Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 125 Crs. of Capital Electech Pvt Ltd
Particulars| Facilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||
|---|---|---|---|---|---|
| Previous | Present | Previous (04 Dec 2020) |
Present | ||
| Fund Based | 1.50 | 1.50 | Long Term |
BWR BBB- (Stable)
Reaffirmed |
BWR BBB -
/Stable Reaffirmation |
| Non Fund Based | 123.50 | 123.50 | Long Term |
BWR BBB- (Stable)
Reaffirmed |
BWR BBB -
/Stable Reaffirmation |
| Grand Total | 125.00 | 125.00 | (Rupees One Hundred Twenty Five Crores Only) | ||
Reaffirmation in the ratings of Capital Electech Pvt Ltd. (CEPL or the company) factors in its good revenue visibility, comfortable gearing and debt coverage metrics besides adequate liquidity to meet working capital needs and debt repayment obligations in the medium term. While revenue of the company declined during FY20 and FY21, primarily owing to covid led disruptions resulting in delays in work completion/ site inspections/ billing, the same is expected to grow along the projected lines during FY22 and FY23 on the strength of a healthy work order book position upto March 2024. Long term debt obligations of the company are significantly low and the company has been generating adequate cash accruals to meet the borrowing expenses and debt obligations. The company does not propose any fresh debt and overall working capital utilization is expected to remain fairly low during FY22 and FY23 on the strength of sufficient liquidity available with the company to meet its working capital needs. Accordingly, BWR expects the company’s overall financial risk profile to remain medium risk during FY22 and FY23.
Outlook: Stable
BWR believes the Capital Electech Pvt Ltd.’s business risk profile will be maintained over the medium term. The ‘Stable’ outlook indicates a low likelihood of rating change over the medium term.
Credit Strengths:
Presently the company is involved in execution of 25 work orders with a total work contract of Rs.612.43 crs to be completed upto March 2024. Works are being executed primarily in J&K and other states such as UP, Bihar, Haryana. Out of these, the company has already billed Rs.130.66 crs upto FY21 and Rs.32.26 crs has been billed upto 8MFY22 and expects further billing of Rs.69.80 crs during the remaining 4MFY22. Works of Rs.176.11 crs are expected to be billed in FY23.
Besides the above, the work orders worth Rs.150 crs are in the pipeline and would be confirmed by Jan 2022. Further, additional orders for the supply of equipment worth Rs.30 crs are expected in FY22 and Rs.50 crs expected in FY23.
Overall gearing of the company is comfortable as indicated by Total Debt/TNW and TOL/TNW ratios of 0.18x and 0.63x respectively in FY21 (Prov.) as against 0.21x and 1.50x respectively in FY20.
Debt coverage indicators of the company are comfortable as indicated by ISCR and DSCR of 3.47x and 1.58x respectively during FY21 (Prov.).
Revenues of the company have declined from Rs.170 crs in FY18 to Rs.169 crs in FY19 to Rs.125.40 crs in FY20 (after adjusting one time gain of Rs.28 crs) and further to Rs.101 crs in FY21 (Prov.). Although, the revenues of the company are expected to improve to Rs.120 crs in FY22, fresh business disruptions owing to the covid pandemic may be an obstacle. However, the revenues of the company are expected to improve during FY22 and FY23.
The company is majorly working with PSUs and orders are received on a tender basis which exposes it to risks associated with tender based businesses. Further, majority of the works being executed by the company are in J&K with few works in Bihar, Haryana and UP.
Businesses based on tenders floated by government departments generally suffer from the risks of delayed payments. Further, since the contracts are awarded to lowest bidders, profitability margins are generally thin and contractors face the risk of cost and time overruns due to non-cooperation by the principal. Such businesses are also characterised by the presence of large numbers of small and medium players creating intense competition amongst each other.
Receivables holding period of the company increased sharply from 94 days in FY18 to 168 days in FY19 and further to 446 days in FY20 and marginally declined to 443 days during FY21 (Prov.).
For arriving at its ratings, BWR has applied its rating methodology on a standalone basis as detailed in the Rating Criteria detailed below.
RATING SENSITIVITIES
Upward: Substantial improvement in scale of operations, operating margins and receivables holding period would support upward rating action.
Downward: Decline in revenues, operating margins, and cash conversion cycle particularly receivables holding period in the company would attract downward rating action.
Liquidity in the company is adequate as indicated by NWC, average utilisation of working capital and cash accruals versus debt obligations. NWC of the company is Rs.79.53 crs as on 31 March 2021 (prov.) and average utilisation of fund based working capital facilities is less than 5% during six months period ending Nov 2021 and average utilisation of non fund based working capital facilities is approx. 37% for 12 months ending Nov 2021. During FY21, the company has generated cash accruals of Rs.7.33 crs against debt obligations of Rs.3.33 crs. Going forward, the company is expected to generate adequate cash accruals during FY22 and FY23 to support borrowing expenses and debt obligations and NWC of the company is expected to improve further.
Capital Electech Private Limited., established in August 2005 with its registered office at D-1/1, Rajapuri Uttam Nagar, New Delhi, is in the business of upgrading existing power substations and transmission lines, and setting up new power stations, generator sets and transmission lines on turnkey basis for the central and state government entities, and public and private sector organizations. Vikas Sharma and Sachin Sharma are the promoters and directors in the company.
| Key Parameters | Units |
FY 20-21 (Provisional) |
FY 19-20 (Audited) |
|---|---|---|---|
| Operating Revenue | Rs.Crs. | 100.80 | 153.44 |
| EBITDA | Rs.Crs. | 12.33 | 36.21 |
| PAT | Rs.Crs. | 7.00 | 25.49 |
| Tangible Net Worth | Rs.Crs. | 82.45 | 75.46 |
| Total Debt/Tangible Net Worth | Times | 0.18 | 0.21 |
| Current Ratio | Times | 2.47 | 1.65 |
The terms of sanction include standard covenants normally stipulated for such facilities.
NIL
ANY OTHER INFORMATIONNIL
RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)| Facilities | Current Rating (2021) | 2020 | 2019 | 2018 | |||||
|---|---|---|---|---|---|---|---|---|---|
| Type | Tenure | Amount (Rs.Crs.) |
Rating | Date | Rating | Date | Rating | Date | Rating |
| Fund Based | LT | 1.50 |
BWR BBB-/Stable
(Reaffirmation) |
04Dec2020 |
BWR BBB- (Stable)
(Reaffirmed) |
06Nov2019 |
BWR BBB- (Stable)
(Reaffirmed) |
26Jun2018 |
BWR BBB- (Stable)
(Upgrade) |
| Non Fund Based | LT | 123.50 |
BWR BBB-/Stable
(Reaffirmation) |
04Dec2020 |
BWR BBB- (Stable)
(Reaffirmed) |
06Nov2019 |
BWR BBB- (Stable)
(Reaffirmed) |
NA |
NA
|
| Non Fund Based | ST | NA |
NA
|
NA |
NA
|
NA |
NA
|
26Jun2018 |
BWR A3
(Upgrade) |
| Grand Total | 125.00 | (Rupees One Hundred Twenty Five 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.
Hyperlink/Reference to applicable Criteria| Analytical Contacts | |
|---|---|
|
Saurabh Agarwal Assistant Manager - Ratings Board : +91 11 2341 2232 saurabh.a@brickworkratings.com |
Ashwini Mital Director - Ratings Board : +91 172 5032 295 / 6 ashwinimital@brickworkratings.com |
| 1-860-425-2742 | media@brickworkratings.com | |
| SL.No. | Name of the Bank/Lender | Type Of Facilities | Long Term(Rs.Crs.) | Short Term(Rs.Crs.) | Total(Rs.Crs.) | |
|---|---|---|---|---|---|---|
| 1 | HDFC Bank | Bank GuaranteeSanctioned | 16.50 | _ | 16.50 | |
| 2 | HDFC Bank | OverdraftSanctioned | 0.50 | _ | 0.50 | |
| 3 | Punjab National Bank | Cash CreditSanctioned | 1.00 | _ | 1.00 | |
| 4 | Punjab National Bank | Bank GuaranteeSanctioned | 55.00 | _ | 55.00 | |
| 5 | Un tied portion | Bank GuaranteeProposed | 52.00 | _ | 52.00 | |
| Total | 125.00 | 0.00 | 125.00 | |||
| TOTAL (Rupees One Hundred Twenty Five Crores Only) | ||||||
| Instrument | Issue Date | Amount (Rs.Crs) | Coupon Rate (%) | Maturity Date | ISIN Particulars |
|---|---|---|---|---|---|
| N.A | 0 |
| Name of Entity | % Ownership | Extent of consolidation | Rationale for consolidation |
|---|---|---|---|
| NIL |
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