current ratio stood at 1.81x as on FY20. Conversion cycle of 190 days is reported in FY20. The company had ISCR and DSCR of 1.27x and 1.65x in FY20 respectively. 

Any Group Concerns

NA

PROFILE

Elektrolites (power) Private Limited is a private company incorporated in 1994 in Jaipur, Rajasthan. It was earlier formed as a partnership concern with the business of trading in power station equipment in 1966. Presently, it is promoted by Mr. Anil Kumar Saboo along with family members. Company is engaged in the business of manufacturing/assembling, designing and testing of electrical items such as Isolators, Disconnectors/Air Break Switch, Surge Arresters, Load Break Switch, VCB Sectionalizer and other transmission line hardware. Further, the company has total 4 wind mills with an installed capacity of 2.40 Mega Watt (MW) located in the state of Rajasthan. It has Purchase Power Agreement (PPA) with SPUs of Rajasthan, Uttar Pradesh, Delhi, Gujarat, Chhattisgarh, Madhya Pradesh, Punjab, Orissa and Maharashtra. It also supplies its products to leading Public Sector Undertakings (PSUs) such as NTPC Limited, Power Grid Corporation of India Limited and Bharat Heavy Electricals Limited (BHEL). Further, it sells its products to well-known private organizations like ABB India Limited, Angelique International Limited, Bajaj Auto Limited, Jyoti Structures Limited, HPL India Limited, Godrej Industries Limited, Siemens, Easun Reyrolle, Sterling & Wilson and Larsen & Toubro Limited. Moreover, it exports its product to African as well as South East Asian countries.

KEY FINANCIAL INDICATORS

Key Parameters	Units	FY 20-21 (Provisional)	FY 19-20 (Audited)
Operating Revenue	Rs.Crs.	36.66	44.42
EBITDA	Rs.Crs.	3.71	2.94
PAT	Rs.Crs.	2.39	0.54
Tangible Net Worth	Rs.Crs.	29.71	26.35
Total Debt/Tangible Net Worth	Times	0.39	0.49
Current Ratio	Times	2.48	1.81

KEY COVENANTS OF THE INSTRUMENT/FACILITY RATED

N.A

RATING HISTORY (INCLUDING WITHDRAWAL AND SUSPENSION)

S.No	Current Rating (2021)				Rating History
	Facilities	Tenure	Amount (Rs.Crs)	Rating	2020	2019	2018
Fund Based
1	Cash Credit - Sanctioned Sub-Limit (PCL/ FDBP/ FUBN/ FUBP (Against Prime Bank LC)) - Sanctioned	Long Term	10.50 (02.00)	BWR BB+ (Stable)	NA	NA	NA
Non-Fund Based
2	Bank Guarantee - Sanctioned FLC(DA/DP) - Sanctioned	Short Term	12.00 11.50	BWR A4+	NA	NA	NA
Total			34.00	(Rupees Thirty Four Crores Only)

COMPLEXITY LEVELS OF THE INSTRUMENTS

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.

Hyperlink/Reference to applicable Criteria :

• General Criteria
• Approach to Financial Ratios
• Manufacturing Companies

For More Information Contact:

Analytical Contacts
Kartik Ruia Rating Analyst kartik.r@brickworkratings.com	V.K.Kukreja Associate Director - Ratings B : +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 Credit - Sanctioned	10.50	_	10.50
Sub-Limit (PCL/ FDBP/ FUBN/ FUBP (Against Prime Bank LC)) - Sanctioned	(2.00)
2	Bank Guarantee - Sanctioned	_	12.00	12.00
3	FLC(DA/DP) - Sanctioned	_	11.50	11.50
Total		10.50	23.50	34.00
TOTAL (Rupees Thirty Four Crores Only)