Product Quantum (Rs. Cr) Long Term Rating Short Term Rating
Bank Loan Ratings 61.50 ACUITE BBB | Stable | Assigned -
Bank Loan Ratings 81.00 ACUITE BBB | Stable | Reaffirmed -
Bank Loan Ratings 38.50 - ACUITE A2 | Assigned
Bank Loan Ratings 127.00 - ACUITE A2 | Reaffirmed
Total Outstanding 308.00 - -
Total Withdrawn 0.00 - -
 
Rating Rationale

Acuité has reaffirmed its long-term rating of ‘ACUITE BBB’ (read as ACUITE triple B) on Rs.81.00 Cr. bank facilities and its short-term rating of ‘ACUITE A2’ (read as ACUITE A two) on the Rs.127.00 Cr. bank facilities of Capital Power Systems Limited (CSPL). The outlook is ‘Stable’.

Acuité has also assigned its long-term rating of ‘ACUITE BBB’ (read as ACUITE Triple B) on Rs.61.50 Cr. bank facilities and the short-term rating of ‘ACUITE A2’ (read as ACUITE A two) on the Rs.38.50 Cr. bank facilities of Capital Power Systems Limited (CSPL). The outlook is ‘Stable’.

Rationale for rating reaffirmation
The rating reaffirmation reflects steady improvement in operating performance, backed by healthy order book position and moderation in financial risk profile on the back of debt funded capex. The rating also considers experienced management, long operational track record and reputed clientele of the company. However, the above-mentioned strengths are partially offset by the company's working capital intensive operations along with the intensity of competition in industry due to tender driven nature of business restricting its profit margins.


About the Company

Incorporated in 1988, Capital Power Systems Limited (CPSL) is promoted by Mr. Pawan Bansal and Mr. Abhishek Bansal. CPSL is engaged in manufacturing of electricity meters, gas meters and water meters. Its manufacturing plant is located at Noida, Uttar Pradesh with an installed capacity of 60 lakh meter per annum. CPSL supplies meters majorly to state power utilities along with certain private sector players. Also, since last few years they have started to supply for turnkey projects wherein installation, operation and maintenance of meters are also being done.

 
Unsupported Rating
Not Applicable­
 
Analytical Approach

­Acuité has considered the standalone business and financial risk profile of CPSL to arrive at the rating.

 
Key Rating Drivers

Strengths

Experienced management and long operational track record.
CPSL has a long operational track record of more than three decades in this line of business. The promoters of the company, Mr Pawan Kumar Bansal and  Mr. Abhishek Bansal have an experience of more than three decade in this industry and are involved in the day-to-day operations. The experience of the promoters has helped the company to maintain a healthy relationship with its customers and suppliers of 7-15 years wherein few customers are associated with the company for even three decades. Acuité believes that CPSL will continue to benefit from its experienced management to strengthen its business risk profile over the medium term.

Improvement in revenue and profitability
CPSL’s revenue stood at Rs. 178.27 Cr. in FY24 vis-a-vis Rs. 150.89 Cr. in FY23.  In FY 2025, the revenue is estimated at ~Rs.213 Cr.  on account of sale of new smart meter products The company has unexecuted orders worth Rs. 508.11 Cr. which gives revenue visibility for the medium term. EBITDA Margin of the company improved and stood at 10.96 per cent in FY24 as against 9.98 per cent in FY23. The PAT margins have increased to 3.81 per cent in FY24 vis-à-vis 3.15 per cent in FY23. The improvement in margin is account of better absorption of fixed cost resulting into better margins. Further, the company has orders in hand which commands better margins as compared to previous years. Acuite believes, the operating performance of the company would improve steadily on account of expected capacity utilisation in the medium term.

Moderate Financial Risk Profile
Financial Risk profile of the company remained moderate marked by moderate net-worth, low gearing and moderate debt protection metric. Tangible Net worth of the company stood at Rs. 91.04 Cr. in FY 24 as against Rs. 61.53 Cr. in FY 23. Net worth of the company includes loan from promoters ~Rs.22.79 Cr. as quasi equity. Improvement in Net worth is due to accretion of profits in reserves. Total Debt of the company stood at Rs. 65.94 Cr in FY 24 as against Rs. 44.22 Cr. in FY 23, it comprises of Long-term loan of Rs. 19.44 Cr, CPLTD of Rs. 2.61 Cr. and Rs. 43.89 Cr. of Short-term loan as on FY 2024. Gearing of the company stood comfortable at 0.72 times in FY24 as against 0.72 times in FY23. However, the gearing is expected to increase on account of additional debt taken in FY25 for capex as it is increased from Rs.65 Cr. in FY24 to ~Rs. 83 Cr. in FY25 with gearing estimated to increase to 0.84 times in FY25 compared 0.72 times in FY24. TOL/TNW stood at 1.26 times in FY24 as against 1.18 times in FY 23. Debt protection metrics are moderate with interest coverage of 2.19 times in FY24 as against 2.06 times in FY23 and DSCR of 1.75 times in FY24 as against 1.68 times in FY23. The coverage indicators of the company are estimated to remain moderate with ICR at ~ 2.38 times and DSCR at ~1.71 times in FY25 on account of additional debt for capex vis a vis steady cash accrual.

Acuite believes that the financial risk profile of the company would remain moderate over the medium term on account of debt funded capex and lower capacity utilisations.


Weaknesses

Working Capital Intensive Operations
CPSL’s operations remained working capital intensive marked by Gross Current Asset  (GCA) of 308 days in FY24 as against 265 days in FY23. The debtor days improved and stood at 100 days in FY24 as against 121 days in FY23 and 208 days in FY22.  Inventory holding period majorly increased to 183 days in FY24 from 104 days in FY23 as few of the orders were billed in next fiscal. Creditor days of the company remained stable at 126 days in FY24 as against 82 days in FY23. Acuité expects the working capital operations to remain intensive over the medium term on account of the high credit period extended to its customer majorly being state owned power utilities.

Tender based nature of operations and competitive industry

CPSL manufactures and supplies meters to various state owned power utilities. The revenue of the company is highly dependent on the number and value of tenders floated by such power utilities. Additionally, supply to such state owned power utilities exposes the company to the risk of elongated receivables. The company also faces intense competition from several players in the industry in procuring orders through bidding, immense competition for procuring tenders leads to very competitive pricing which in turn lead to stress on the operating margins. Moreover, susceptibility of raw material pricing again keeps margin vulnerable and is a key sensitivity factor.

Rating Sensitivities
  • Sustain improvement in revenues and profitability margins
  • Any further elongation in working capital cycle impacting the liquidity position of the company
  • Stabilisation and commercialisation of newly added production capacity
 
Liquidity Position
Adequate

CPSL has an adequate liquidity marked by sufficient net cash accruals of Rs 8.33 Cr. as against maturing debt obligations of Rs 0.93 Cr. in FY24. The company is expected to generate net cash accruals in the range of Rs.11-12 Cr. in FY25 & FY26 as against loan obligation  in the range of Rs. 7-9 Cr. giving adequate liquidity buffer for growth capital. Average bank limit utilization in the past 06 months ended February 2025 stood high at 86 per cent. Further, the current ratio of the company stood at 1.74 times in FY24 as against 1.73 times in FY23.

 
Outlook: Stable
­
 
Other Factors affecting Rating
­None
 

Particulars Unit FY 24 (Actual) FY 23 (Actual)
Operating Income Rs. Cr. 178.27 150.89
PAT Rs. Cr. 6.80 4.75
PAT Margin (%) 3.81 3.15
Total Debt/Tangible Net Worth Times 0.72 0.72
PBDIT/Interest Times 2.19 2.06
Status of non-cooperation with previous CRA (if applicable)
­Not Applicable
 
Interaction with Audit Committee anytime in the last 12 months (applicable for rated-listed / proposed to be listed debt securities being reviewed by Acuite)
Not applicable
Any other information

None

 
Applicable Criteria
• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm
• Manufacturing Entities: https://www.acuite.in/view-rating-criteria-59.htm
• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm

Note on complexity levels of the rated instrument

Date Name of Instruments/Facilities Term Amount (Rs. Cr) Rating/Outlook
06 May 2024 Bank Guarantee (BLR) Short Term 2.51 ACUITE A2 (Assigned)
Bank Guarantee (BLR) Short Term 26.00 ACUITE A2 (Assigned)
Bank Guarantee (BLR) Short Term 20.00 ACUITE A2 (Reaffirmed)
Bank Guarantee (BLR) Short Term 24.50 ACUITE A2 (Reaffirmed)
Bank Guarantee (BLR) Short Term 4.00 ACUITE A2 (Assigned)
Letter of Credit Short Term 20.50 ACUITE A2 (Reaffirmed)
Bank Guarantee (BLR) Short Term 25.49 ACUITE A2 (Reaffirmed)
Bank Guarantee (BLR) Short Term 4.00 ACUITE A2 (Reaffirmed)
Cash Credit Long Term 11.59 ACUITE BBB | Stable (Reaffirmed)
Cash Credit Long Term 2.00 ACUITE BBB | Stable (Reaffirmed)
Cash Credit Long Term 13.00 ACUITE BBB | Stable (Assigned)
Working Capital Term Loan Long Term 0.08 ACUITE BBB | Stable (Reaffirmed)
Cash Credit Long Term 6.00 ACUITE BBB | Stable (Reaffirmed)
Cash Credit Long Term 14.00 ACUITE BBB | Stable (Reaffirmed)
Cash Credit Long Term 4.00 ACUITE BBB | Stable (Assigned)
Cash Credit Long Term 0.91 ACUITE BBB | Stable (Assigned)
Term Loan Long Term 25.00 ACUITE BBB | Stable (Assigned)
Term Loan Long Term 0.78 ACUITE BBB | Stable (Assigned)
Term Loan Long Term 0.80 ACUITE BBB | Stable (Assigned)
Working Capital Term Loan Long Term 2.84 ACUITE BBB | Stable (Reaffirmed)
29 Mar 2023 Bank Guarantee (BLR) Short Term 4.00 ACUITE A2 (Reaffirmed)
Bank Guarantee (BLR) Short Term 15.00 ACUITE A2 (Reaffirmed)
Bank Guarantee (BLR) Short Term 9.50 ACUITE A2 (Assigned)
Bank Guarantee (BLR) Short Term 13.00 ACUITE A2 (Reaffirmed)
Bank Guarantee (BLR) Short Term 7.00 ACUITE A2 (Assigned)
Letter of Credit Short Term 11.50 ACUITE A2 (Reaffirmed)
Letter of Credit Short Term 9.00 ACUITE A2 (Assigned)
Bank Guarantee (BLR) Short Term 17.00 ACUITE A2 (Reaffirmed)
Bank Guarantee (BLR) Short Term 6.00 ACUITE A2 (Assigned)
Cash Credit Long Term 10.00 ACUITE BBB | Stable (Reaffirmed)
Cash Credit Long Term 2.00 ACUITE BBB | Stable (Reaffirmed)
Working Capital Term Loan Long Term 3.00 ACUITE BBB | Stable (Reaffirmed)
Proposed Cash Credit Long Term 1.97 ACUITE BBB | Stable (Reaffirmed)
Working Capital Term Loan Long Term 1.45 ACUITE BBB | Stable (Reaffirmed)
Working Capital Term Loan Long Term 0.14 ACUITE BBB | Stable (Assigned)
Working Capital Term Loan Long Term 0.35 ACUITE BBB | Stable (Reaffirmed)
Working Capital Term Loan Long Term 0.09 ACUITE BBB | Stable (Assigned)
Cash Credit Long Term 5.00 ACUITE BBB | Stable (Reaffirmed)
Cash Credit Long Term 1.00 ACUITE BBB | Stable (Assigned)
Cash Credit Long Term 10.73 ACUITE BBB | Stable (Reaffirmed)
Cash Credit Long Term 3.27 ACUITE BBB | Stable (Assigned)
29 Apr 2022 Bank Guarantee (BLR) Short Term 15.00 ACUITE A2 (Assigned)
Bank Guarantee (BLR) Short Term 17.00 ACUITE A2 (Assigned)
Bank Guarantee (BLR) Short Term 4.00 ACUITE A2 (Assigned)
Letter of Credit Short Term 11.50 ACUITE A2 (Assigned)
Bank Guarantee (BLR) Short Term 13.00 ACUITE A2 (Assigned)
Cash Credit Long Term 10.00 ACUITE BBB | Stable (Reaffirmed)
Proposed Cash Credit Long Term 2.50 ACUITE BBB | Stable (Reaffirmed)
Cash Credit Long Term 5.00 ACUITE BBB | Stable (Assigned)
Cash Credit Long Term 10.00 ACUITE BBB | Stable (Assigned)
Cash Credit Long Term 2.00 ACUITE BBB | Stable (Assigned)
Working Capital Term Loan Long Term 3.00 ACUITE BBB | Stable (Assigned)
Working Capital Term Loan Long Term 1.45 ACUITE BBB | Stable (Assigned)
Working Capital Term Loan Long Term 0.35 ACUITE BBB | Stable (Assigned)
Proposed Long Term Bank Facility Long Term 0.20 ACUITE BBB | Stable (Assigned)
11 Apr 2022 Cash Credit Long Term 10.00 ACUITE BBB | Stable (Assigned)
Proposed Cash Credit Long Term 2.50 ACUITE BBB | Stable (Assigned)
­

Lender’s Name ISIN Facilities Date Of Issuance Coupon Rate Maturity Date Quantum
(Rs. Cr.)
Complexity Level Rating
Yes Bank Ltd Not avl. / Not appl. Bank Guarantee (BLR) Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 28.00 Simple ACUITE A2 | Reaffirmed
ICICI Bank Ltd Not avl. / Not appl. Bank Guarantee (BLR) Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 26.00 Simple ACUITE A2 | Reaffirmed
HDFC Bank Ltd Not avl. / Not appl. Bank Guarantee (BLR) Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 20.00 Simple ACUITE A2 | Reaffirmed
Axis Bank Not avl. / Not appl. Bank Guarantee (BLR) Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 28.50 Simple ACUITE A2 | Reaffirmed
Indusind Bank Ltd Not avl. / Not appl. Bank Guarantee (BLR) Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 4.00 Simple ACUITE A2 | Reaffirmed
Indusind Bank Ltd Not avl. / Not appl. Bank Guarantee (BLR) Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 3.50 Simple ACUITE A2 | Assigned
HDFC Bank Ltd Not avl. / Not appl. Bank Guarantee (BLR) Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 5.00 Simple ACUITE A2 | Assigned
Yes Bank Ltd Not avl. / Not appl. Bank Guarantee (BLR) Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 5.00 Simple ACUITE A2 | Assigned
Federal Bank Not avl. / Not appl. Bank Guarantee (BLR) Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 10.00 Simple ACUITE A2 | Assigned
CSB Bank Limited Not avl. / Not appl. Bank Guarantee (BLR) Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 10.00 Simple ACUITE A2 | Assigned
Yes Bank Ltd Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 6.00 Simple ACUITE BBB | Stable | Reaffirmed
Axis Bank Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 18.00 Simple ACUITE BBB | Stable | Reaffirmed
ICICI Bank Ltd Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 13.00 Simple ACUITE BBB | Stable | Reaffirmed
HDFC Bank Ltd Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 14.50 Simple ACUITE BBB | Stable | Reaffirmed
Indusind Bank Ltd Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 2.00 Simple ACUITE BBB | Stable | Reaffirmed
Indusind Bank Ltd Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 5.00 Simple ACUITE BBB | Stable | Assigned
HDFC Bank Ltd Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 3.00 Simple ACUITE BBB | Stable | Assigned
Federal Bank Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 20.00 Simple ACUITE BBB | Stable | Assigned
CSB Bank Limited Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 25.00 Simple ACUITE BBB | Stable | Assigned
Indusind Bank Ltd Not avl. / Not appl. Letter of Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 20.50 Simple ACUITE A2 | Reaffirmed
Indusind Bank Ltd Not avl. / Not appl. Letter of Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 5.00 Simple ACUITE A2 | Assigned
HDFC Bank Ltd Not avl. / Not appl. Term Loan 23 Jun 2023 Not avl. / Not appl. 07 Dec 2029 25.00 Simple ACUITE BBB | Stable | Reaffirmed
HDFC Bank Ltd Not avl. / Not appl. Term Loan 23 Jun 2023 Not avl. / Not appl. 07 Dec 2027 0.75 Simple ACUITE BBB | Stable | Reaffirmed
HDFC Bank Ltd Not avl. / Not appl. Term Loan 30 Aug 2024 Not avl. / Not appl. 07 Oct 2031 8.50 Simple ACUITE BBB | Stable | Assigned
Axis Bank Not avl. / Not appl. Working Capital Term Loan 10 Dec 2021 Not avl. / Not appl. 01 Dec 2026 1.75 Simple ACUITE BBB | Stable | Reaffirmed

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