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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 40.00 | ACUITE A+ | Stable | Assigned | - |
| Bank Loan Ratings | 286.89 | ACUITE A+ | Stable | Reaffirmed | - |
| Bank Loan Ratings | 125.00 | - | ACUITE A1+ | Assigned |
| Bank Loan Ratings | 950.11 | - | ACUITE A1+ | Reaffirmed |
| Total Outstanding | 1402.00 | - | - |
| Total Withdrawn | 0.00 | - | - |
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Rating Rationale |
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Acuité has reaffirmed its long-term rating of ‘ACUITE A+’ (read as ACUITE A plus) and its short term rating of ‘ACUITE A1+’ (read as ACUITE A one plus) on the Rs.1237.00 crore bank facilities of Laser Power and Infra Private Limited (LPIPL). The outlook is ‘Stable’.
Furthermore, Acuité has assigned a long-term of ‘ACUITE A+’ (read as ACUITE A plus) and its short term rating of ‘ACUITE A1+’ (read as ACUITE A one plus) on the Rs.165.00 crore bank facilities of Laser Power and Infra Private Limited (LPIPL). The outlook is ‘Stable’. Rationale for rating The rating takes into cognizance the sound business risk profile of the company majorly driven by diversified revenue streams, particularly in manufacturing power cables and conductors, and in the Engineering, Procurement and Construction (EPC) segment. Furthermore, the company has a well-established customer base, supported by consistent volume growth, rising product prices, and improving industry demand from power industry, complemented by government initiatives in infrastructure industry, augmentation in scale of operations where revenue from operations of the company increased to Rs. 1621.23 Cr. in FY2024 as compared to revenues of Rs. 1233.91 Cr. in FY2023 on account of healthy order inflow, change in revenue mix during the period resulting the growth around 31.39% in the FY24. Increase in company’s profitability margins which stood at 9.39% in the FY24 as against 9.07% in the FY23 mainly due to change in revenue mix to the EPC (21.62% in FY24) as compared to FY23 which comprise of 8.81% in the FY23 as EPC segment has higher margin as compared to the EPC segment and stability in raw material prices. The rating also factors in the comfortable combined order book of the company from manufacturing as well as EPC business segments which stood at Rs.2244.37 Cr. as on 31st August,2024 to be executed over the medium term, albeit decrease in order book compared with order book as on 31st August 2023 which stood Rs 4112.02 Cr. The rating also draws comfort from management’s extensive experience and healthy financial position, characterized by a comfortable gearing ratio, moderate debt coverage indicators, consistent net worth growth, and strong cash accruals. However, these strengths are partially offset by the company’s intensive working capital management reflected by high Gross Current Asset (GCA) days of 247 days as on March 31, 2024 but the same had been improved as compared to 249 days as on March 31 ,2023. |
| About the Company |
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Established in 1988, LPIPL, headquartered in Kolkata, specializes in the production of power cables and conductors like aerial bunched cables, HT cables, XLPE insulated cables, and aluminium conductors at Dhulagarh (West Bengal). Since February 2015, the company has expanded into power distribution projects through its EPC.LPIPL is a registered supplier of railway signalling and power cables to Indian Railways, accredited by the Research Design & Standard Organization (RDSO). Founded by Mr. Purushottam Dass Goel and family, the company is currently under the leadership of the second generation, with Mr. Deepak Goel, Managing Director ,son of Mr. Purushottam Dass Goel, overseeing its operations and Mr. Navin Kumar Saffar.
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| Unsupported Rating |
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Not applicable
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| Analytical Approach |
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Acuité has considered the standalone business and financial risk profile of LPIPL to arrive at the rating.
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| Key Rating Drivers |
| Strengths |
| Long track record of operations
The company, led by Mr. Deepak Goel and Mr. Navin Kumar Saffar, boasts a three-decade history in manufacturing aluminium conductors and power cables. Beyond this, they have expanded into infrastructure turnkey projects, specializing in transmission and distribution lines and power substations. LPIPL has become a prominent player in the eastern part of India, particularly excelling in EPC projects for power distribution, collaborating with entities like West Bengal State Electricity Distribution Company, South Bihar Power Distribution Company, Assam Power Distribution Company and Power Grid Corporation. Acuité believes that the company is expected to benefit from the promoters’ extensive experience and established relationships with their key suppliers and customers. Augmentation in scale of operations with improvement in profitability margin The company has achieved revenues of Rs.1621.23 Cr. in FY2024 as compared to revenues of Rs. 1233.91 Cr. in FY2023. The turnover of the company has been growing at y-o-y with the growth of 31.39 per cent in the FY24.LPIPL has an unexecuted comfortable order book position to the tune of Rs. 2244.37 Cr. as on 31st August,2024 which will be executed shortly in next 12 months, with new orders being added regularly, thus providing moderate revenue visibility over the medium term. The Company has achieved a net turnover of ~Rs. 977.31 Cr. upto mid of Sep 2024. In addition to that, operating margin increased to 9.39%, from 9.07% in FY2023, mainly due to higher contribution of revenue from EPC (21.62% in FY24) business vis-à-vis 8.81% in FY23, since it commands better pricing. The company’s PAT margin also increased to 2.41% in FY2024 from 1.78% in FY2023 due to improvement in operating margins and increase in other income (mainly Fixed Deposit interest), albeit increase in finance cost. Going forward, Acuité believes that the ability of the company to maintain its scale of operations and improve in profitability margins is going to remain a key monitorable over the medium term. Healthy financial risk profile The company’s financial risk profile is marked by healthy net worth, comfortable gearing and moderate debt protection metrics. The adjusted tangible net worth of the company stood at Rs.395.49 Cr. as on March 31, 2024 from Rs. 356.47 Cr. as on March 31, 2023 due to accretion of reserves. Acuité has considered unsecured loans of Rs.25.00 Cr. as on March 31, 2024, as quasi-equity as the management has undertaken to maintain the amount in the business over the medium term and the same is subordinated to bank loans. Gearing of the company improved and stood moderate at 0.74 times as on March 31,2024 as against 0.93 times as on March 31, 2023 on account of increase in net worth of the company and reduction in debt obligations. The Total Outside Liabilities/Tangible Net Worth (TOL/TNW) stood high at 3.14 times as on March 31, 2024 as against 2.39 times as on March 31, 2023. The moderate debt protection metrics of the company is improved which marked by Interest Coverage Ratio at 1.90 times as on March 31, 2024 and Debt Service Coverage Ratio at 1.45 times as on March 31, 2024 as against 1.76 times and 1.36 times as on March 31, 2023 respectively. Net Cash Accruals/Total Debt (NCA/TD) also improved and stood at 0.21 times as on March 31, 2024 as against 0.12 times as on March 31, 2023. Acuité believes that going forward the financial risk profile of the company will remain healthy marked by comfortable gearing and debt protection metrices over the medium term. |
| Weaknesses |
| Working capital intensive nature of operation
The working capital management of the company is intensive marked by high Gross Current Assets (GCA) of 247 days as on 31st March 2024 as compared to 249 days as on 31st March 2023. The GCA days is high primarily on account of high receivables and inventory. The bills on EPC business are mostly raised towards year end, resulting in skewed receivable cycle towards end. The EPC business retains a naturally elevated working capital intensity, attributed to prolonged project execution timelines, payments tied to project milestones. Despite that, the debtors (having outstanding less than 1 year) have improved to 109 days in FY2024 compared to 130 days in FY2023, but debtors having the outstanding balance more than 1 year had been increased in the FY 24 with stood at Rs 27.25 Cr. as against Rs 13.71 Cr. in the FY23, but as on Sep24 debtors having the outstanding balance more than 1 year had been reduced to Rs. 9.56 Cr. Inventory holding had increased and stood at 131 days as on 31st March 2024 as compared to 105 days as on 31st March 2023. The inventory levels of the company have been historically high owing to the lengthy order execution cycle, which entails multiple inspections at various stages of execution. The creditor holding had increased and stood at 178 days as on 31st March 2024 as compared to 161 days as on 31st March 2023 as in includes the creditors without LC payable and creditors payable by LC which consist of 53.05% and 46.95% respectively. The fund based limit remained utilized at ~77 per cent and non fund based limit remained utilized at ~88 percent over the six months ended July, 2024. Acuité believes that the working capital operations of the company will remain at same level as evident from elongation in the receivable period, will remain a key monitorable. |
| Rating Sensitivities |
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| Liquidity Position |
| Adequate |
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The company’s liquidity is adequate marked by steady net cash accruals of Rs.63.20 Cr. as on March 31, 2024 as against long term debt repayment of only Rs.16.43 Cr. over the same period. Overall profits and cash accruals from the business stood at a comfortable level in FY2024 which remain sufficient to meet the scheduled debt obligations. The current ratio dipped and stood at 0.92 times as on March 31, 2024 as against 1.07 times as on March 31, 2023 mainly on account of increase in creditor holding. The fund based limit remained utilized at ~77 per cent and non fund based limit remained utilized at ~88 percent over the six months ended July, 2024 . Moreover, working capital management of the company is intensive marked by same level of high Gross Current Assets (GCA) of 247 days in 31st March 2024 as compared to 249 days in 31st March 2023. Acuité believes that going forward the company will continue to maintain adequate liquidity position owing to steady accruals backed by improvement in earnings led by high demand.
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| Outlook |
| Stable |
| Other Factors affecting Rating |
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None
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| Particulars | Unit | FY 24 (Actual) | FY 23 (Actual) |
| Operating Income | Rs. Cr. | 1621.23 | 1233.91 |
| PAT | Rs. Cr. | 39.08 | 21.92 |
| PAT Margin | (%) | 2.41 | 1.78 |
| Total Debt/Tangible Net Worth | Times | 0.74 | 0.93 |
| PBDIT/Interest | Times | 1.90 | 1.76 |
| Status of non-cooperation with previous CRA (if applicable) |
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Not applicable
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| Any other information |
| None |
| Applicable Criteria |
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• 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 |
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