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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 21.80 | ACUITE BBB- | Stable | Reaffirmed | - |
| Bank Loan Ratings | 50.70 | - | ACUITE A3 | Reaffirmed |
| Total Outstanding Quantum (Rs. Cr) | 72.50 | - | - |
| Total Withdrawn Quantum (Rs. Cr) | 0.00 | - | - |
| Rating Rationale |
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Acuité has reaffirmed its long-term rating of ‘ACUITE BBB-’ (read as ACUITE triple B minus) and the short term rating of ‘ACUITE A3’ (read as ACUITE A three) on the Rs.72.50 Crore bank facilities of Galaxy Mining Private Limited (GMPL). The outlook is ‘Stable’.
Rationale for reaffirmation The rating continues to be reaffirmed with continuous improvement in revenue to Rs.520.99 Crore in FY22 against Rs.229.46 Crore in FY21 and Rs 147.06 Crore in FY20. Further, the rating draws its comfort from moderate financial risk profile with comfortable coverage indicators. Further, the growth in revenue is expected to be sustained in the medium term with an order book of Rs.636 Crores as on December 2022. However, the rating continues to be constrained by moderate working capital operations and tender based nature of operations. |
| About Company |
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Rajasthan-based, Galaxy Mining Private Limited (GMPL) was incorporated in May-2019 as a private limited company which is engaged in the business of collection of royalty from mining sites and toll collection business.
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| About the Group |
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Galaxy mining group was established in 2016 by Mr. Deependra Singh Rathore and Mrs. Sashi Singh Rathore. The group currently consist of 3 companies, namely Galaxy Mining & Royalties Private Limited (GMRPL), Galaxy Mining Private Limited (GMPL) and Goldcorp Global Mining Private Limited (GGMPL). The group is mainly engaged in the business of stone mining, trading and supplying of construction materials, toll collection and collection of royalties at precious stones and gypsum mining sites on behalf of the government.
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Analytical Approach
| Extent of Consolidation |
| •Full Consolidation |
| Rationale for Consolidation or Parent / Group / Govt. Support |
| Acuité has consolidated the business and financial risk profiles of Galaxy Mining & Royalties Private Limited (GMRPL), Galaxy Mining Private Limited (GMPL) and Goldcorp Global Mining Private Limited (GGMPL) together known as Galaxy Mining Group, to arrive at this rating. The consolidation is on account of common management, similar line of business, and operational linkages.
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Key Rating Drivers
| Strengths |
| Substantial growth in overall operating income
The company has recorded a revenue of Rs.520.99 Crore in FY22 against Rs.229.46 Crore in FY21. There is an increase in revenue on an account of increase in mines and order book. In addition to this, company is also serving to L&T and L&T has installed new crusher plant on the same site to expedite the process. However, the margins of the company are on declining phase in FY22 at 7.63 per cent against 11.77 per cent in FY21. As in FY21 government has waived off liability on company’s account due to Kisan andolan resulting into higher margins and in FY22 the project execution cost has increased resulting into low margins in FY22. However, the PAT margin of the company stood at 3.55 per cent in FY22 against 5.08 percent in FY21. Currently, the company is having an healthy order book position of around Rs.636 Crore which provides a revenue visibility over the medium term. The galaxy group has achieved a turnover of around Rs.255 Crore till November. Acuite believes that revenue of the company may continue to increase in medium term with a healthy order book position. Moderate Financial Risk Profile with comfortable coverage indicators The financial risk profile of the company is moderate marked by average net worth, moderate gearing and comfortable coverage indicators. The net worth of the company stood at Rs.51.59 Crore as on 31st March, 2022 as against Rs.32.12 Crore as on 31st March, 2021 and Rs 36.07 Crore as on 31st March, 2020. There is a decline in equity share capital in GMRPL in FY2021 which is mainly because of the adjustment done due to conversion of partnership firm into private limited company.. There is no withdrawal of capital by the company. However, in FY 2022 net worth has increased due to accretion of profits in the reserves. The total debt of the company is Rs.73.46 Crore as on March , 2022 includes long term debt of Rs.18.34 Crore, Unsecured loans of Rs.2.31 Crore andShort term debt of Rs.48.99 Crore. The gearing ratio of the company stood at 1.42 times in FY22 against 2.33 times in FY21. Further, the debt service coverage ratio and interest coverage ratio of the company improved at 2.63 times and 3.19 respectively in FY22 against 2.69 times and 3.15 times respectively in FY21. Acuite believes that financial risk profile may continue to remain moderate going forward with no major debt-funded capex plan. |
| Weaknesses |
| Moderately working capital intensive operations
The working capital operations of the company is moderate with GCA days at 63 days in FY22 as against 128 days in FY21. The GCA days improved on an account of better realisation from debtors in FY22 at 24 days against 39 days in FY21. In addition to this, the inventory days of the company also went down from 13 days in FY21 to 7 days in FY22. However, the creditor days of the company stood at 33 days in FY22 against 42 days in FY21. The current ratio of the company in FY22 stood at 1.23 times in FY22 against 1.16 times in FY21. Acuite believes that the working capital operation of the company will continue to remain moderate in the medium term. Tender Based nature of Business The group deals with government organizations and quotes for the contracts on a tender basis. Going forward the group's ability to successfully bid for greater number of large orders remains to be seen. |
| Rating Sensitivities |
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| Material Covenants |
| None. |
| Liquidity Position |
| Adequate |
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The liquidity position of the company is adequate with sufficient net cash accruals of Rs.23.61 Crore in FY22 against the maturing debt repayment obligation of Rs.0.45 Crore in the same period. The cash accrual of the group is estimated to be in the range of Rs.30 Crore to Rs.40 Crore against debt repayment obligation of not more than Rs.4 Crore during the same tenure. The company has maintained unencumbered cash and bank balance of Rs.10.21 Crore in FY22. The average bank limit utilisation stood at 84% in last 6 months ending September 2022.
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| Outlook: Stable |
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Acuité believes that Group will maintain a ‘Stable’ outlook and will continue to derive benefit over the medium term due to its extensive experience of promoters, adequate financial risk profile and healthy revenue visibility due to new in-house structure set up by them. The Outlook may be revised to ‘Positive’, if the company demonstrates substantial and sustained growth in its revenues from the current levels while maintaining its capital structure. Conversely, the outlook may be revised to ‘Negative’ if the company generates lower than anticipated cash accruals, most likely due to significant debt-funded capex or any significant withdrawal of capital, thereby impacting its financial risk profile, particularly its liquidity.
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 22 (Actual) | FY 21 (Actual) |
| Operating Income | Rs. Cr. | 520.99 | 229.46 |
| PAT | Rs. Cr. | 18.51 | 11.66 |
| PAT Margin | (%) | 3.55 | 5.08 |
| Total Debt/Tangible Net Worth | Times | 1.42 | 2.33 |
| PBDIT/Interest | Times | 3.19 | 3.15 |
| Status of non-cooperation with previous CRA (if applicable) |
| None |
| Any Other Information |
| None |
| Applicable Criteria |
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• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm • Consolidation Of Companies: https://www.acuite.in/view-rating-criteria-60.htm • Default Recognition: https://www.acuite.in/view-rating-criteria-52.htm • Service Sector: https://www.acuite.in/view-rating-criteria-50.htm |
| Note on Complexity Levels of the Rated Instrument |
| In order to inform the investors about complexity of instruments, Acuité has categorized such instruments in three levels: Simple, Complex and Highly Complex. Acuite’ s categorisation of the instruments across the three categories is based on factors like variability of the returns to the investors, uncertainty in cash flow patterns, number of counterparties and general understanding of the instrument by the market. It has to be understood that complexity is different from credit risk and even an instrument categorized as 'Simple' can carry high levels of risk. For more details, please refer Rating Criteria “Complexity Level Of Financial Instruments” on www.acuite.in |
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