Product Quantum (Rs. Cr) Long Term Rating Short Term Rating
Bank Loan Ratings 18.50 ACUITE BB | Stable | Reaffirmed -
Bank Loan Ratings 6.50 - ACUITE A4+ | Reaffirmed
Total Outstanding Quantum (Rs. Cr) 25.00 - -
Total Withdrawn Quantum (Rs. Cr) 0.00 - -
 
Rating Rationale

­Acuité has reaffirmed its long-term rating of ‘ACUITE BB’ (read as ACUITE Double B) and short term rating of ‘ACUITE A4+ ’ (read as ACUITE A Four plus) on the Rs.25.00 Cr bank facilities of Elixir Met Form Private Limited (EMFPL). The outlook is ‘Stable’.

The rating takes into account the extensive experience of the promoters, long track record of operations and moderate financial risk profile of EMFPL. The rating is constrained by stiff competition and working capital intensive nature of operations of EMFPL

About the Company

­Incorporated in 2005 by Mr. P.V.Narasimha Raju, Elixir Met  Form Private Limited (EMFPL) is involved in the manufacturing, engineering and installation of Roll Forming Sections (UPVC windows, Pre-painted steel windows and Door Frames) & undertaking civil construction project predominantly pre-engineered buildings of lightweight and heavyweight structures for commercial, industrial and residential purpose for clients across private sector, state government departments (mainly in the states of Telangana and Andhra Pradesh) and central government departments on tender basis. The Company has two manufacturing facilities, one in Hyderabad and one in Bonthapally Village, Medak District Telangana.
 
Analytical Approach

­Acuité has considered the standalone business and financial risk profile of EMFPL for arriving at this rating. 
 

Key Rating Drivers

Strengths

Extensive experience of promoters and long track record of operations
Incorporated in 2005, EMFPL is promoted by Mr. P.V. Narasimha Raju along with his family members.  Mr.  P.V.  Narasimha  Raju is  an engineer  with nearly thirty-five  years  of  industry experience. He oversees the business, along with his sons, Mr. P. Karthik, Mr. P .Praneeth, both are Post Graduates. All of them are actively involved in day to day operations of the entity. Acuité believes that EMFPL will continue to benefit from the extensive experience of its promoters and long track record of operations.

Moderate Financial Risk Profile:
EMFPL’s gearing is healthy and stood at 0.34 times as on March 31, 2022 (Provisionals) against 0.62 times as on March 31,2021. EMFPL’s Net worth is moderate at Rs.18.55 Cr as on March 31, 2022(Provisional) against Rs.16.36Cr for previous year. The improvement was on account of accretion of profits to reserve. Total outside liabilities to total tangible net worth (TOL/TNW) as on March 31, 2022(Provisionals) stood healthy at 0.86 times from 1.27 times in previous year. This is on account of decreased short term debt and payables toRs.6.08Cr and Rs.5.84Cr respectively in FY22 from Rs.10.21Cr and Rs.7.21Cr in FY21.EMFPL’s Debt protection metrics are moderate marked by interest coverage ratio, Debt service coverage ratio and Net cash accruals to total debt (NCA/TD) of 2.48 times, 2.12 times and 0.38 times respectively as on March 31, 2022 (Provisionals) against 3.31 times, 2.64 times and 0.25 times as on March 31, 2021. Acuite believes that financial risk profile of the company will improve over the medium term.

Weaknesses

­Intensive working capital operations:
EMFPL’s operations are working capital intensive. The same is reflected in GCA days of 260 days as on March 31, 2022(Provisional) as against 295 days as on March 31, 2021. The GCA days are driven by debtor days and inventory days. The debtor days stood at 174 days as on March 31, 2022(Provisional) as against 197 days as on March 31, 2021. The inventory days increased to 71 days as on March 31, 2022(Provisional) as against 45 days as on March 31, 2022. Acuite believes that the working capital operations will improve over the medium term.

Highly competitive and fragmented industry
The business segment in which EMFPL operates is a high competitive space, with large number of organized and unorganized players. The high competition level also restricts the bargaining power of the players

Rating Sensitivities

  • ­ Improvement in scale of operations while maintaining its operating profitability

  • Any deterioration in the capital structure 
 
Material covenants

­None
 
Liquidity : Adequate

EMFPL has adequate NCA of Rs.2.39Cr in FY22 (Provisionals) against debt repayment obligation of below Rs.0.1Cr. The company is expected to generate adequate NCA’s in the range of Rs.3.3Cr to Rs.4.5Cr in the medium term. Unencumbered cash and bank balances stood low at Rs.0.03Cr as on March 31, 2022 (Provisionals) with current ratio of 1.90 times. Acuite believes that the liquidity position of EMFPL will remain adequate in the medium term on  account of healthy NCA's.
 
Outlook: Stable

­Acuité believes that EMFPL will maintain a stable outlook over medium term on account of extensive experience of its promoters, long track record of operations and healthy financial risk profile. The outlook may be revised to ‘Positive’ in case the company achieves higher than expected improvement in its scale of operations and profitability while maintaining its capital structure. Conversely, the outlook may be revised to ‘Negative’ in case of further decline in scale of operations or deterioration in financial risk profile adversely affecting its liquidity position. 
 
Other Factors affecting Rating
­None
 

Particulars Unit FY 22 (Provisional) FY 21 (Actual)
Operating Income Rs. Cr. 36.16 37.16
PAT Rs. Cr. 2.19 2.18
PAT Margin (%) 6.05 5.87
Total Debt/Tangible Net Worth Times 0.34 0.62
PBDIT/Interest Times 2.48 3.31
Status of non-cooperation with previous CRA (if applicable)

EMFPL’S s rating was migrated to ‘ISSUER NON COOPERATING' status with CRISIL, through its rating rationale dated May 18, 2022. The reason provided by CRISIL is non-furnishing of information by EMFPL.
 
 
Any other information

­None
 
Applicable Criteria
• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm
• Entities In Manufacturing Sector:- https://www.acuite.in/view-rating-criteria-59.htm
• Rating Process and Timeline: https://www.acuite.in/view-rating-criteria-67.htm
• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm
Note on complexity levels of the rated instrument
https://www.acuite.in/view-rating-criteria-55.htm

Date Name of Instruments/Facilities Term Amount (Rs. Cr) Rating/Outlook
01 Jul 2021 Cash Credit Long Term 14.50 ACUITE BB | Stable (Upgraded from ACUITE BB-)
Bank Guarantee Short Term 3.50 ACUITE A4+ (Upgraded from ACUITE A4)
Proposed Term Loan Long Term 4.00 ACUITE BB | Stable (Assigned)
Letter of Credit Short Term 3.00 ACUITE A4+ (Upgraded from ACUITE A4)
30 Mar 2020 Letter of Credit Short Term 1.50 ACUITE A4 (Downgraded and Issuer not co-operating*)
Cash Credit Long Term 10.00 ACUITE BB- (Downgraded and Issuer not co-operating*)
Bank Guarantee Short Term 2.50 ACUITE A4 (Downgraded and Issuer not co-operating*)
07 Mar 2019 Bank Guarantee Short Term 2.50 ACUITE A4+ (Assigned)
Letter of Credit Short Term 1.50 ACUITE A4+ (Assigned)
Cash Credit Long Term 10.00 ACUITE BB | Stable (Assigned)
­

Lender’s Name ISIN Facilities Date Of Issuance Coupon Rate Maturity Date Quantum (Rs. Cr.) Rating
Union Bank of India Not Applicable Bank Guarantee/Letter of Guarantee Not Applicable Not Applicable Not Applicable 3.50 ACUITE A4+ | Reaffirmed
Union Bank of India Not Applicable Cash Credit Not Applicable Not Applicable Not Applicable 14.50 ACUITE BB | Stable | Reaffirmed
Union Bank of India Not Applicable Letter of Credit Not Applicable Not Applicable Not Applicable 3.00 ACUITE A4+ | Reaffirmed
Not Applicable Not Applicable Proposed Long Term Loan Not Applicable Not Applicable Not Applicable 4.00 ACUITE BB | Stable | Reaffirmed

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