NR Switch N Radio Services Pvt. Ltd.

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.18.92 Crs. of NR Switch N Radio Services Pvt. Ltd.

Particulars

Facility**	Amount (Rs.Crs)	Tenure	Rating*
Fund Based
Cash Credit - Sanctioned Cash Credit - Proposed	12.00 06.00	Long Term	BWR BB + (Stable)
Sub Total	18.00
Non-Fund Based
Bank Guarantee - Sanctioned	00.92	Long Term	BWR BB + (Stable)
Sub Total	00.92
Grand Total	18.92	(Rupees Eighteen Crores and Ninety Two lakhs Only)

*Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank facilities are provided in Annexure-I
Note: The company also has term loan facilities from ICICI Bank having outstanding balance of Rs. 3.63 crs which are not being rated by us. RATING ACTION / OUTLOOK : Stable

BWR has assigned long term rating BWR BB+ with "Stable" Outlook for the bank loan facilities of NR Switch N Radio Services Pvt. Ltd. (" or ‘the company’). The rating draws strength from the long operational track record of the company, well qualified and experienced directors, moderate financial risk profile, strong customer base and future growth prospects. However, the rating is constrained on account of the strong competition in the market from other small players and established players in the market and technology upgradation challenges faced by the company.

BWR believes that NR Switch N Radio Services 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 there is any deterioration in financial risk profile. 

KEY RATING DRIVERS

Credit Strengths:

• Long Operational Track Record and Experienced Directors :

  Being incorporated in 1998, the company has more than two decades operational track record in the telecom network infrastructure service industry. The company is currently managed and controlled by well experienced directors- Ramesh Chandar Ralhan, Neena Ralhan, Surbhi Ralhan, Kaitkey Sood, Vijay Batra. Mr. R C Ralhan, Managing Director & Chief Executive Officer is a graduate in electronics & communication engineering having more than 3 decades of experience in electronics and telecommunication industry. Further, he is assisted by other directors and experienced and qualified staff.

• Wide range of service offering :

  The service portfolio of the company includes Network planning, Network rollout (implementation domain), Manpower outsourcing, Managed services for active and passive infrastructure and Benchmarking. The company specializes in Core Implementation of MSCs & RNCs, BSCs & BSS, and Transcoders, installing and commissioning of BTSs and Node Bs for telecom operators. The company covers all 23 telecom circles and also expanding its presence abroad in South East Asia. spanning the length and breadth of the country. Further, it has a requisite resource pool in end to end RF and TX designing and implementation , multi operator benchmarking, RF Audits and surveys.

• Future Growth Prospects and Reputed clientele base :

  The network engineering services solutions industry has a positive long term industry outlook. Further, owing to a high demand for new network infrastructure supporting different applications, the market is expected to gain traction in the near future. Thus, the company is expected to be on a growth trajectory supported by its strong customer base. The company’s customer base includes reputed companies interalia, Ericsson India Pvt. Ltd., Tata Teleservices Ltd., Bharat Electronics Ltd., Samsung India Electronics Pvt. Ltd., Reliance Jio Infocomm Ltd., Nokia India Pvt. Ltd., Huawei Telecom India Pvt. Ltd.

• Moderate Financial Risk Profile :

  NR Switch N Radio Services Pvt. Ltd. has a moderate scale of operations with consistent increase in revenues. The y-o-y growth in revenues is around 18% from Rs. 63.26 crs in FY18 to Rs. 74.75 crs in FY19. As submitted by management, the company has booked revenues of Rs. 58.73 crs by Jan end for FY19-20. Further profitability has marginally improved with operating profit margins and net profit margins increasing from 7.29% and 0.75% in FY18 to 7.86% and 0.83% in FY19. Debt equity ratio is comfortable at 1.59x as on 31.03.2019 due to reduced debt levels.

Credit Risks:

• Intense Competition :

  The company faces intense competition in the industry of network related solutions to various telecom operators, being highly fragmented marked by the presence of a large number of organised and unorganized players in the market. Thus, restricting pricing flexibility and bargaining power of the company.

• Technology Upgradation Challenges :

  The advancements in technologies and automation have transformed the way customers interact and engage with organizations across industries. The network has become a critical part of every organization and mandates frequent upgradation of the network infrastructure to remain competitive.

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

Positive: The rating may be upgraded if the company interalia, is able to increase revenues, improve profitability margins , maintain gearing levels, improve debt protection metrics or on account of any other favourable 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 unfavourable events.

LIQUIDITY POSITION

Stretched : The company has liquid investments including Cash & Cash Equivalents of INR 0.08 crs as on 31.03.2019. Long term borrowings as on 31.03.2019 includes term loans from ICICI Bank having outstanding balance of INR 3.63 crs. The company has net cash accruals of INR 2.25 crs in FY19 against Current portion of long term debt (CPLTD) of INR 1.11 crs as on 31.03.2019. Current ratio stood at 1.67x as on 31.03.2019. The company had a conversion cycle of 117 days in FY19. Further, ISCR and DSCR of the company was 1.74x and 1.28x for FY19. Overall liquidity of the company remains stretched with average limit utilization of Cash credit facility of around 100.32% for the six months i.e. from Aug' 19 to Jan' 20. 

Any Group Concerns: NR Switch N Radio Services Pvt. Ltd. has following associate concerns having common directors- Rajasthan Hybrids Pvt. Ltd., Intech Enterprises Pvt. Ltd., Intal Technology Pvt. Ltd., Wireless Innovative Network Solutions Pvt. Ltd., Winsum Services Pvt. Ltd., J Net Communicates Pvt. Ltd., J Net Communication LLP. Sub contract work expenses and rent on equipment amounting to a total of Rs. 6.58 crs are paid to Winsum Services Pvt. Ltd., J Net Communicates Pvt. Ltd. and Rajasthan Hybrids Pvt. Ltd. in FY19. 

PROFILE

Incorporated in Mar' 2008; NR Switch N Radio Services Pvt. Ltd. was promoted by Mr. Ramesh Chander Ralhan who is also the managing director of the company. The company started its business as a support organization for Nokia Network Private limited (NNPl). It made its debut in Telecom Services with installing the first MSC for Nokia and then it made deep inroads into various areas of Mobile Technology. Today NR Switch N Radio Services is an active global partner for OEMs and Operators with a presence in multiple locations in India and South East Asia. The service portfolio of the company includes Network planning, Network rollout (implementation domain), Manpower outsourcing, Managed services for active and passive infrastructure, Benchmarking. The company specialises in Core Implementation of MSCs (Mobile Switch Centre), RNCs (Radio Network Controller), BSCs (Base Station Controller) & BSS (Base Station Subsystem) and Transcoders; core installation of MSC/MGW installations, LTE switches, NGN implementation and core commissioning of MSS/MSC, MGW and associated network elements and HLR/HSS and associated network elements.

KEY FINANCIAL INDICATORS

Key Parameters	Units	FY 18-19 (Audited)	FY 17-18 (Audited)
Operating Revenue	Rs.Crs.	74.75	63.26
EBITDA	Rs.Crs.	5.88	4.61
PAT	Rs.Crs.	0.62	0.47
Tangible Net Worth	Rs.Crs.	12.41	11.79
Total Debt/Tangible Net Worth	Times	1.59	1.79
Current Ratio	Times	1.67	1.57

NON-COOPERATION WITH PREVIOUS RATING AGENCY ,IF ANY

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 - Proposed	Long Term	12.00 06.00	BWR BB+ (Stable)	NA	NA	NA
Non-Fund Based
2	Bank Guarantee - Sanctioned	Long Term	00.92	BWR BB+ (Stable)	NA	NA	NA
Total			18.92	(Rupees Eighteen Crores and Ninety Two lakhs 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

For More Information Contact:

Analytical Contacts	Investor Contacts
Rashi Arora Ratings Analyst B : +91 172 5032 295 / 6 Ext : 104 rashi.a@brickworkratings.com	Liena Thakur Assistant Vice President - Corporate Communications M : +91 84339 94686 liena.t@brickworkratings.com
V.K.Kukreja Associate Director - Ratings B : +91 11 2341 2232 kukreja.vk@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	12.00	_	12.00
2	Cash Credit - Proposed	6.00	_	6.00
3	Bank Guarantee - Sanctioned	0.92	_	0.92
Total				18.92
TOTAL (Rupees Eighteen Crores and Ninety Two lakhs Only)

Note: The company also has term loan facilities from ICICI Bank having outstanding balance of Rs. 3.63 crs which are not being rated by us.