Maha Active Engineers India Pvt. Ltd.

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.30.00 Crs. of Maha Active Engineers India Pvt. Ltd.

Particulars

Facility**	Amount (Rs.Crs)	Tenure	Rating*
Fund Based
Cash Credit - Sanctioned Cash Credit - Sanctioned	00.10 07.00	Long Term	BWR BB (Stable)
Sub Total	07.10
Non-Fund Based
Bank Guarantee - Sanctioned Bank Guarantee - Sanctioned	04.90 18.00	Short Term	BWR A4 +
Sub Total	22.90
Grand Total	30.00	(Rupees Thirty Crores Only)

*Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank facilities are provided in Annexure-I KEY RATING DRIVERS

Credit Strengths:

• Established track record backed by experienced management leading to reputed clientele base: :

  MAEIPL enjoys reputed clientele base in the form of renowned engineering/electrical companies, public sector undertakings, state electricity boards, departments of state governments, and the like. This is due to the established track record of the Company backed by the good business acumen of management in the present line of business.

• Moderate DSCR ratios: :

  The company has reported moderate DSCR at 2.08x in FY19 as against 1.91x in FY18.

• Moderate net worth and low gearing: :

  TNW stood moderate at Rs.25.28 Crs and Rs.23.75Crs respectively in FY19 and FY18. However, it is showing an increasing trend and is on similar lines on account of plow-back of profits in business. MAEIPL has the moderate capital structure as indicated by gearing of 0.42x in FY19 from 0.32x in FY18.

• Moderate and reduced profitability margins: :

  OPM moderate and reduced to 4.85% in FY19 from 8.30% in FY18 and NPM also stood moderate at 3.97% in FY19 from 3.29% in FY18.

• Moderate liquidity position of the Company: :

  Liquidity remained moderate though reduced marginally was observed in current ratio to 1.51x in FY19 from 1.54x in FY18. It appears to improve to 1.53x in FY19 (9m).

Credit Risks:

• Declining Revenue & fluctuating profitability and low ISCR: :

  The revenue is in downward trend from Rs. 72.83 Crs in FY17 to Rs. 40.25 crs in FY18 , Rs. 38.56 crs in FY19 . However on a provisional basis in FY20, the company has achieved revenue of Rs. 54.61 Crs. Fluctuating profitability to Rs. 1.53 Crs in FY19 from Rs. 1.32 Crs in FY18, Rs. 1.53 Crs in FY17. ISCR is also reduced to 1.24x in FY19 from 2.28 x in FY18 and provisional basis 0.77x in FY20 (9 months).

• Susceptibility to risks inherent in tender based business: :

  Since the entire operations are tender based, the business depends on the ability to bid for tenders successfully. Also, the majority of orders are from Government agencies, resulting in high dependence on timely clearances for tenders and payments. Revenue and profitability are expected to remain susceptible to risks inherent in tender based operations.

• Intensely competitive nature of the industry: :

  The industry is characterized by numerous small and big players in EPC business segment resulting in intense competition for the Company.

• Effects of COVID-19: :

  The Company’s business is correlated with the overall economic activity level of the country. Given the current lockdown, the country's economic activities have come to an almost standstill. The broad picture regarding the fallout of the pandemic is yet to emerge. But, this is most likely to bring down the growth rate of the Indian economy and affect the Company’ business operations due to delay in execution, a possible increase in labour cost due to migrant labourers’ exodus to their native places, the possibility of decline in new projects and an increase in raw materials’ cost due to supply chain disruptions.

ANALYTICAL APPROACH AND APPLICABLE RATING CRITERIA

BWR has factored in the standalone business parameters and financial risk profile of the company to arrive at the rating. Reference may be made to the Rating Criteria hyperlinked detailed below (hyperlinks provided at the end of this rationale).

RATING SENSITIVITIES

Going forward, the ability of the entity to accelerate its scale of operations, increase its profit margins, compliance of bank's sanction terms, efficiently manage its working capital and cash flows for timely servicing of interest/debt obligations and strengthening of overall financial risk profile shall be the key rating sensitivities over short to medium term.

Positive: The rating outlook may be revised to positive or rating may be upgraded if the company is able to sustain its growth and profit margins.  Any additional infusion of share’s capital would help to improve its capital structure of the company.

Negative: The rating outlook may be revised to negative or rating may be downgraded if the entity achieves lower revenue and profit margins than projected. 

LIQUIDITY POSITION

The liquidity position of the company is adequate. The cash and cash equivalents of Maha Active Engineers Pvt. Ltd includes an FD of Rs. 16.58 Crs and cash and bank balance of Rs. 0.11 Crs  in FY19. The current ratio of the company stands at 1.51x in FY19. The average utilisation of the working capital stood at 70 %. The company does not have any term loan facility in FY19 except vehicle loan.

PROFILE

M/S Maha Active Engineers India Pvt. Ltd. (MAEIPL) was incorporated in July 2006. It is located at Aurangabad, Maharashtra. Mr. Sunil Vidolkar has started business in December 1990 with “Active Engineers’. Mr. Sunil Vidolkar is the managing director of the company and he has 30 years of experience in the business and Ms. Vanita Vidolkar, Ms. Nita Vidolkar, and Mr.Sagar Vidolkar are the directors of the company. It is engaged in Turnkey & EPC Power Transmission & Distribution Projects. The current project unit is located at Hingoli & Nagbhid in Maharashtra.

KEY FINANCIAL INDICATORS

Key Parameters	Units	FY 18-19 (Audited)	FY 17-18 (Audited)
Operating Revenue	Rs.Crs.	38.56	40.25
EBITDA	Rs.Crs.	1.87	3.34
PAT	Rs.Crs.	1.53	1.32
Tangible Net Worth	Rs.Crs.	25.28	23.75
Total Debt/Tangible Net Worth	Times	0.42	0.32
Current Ratio	Times	1.51	1.54

RATING HISTORY (INCLUDING WITHDRAWAL AND SUSPENSION)

S.No	Current Rating (2020)				Rating History
	Facilities	Tenure	Amount (Rs.Crs)	Rating	2019	2018	2017
Fund Based
1	Cash Credit - Sanctioned Cash Credit - Sanctioned	Long Term	00.10 07.00	BWR BB (Stable)	NA	NA	NA
Non-Fund Based
2	Bank Guarantee - Sanctioned Bank Guarantee - Sanctioned	Short Term	04.90 18.00	BWR A4+	NA	NA	NA
Total			30.00	(Rupees Thirty 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
• Services Sector
• Short Term Debt

For More Information Contact:

Analytical Contacts	Investor Contacts
Ushadevi V Dogra Ratings Analyst D : +91 22 6745 6650 B : +91 22 2831 1426, +91 22 2831 1439 ushadevi.d@brickworkratings.com	Liena Thakur Assistant Vice President - Corporate Communications M : +91 84339 94686 liena.t@brickworkratings.com
Sushil Kumar Chitkara Associate Director - Ratings B : +91 22 2831 1426, +91 22 2831 1439 sushilkumar.c@brickworkratings.com
1-860-425-2742

SL.No.	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)
1	Cash Credit - Sanctioned	7.00	_	7.00
2	Bank Guarantee - Sanctioned	_	18.00	18.00
3	Cash Credit - Sanctioned	0.10	_	0.10
4	Bank Guarantee - Sanctioned	_	4.90	4.90
Total				30.00
TOTAL (Rupees Thirty Crores Only)