RATING RATIONALE
15 Dec 2020
Nsure Reliable Power Solutions Pvt. Ltd.
Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.20.00 Crs. of Nsure Reliable Power Solutions Pvt. Ltd.
Particulars| Facility** | Amount (Rs.Crs) | Tenure | Rating* |
|---|---|---|---|
| Fund Based | |||
| Cash Credit Sanctioned | 01.00 | Long Term | BWR BB (Stable) |
| Sub Total | 01.00 | ||
| Non-Fund Based | |||
| Bank Guarantee Sanctioned | 19.00 | Short Term | BWR A4 |
| Sub Total | 19.00 | ||
| Grand Total | 20.00 | (Rupees Twenty Crores Only) | |
**Details of Bank facilities are provided in Annexure-I RATING ACTION / OUTLOOK : Stable
BWR believes that Nsure Reliable Power Solutions 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 the revenues go down and profit margins show lower than expected figures.
KEY RATING DRIVERS
BWR has essentially relied upon the audited financial statements of Nsure Reliable Power Solutions Pvt. Ltd. of FY18,FY19,FY20 and projected financial statements of FY21,FY22, publicly available information and information / clarifications provided by the entity’s management. The ratings draw strength from the vast business experience of the directors and above average financial risk profile. However, the ratings are constrained by modest the scale of operations and Customer concentration risk.
Going forward, the ability of the entity to achieve projected revenue & profitability margins and maintain its above average financial risk profile and liquidity would be key rating sensitivities.
Credit Strengths:
- Promoters experience :
Promotors experience of more than 3 decades has helped the Company to establish strong relationship with the suppliers and customers over the years, despite the company having limited track record of operation as it was incorporated in 2016. NRPSPL is a subsidiary company of Ramalingam Construction Company Pvt Ltd which has given short term unsecured loan (Rs 16.00 Crs as on 31 Oct 2020) to the Company.
- Above average financial profile :
Financial profile is strong marked by high debt service coverage ratio, DSCR and ISCR of 63.78 times and 61.84 times, respectively in FY20 due to no external long term debt obligations. Net worth of the company stood at Rs 6.94 Crs as on 31 March 2020, increased from Rs 2.72 Crs (as on 31 March 2019) due to fresh issue of equity share in FY20 and accretion to reserve. However, Debt equity is high due to short term unsecured loan from the Directors.
Credit Risks:
- Modest scale of operation :
The scale of operation is modest marked by revenue of Rs 23.29 Cr and Rs 23.00 Cr, respectively in FY20 and FY 19. The company has modest outstanding work orders from two customers (BESCOM Electricity Supply Company Limited and Chamundeshwari Electricity Supply Corporation Limited) at present, hence, scale of operation is expected to remain modest over the medium term, if the order from Hubli Electricity Supply Company Limited which is under the bidding process not awarded.
- Concentration risk :
The company is exposed to customer concentration risk as only two of its customers (BESCOM and CESCOM) contributed 100% in total sale in FY 19 and FY20.Further, NRPSPL's is exposed to orderbook concentration risk as outstanding orderbook of Rs 55.88 Crs are also from these two clients. As its operation is confined to state of Karnataka, it is also exposed to geographical concentration risk.
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
The ability of the Company to increase its scale of operations and improve its profit margins while maintaining its above average financial risk profile would be key rating sensitivities.
Positive: The outlook may be revised to Positive if the Company enhances its scale of operations substantially and improves its profit margins while maintaining its financial risk profile.
Negative: The outlook may be revised to Negative if there is a decrease in scale of operations and profit margins, resulting in any deterioration in the financial risk profile
LIQUIDITY POSITION
Conversion cycle has been negative in FY19 and FY20 despite high debtor days of 233 days and 211 days, respectively as on 31 March 2020 and 31 March 2019 due to high creditor days (478 days and 424 days, respectively as on 31 March 2020 and 31 March 2019) . Debtor days are higher as the Company receives ~60% of the total payments after the installation of meters over a period of 5 years from the major client. Creditor days are higher as the Company procures raw materials through its parent Company, Ramalingam Construction Company Pvt Ltd. Its average working capital utilization was moderate at 67% in the last three months ending November 2020. Net cash accrual marginally increased to Rs.1.45 Cr in FY20 from Rs.1.44 Cr in FY19. Current ratio was low at 0.51 times and cash and cash equivalent stood low at Rs0.09 Cr as on 31 March 2020.
PROFILEIncorporated in Nov 2016, NSure Reliable Power Solution Pvt Ltd (NRPSPL) is engaged in the billing of power consumption units in domestic market, power distribution and other allied services to various power distribution companies across the country. It is a subsidiary company of Ramalingam Construction Company Pvt Ltd and has its registered office at Cottonpet, Bangalore, Karnataka. Through the Smart Meter (Prepaid meter) installation and implementation venture, the Company acquires the meter data automatically without any human intervention, monitors important distribution parameters, uses meter data for accurate billing purposes and generates exceptions and MIS report for proper planning, monitoring, decision support and taking corrective actions and maintains the overall systems for the contract period.
KEY FINANCIAL INDICATORS| Key Parameters | Units |
FY 19-20 (Audited) |
FY 18-19 (Audited) |
|---|---|---|---|
| Operating Revenue | Rs.Crs. | 23.29 | 23.00 |
| EBITDA | Rs.Crs. | 1.44 | 1.55 |
| PAT | Rs.Crs. | 1.31 | 1.32 |
| Tangible Net Worth | Rs.Crs. | 6.94 | 2.72 |
| Total Debt/Tangible Net Worth | Times | 3.65 | 8.21 |
| Current Ratio | Times | 0.51 | 0.47 |
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 | Long Term | 01.00 | BWR BB(Stable) | NA | NA | NA | |||
| Non-Fund Based | ||||||||||
| 2 | Bank Guarantee - Sanctioned | Short Term | 19.00 | BWR A4 | NA | NA | NA | |||
| Total | 20.00 | (Rupees Twenty Crores Only) | ||||||||
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.
For More Information Contact:| Analytical Contacts | |
|---|---|
|
Thakur Trinath Prasad Pani Lead Analyst thakur.tp@brickworkratings.com |
Nagaraj K Associate Director - Ratings B : +91 80 4040 9940 nagaraj.ks@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 | 1.00 | _ | 1.00 |
| 2 | Bank GuaranteeSanctioned | _ | 19.00 | 19.00 |
| Total | 20.00 | |||
| TOTAL (Rupees Twenty Crores 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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