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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 27.20 | ACUITE C | Upgraded | - |
| Bank Loan Ratings | 19.80 | ACUITE D | Reaffirmed | - |
| Bank Loan Ratings | 13.00 | - | ACUITE A4 | Upgraded |
| Bank Loan Ratings | 15.00 | - | ACUITE D | Reaffirmed |
| Total Outstanding | 75.00 | - | - |
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Rating Rationale |
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Acuité has upgraded the long-term rating to ‘ACUITE C' (read as ACUITE C) from ‘ACUITE D' (read as ACUITE D) on the Rs.27.20 crore bank facilities of MECHATRONICS SYSTEMS PRIVATE LIMITED (MSPL).
Acuité has reaffirmed the long-term rating ‘ACUITE D' (read as ACUITE D) on the Rs.19.80 crore bank facilities of MECHATRONICS SYSTEMS PRIVATE LIMITED (MSPL). Also reaffirmed the short-term rating of ‘ACUITE D’ (read as ACUITE D) on the Rs.15.00 crore bank facilities of MECHATRONICS SYSTEMS PRIVATE LIMITED (MSPL) and also upgraded the short-term rating to ‘ACUITE A4 ' (read as ACUITE A four) from ‘ACUITE D' (read as ACUITE D) on the Rs.13.00 crore bank facilities of MECHATRONICS SYSTEMS PRIVATE LIMITED (MSPL). Rationale for the rating The rating upgraded is on account of one lender of the company has given a satisfactory feedback. Further, severe liquidity constraints in the operations of the Company leading to delays in servicing debt repayments in a timely manner by MSPL, and according to CRIF High mark report the account is mentioned SMA-2. The rating also factors the stretched liquidity profile of the company marked by the working capital-intensive nature of operations and the high utilisation of the fund-based bank limits. However, Acuité considers the long-standing operations of the company marked by the experienced management and the established relationship with customers. |
| About the Company |
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Mechatronics Systems Private Limited (MSPL) is a Pune based integrated water resource management company engaged in providing automation and real time data solutions in areas such as real time hydro meteorological information systems, flood forecasting and flood management systems with dam automation, smart city water supply management among others. MSPL provides solution for water resources, dams, canals, and water-supply projects and primarily deals with government agencies and urban local bodies. MSPL was incorporated in 1991 as a partnership concern with the name ‘Mechatronics’. The firm was converted to private limited company in 1996 and its name was changed to Mechatronics Systems Private Limited (MSPL). MSPL is promoted by Mr. Ashok Karva.
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| Unsupported Rating |
| Not Applicable |
| Analytical Approach |
| Acuité has considered the standalone business and financial risk profile of MSPL to arrive at the rating. |
| Key Rating Drivers |
| Strengths |
| Experienced management and track record in execution of projects:
The promoter of the entity Mr. Ashok Karva has more than two decades of experience in the water resource management project execution space. Mr. Ashok Karva holds BE degree in Electronics and Tele Communication Engineering. The company benefits from team of 200 professionals comprising of software engineers, hydrologists, electronics and instrumentation engineers, business graduates, installation and commissioning engineers. |
| Weaknesses |
| Delays in servicing term debt obligations
Due to the severe liquidity constraints leading to mis-matches in the cash flows of the Company, there has been delays in servicing debt repayments in a timely manner by MSPL . Below average financial risk profile The financial risk profile of the company remained below average marked by low net worth, high gearing and moderate debt protection metrics. The net worth of the company stood at Rs.28.29 Cr. as on 31 March, 2023 and Rs. 27.68 Cr. as on FY2022. The gearing stood high at 1.60 times as on 31 March, 2023 as against 1.52 times as on 31 March, 2022. The total debt of Rs.32.94 Cr as on 31 March, 2023 consists of short term bank borrowings of Rs.31.35 Cr. and long term bank borrowings of Rs.1.60 Cr. over the same period. The interest coverage ratio and DSCR stood moderate at 1.28 times and 1.15 times respectively for FY2023 as against 1.43 times and 1.32 times respectively for FY2022. Acuité believes that the financial risk profile of MSPL is however expected to remain moderate over the medium term. Continuous losses coupled with decline in the operating margin. The company has consistently incurred losses since the past three years due to disruptions in the operations. The primary reason for losses in FY2023 due to unfulfilled projects and losses incurred at the same time, was the main cause of the revenue decline & due to delay in the completion of project. Moreover, the rise in expenditure deteriorated the operating margin to 10.66 per cent in FY2023 as compared to 14.34 per cent in FY2022. Acuité believes that, going forward, the ability of the company to break the cycle of losses and achieve profits will be a key sensitivity factor. |
| Rating Sensitivities |
| Timely servicing of term debt obligations. |
| Liquidity Position |
| Stretched |
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The liquidity position of the company is stretched marked by full utilisation of its working capital limits owing to working capital intensive nature of operations. The average working capital utilisation of its limits remained at ~99.18 % in last six months ended Dec 2023. The company reported net cash accruals of Rs. 0.79 Cr. in FY2023 as against nil debt obligation over the same period. The current ratio stood at 1.49 times in FY23. The cash and bank balances stood at 2.23 Cr. in FY23.
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| Outlook |
| Not Applicable |
| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 23 (Actual) | FY 22 (Actual) |
| Operating Income | Rs. Cr. | 57.12 | 53.74 |
| PAT | Rs. Cr. | 0.62 | 1.61 |
| PAT Margin | (%) | 1.08 | 2.99 |
| Total Debt/Tangible Net Worth | Times | 1.16 | 1.52 |
| PBDIT/Interest | Times | 1.28 | 1.43 |
| Status of non-cooperation with previous CRA (if applicable) |
| Not Applicable |
| Any other information |
| None |
| Applicable Criteria |
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• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm • Service Sector: https://www.acuite.in/view-rating-criteria-50.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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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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