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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 6.00 | ACUITE B+ | Reaffirmed & Withdrawn | - |
| Total Outstanding Quantum (Rs. Cr) | 0.00 | - | - |
| Total Withdrawn Quantum (Rs. Cr) | 6.00 | - | - |
| Rating Rationale |
| Acuité has reaffirmed and withdrawn the long-term rating of ‘ACUITE B+’ (read as ACUITE B plus) on the Rs.6.00 Cr. bank facilities of National Engineers (NE). The rating is being withdrawn on account of the request received from the firm and the NOC received from the banker as per Acuité’s policy on withdrawal of ratings. |
| About the Company |
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Established in 1995, National Engineers is a proprietorship firm promoted by Mr. Walter Almeida. The proprietor has over 3 decades of experience in the said line of business. The firm is engaged in manufacturing of stone crushing, screening and material handling machines. National Engineers has its manufacturing facility located at Kundaim Industrial Estate, Goa.
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| Analytical Approach |
| Acuité has considered the standalone business and financial risk profiles of NE to arrive at this rating. |
Key Rating Drivers
| Strengths |
| >Experienced management and established track record of operations The proprietor, Mr. Walter Almeida, has over three decades of experience in the machinery manufacturing industry. NE’s established operational track record of more than two decades has helped to maintain long standing relationship with its customers and suppliers. Acuité believes that the proprietor’s extensive experience, long track record of operations and healthy relationship with customers and suppliers is expected to support its business risk profile over the medium term. |
| Weaknesses |
| > Working Capital Intensive operations
NE’s operations continue to remain intensive, though an improvement in working captail cycle is recorded as on March 31, 2022 (Prov.). The Gross Current Asset days (GCA) of the firm stood at 251 days as on March 31, 2022(prov) against 373 days as on March 31, 2021.The inventory days stood at 170 days as on March 31, 2022 against 186 days as on March 31, 2021.The inventory holding policy of the firm depends from product to product. The debtors’ days stood at 65 days as on March 31, 2022) against 201 days as on March 31, 2021. The credit period depends from customer to customer. The creditor days stood at 45 days as on March 31, 2022 (Prov.) as against 77 days as on March 31, 2021. Acuité believes that the ability of the firm to efficiently manage its working capital requirements will remain key rating sensitivity.
> Below Average Financial risk profile The financial risk profile of the firm is below average marked by low net worth, moderate gearing and modest debt protection metrics. The tangible net worth of the firm stood at Rs.4.60 cr as on 31 March 2022(prov) as against Rs.3.19 crore as on 31 March 2021. Total debt of the firm stood at Rs.9.06 cr in FY2022(prov) as against Rs.8.63 Cr in FY2021. Total debt in FY2022(prov) comprises of Rs.1.08 crore of unsecured loan and Rs.8.88 crore of short term debt. Gearing (debt-equity) stood moderate at 1.97 times as on 31 March 2022(prov) as against 2.70 times as on 31 March, 2021. Total outside Liabilities/Total Net Worth (TOL/TNW) stood at 2.75 times as on 31 March 2022(prov) as against 3.97 times as on 31 March, 2021. The debt protection metrics of the firm is modest with Interest Coverage Ratio of 2.77 times for FY2022(prov) as against 2.39 times for FY2021. Net Cash Accruals to Total Debt (NCA/TD) stood at 0.18 times for FY2022(prov) as against 0.13 times for FY2021. > Small scale of operations and fluctuating margins NE has small scale of operations marked by an operating income Rs.21.87 Cr in FY2022(prov) as against Rs.13.10 Cr in FY2021. The operating margin of the firm declined to 11.81 percent in FY2022(prov) as against 15.03 percent in FY2021. The decline is largely on account of increase in material cost and employee cost. The net profitability margin of the firm also declined to 6.43 percent in FY2022(prov) as against 7.07 percent in FY2021. Acuité believes that the firm's ability to register significant growth in its revenues while improving its profitability are key rating sensitivity factors over the medium term. |
| Rating Sensitivities |
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> Growth in revenue with sustainability of the profitability margins. > Any deterioration of its financial risk profile and liquidity. > Any elongation of the working capital cycle leading to deterioration in debt protection metrics |
| Material covenants |
| None |
| Liquidity Position: Stretched |
| NE's liquidity profile is stretched marked by elongated working capital cycle and modest net cash accruals. The GCA days of the firm stood at 251 days as on March 31, 2022. The firm generated cash accruals of Rs.1.66 Cr in FY2022(prov) .The firm maintains unencumbered cash and bank balances of Rs. 0.13 crore as on March 31, 2022(prov). The current ratio of the firm stood moderate as it stands at 1.22 times as on March 31, 2022(prov) as against 1.10 times as on 31 March 2021. |
| Outlook: Not Applicable |
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 22 (Provisional) | FY 21 (Actual) |
| Operating Income | Rs. Cr. | 21.87 | 13.10 |
| PAT | Rs. Cr. | 1.41 | 0.93 |
| PAT Margin | (%) | 6.43 | 7.07 |
| Total Debt/Tangible Net Worth | Times | 1.97 | 2.70 |
| PBDIT/Interest | Times | 2.77 | 2.39 |
| Status of non-cooperation with previous CRA (if applicable) |
| None |
| 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 |
| https://www.acuite.in/view-rating-criteria-55.htm |
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