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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 4.00 | ACUITE BB+ | Stable | Assigned | - |
| Bank Loan Ratings | 6.00 | ACUITE BB+ | Stable | Reaffirmed | - |
| Bank Loan Ratings | 16.50 | - | ACUITE A4+ | Assigned |
| Bank Loan Ratings | 33.50 | - | ACUITE A4+ | Reaffirmed |
| Total Outstanding | 60.00 | - | - |
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Rating Rationale |
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Acuité has reaffirmed and assigned the long term rating of ‘ACUITE BB+’ (read as ACUITE double B plus) and short term rating of ‘ACUITE A4+’ (read as ACUITE A four plus) on the Rs.60.00 Cr. bank facilities of Nitson & Amitsu Private Limited (NAPL).
Rationale for the rating The rating takes into cognizance the sound business risk profile of the group majorly driven by revenue streams and a well-established customer base, including clientele such as ITC Group, RPSG Group, Prestige Group, Larsen & Toubro Limited, Tata Housing Group, Bengal Ambuja Group, Reliance Retail etc. The group has achieved revenues of Rs. 92.81 Cr in FY2023 as compared to revenues of Rs. 80.15 Cr in FY2022 on account of healthy order inflow during the period. The revenues as on December 2023 (provisional) is at Rs.70 Cr. The rating also factors in the healthy order book of the group which stood at Rs. 292.42 Cr. as on 30th November, 2023 which translated into an Order book/ operating income of over 4 times. The rating also draws comfort from management’s extensive experience and above average financial position, characterized by a moderate net worth base and comfortable gearing. The debt protection metrices however remain modest for FY2023. However, these strengths are partially offset by the intensive working capital management reflected by high Gross Current Asset (GCA) days and intense competition in the aluminium products industry. |
| About Company |
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Established in 1983, Nitson & Amitsu Private Limited (NAPL) specializes in offering services related to aluminium doors and windows, facade glazing systems along with electrical jobs and hardware solutions. The company, founded by Late M.S.Gulati and Mr. Aruneshwar Krishan Soni (both of them were ex L & T employees) and later on Mr. Sonesh Gulati and Mr. Nitin Gulati (both are Sons of Late M.S.Gulati) and Mr. Amit Soni and Mr. Sumit Soni (both are sons of Mr. A.K.Soni) joined the organization. The company has its registered office in Kolkata and a branch office in Sri Lanka. NAPL procures manufactured aluminium frames, structures, doors, windows from its group company Nitson and Amitsu Building Systems Private Limited (NABSPL). It is in knocked down condition and installs them at project sites along with allied items and accessories.
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| About the Group |
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Nitson and Amitsu Building Systems Private Limited (NABSPL) is engaged in the manufacturing of aluminium doors, windows and structures and led by Mr. Aruneshwar Krishan Soni, Mr. Sonesh Gulati and Mr. Nitin Gulati. The group majorly caters to the Institutional, Hospital, Industrial, Infrastructure requirement on pan India basis.
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| Unsupported Rating |
| Not Applicable |
| Analytical Approach |
| Extent of Consolidation |
| •Full Consolidation |
| Rationale for Consolidation or Parent / Group / Govt. Support |
| Acuité has consolidated the financial and business risk profile of Nitson & Amitsu Private Limited (NAPL) and Nitson & Amitsu Building Systems Private Limited (NABSPL). The group is herein being referred to as Nitson Group. The same is on account of common management, same line of operations and significant operational and financial linkages.
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| Key Rating Drivers |
| Strengths |
The group was incorporated in 1983 and promoted by Late M.S.Gulati and Mr. Aruneshwar Krishan Soni. They were working with L & T for 20 and 17 years respectively before incorporating NAPL in 1983.
Mr. Soni is having more than 50 years of vast experience in the field of electrical engineering. The other directors Mr. Sonesh Gulati and Mr. Nitin Gulati, also have more than two decades of experience in the field of façade glazing systems and another two directors Mr. Amit Soni and Mr. Sumit Soni also have more than two-decade experience in the field of electrical projects and LED energy saving instruments and devices. The long track record of operations has helped the group build long term relations with customers as well as with the suppliers. The experienced management and long standing relationship with customers, supports group’s business risk profile. Nitson group generates its revenues by providing services to Hotel and Infra industry in Kolkata mostly. Group provides hardware services to reputed clientele like ITC Group, RPSG Group, Prestige Group, Larsen & Toubro Limited, Tata Housing Group, Bengal Ambuja Group etc. Niston group has also received the order for providing the windows and electrical fittings for Trump Tower, Queens Park, Alipore Institutes of Management and Bandan Bank. Acuite believes that the substantial experience of the promoters alongwith established relationship with existing customers will continue to benefit the Company over the medium term.
The group has achieved revenues of Rs. 92.81 Cr in FY2023 as compared to revenues of Rs. 80.15 Cr in FY2022. The turnover of the company has been growing at y-o-y of more than 15.79 per cent. NAPL has an unexecuted order book position of Rs. 292.42 Cr as on 30th November, 2023 which will be executed in 18-24 months. The order book to operating income (OB/OI) is almost 4.18 times. Further, the group has already achieved revenue of around Rs.70.00 Cr. till Dec’23 (Provisional). Going forward, Acuite believes that the revenue of the group will improve backed by healthy order book position, which imparts revenue visibility over the near to medium term.
The operating margin of the group increased to 6.51 per cent in FY2023 as compared to 5.87 per cent in FY2022. This significant increase in operating margin is on account of decrease in employee and selling expenses during the period. The PAT margin of the group stood at 1.11 per cent in FY2023 as compared to 1.07 per cent in FY2022. The ROCE levels stood at 8.87% in FY2023, up from 7.41% in FY2022. Going forward, Acuite believes that the operating profitability margin of the group will improve on account of increasing demand in infrastructure industry in domestic as well as in global market.
The financial risk profile of the group is above average marked by moderate net worth, comfortable gearing and modest debt protection metrics. The tangible net worth of the group stood at Rs.46.03 Cr as on March 31, 2023 as compared to Rs.42.06 Cr.as on March 31, 2022. This improvement in networth is mainly due to the retention of current year profits in reserves. The gearing of the group stood comfortable at 0.48 times as on March 31, 2023. The Total Outside Liabilities/Tangible Net Worth (TOL/TNW) stood at 1.84 times as on March 31, 2023. The debt protection metrices of the group stood modest marked by Interest coverage ratio (ICR) of 1.43 times and debt service coverage ratio (DSCR) of 1.08 times for FY2023. The net cash accruals to total debt (NCA/TD) stood at 0.08 times in FY2023.
Going forward, Acuité believes the financial risk profile of the group will remain above average on account of steady net cash accruals owing to stable profitability margins with no major debt funded capex plan over the near term. |
| Weaknesses |
The working capital operations of the group is intensive marked by high gross current asset (GCA) days of 451 days for FY2023 as compared to 476 days for FY2022. The GCA days are primarily on account of high inventory holding and high receivable days. The inventory days stood at 245 days in FY2023 as compared to 277 days in FY2022. The debtor days of the group stood at 181 days in FY2023 as against 182 days in FY 2022. Against this, the group has substantial dependence on its suppliers to support the working capital; creditors stood at 223 days as on March 31, 2023.
Acuité believes that the working capital operations of the group will remain at the similar levels over the medium term.
The aluminium facade contracting industry is facing competition from new service providers and contractors which could put a pressure on the scalability of the business.
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| Rating Sensitivities |
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| Liquidity Position |
| Adequate |
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The group has adequate liquidity marked by steady net cash accruals of Rs. 1.70 Cr. as on March 31, 2023 as against Rs. 1.22 Cr long term debt obligations over the same period. The current ratio of the group stood comfortable at 1.66 times in FY2023. The cash and bank balance stood at Rs. 0.32 Cr for FY 2023. However, the bank limit of the group has been ~93.53 percent utilized for the last six months ended in December 2023. Further, the working capital operations of the group is intensive marked by high gross current asset (GCA) days of 451 days for FY2023 as compared to 476 days for FY2022. Acuité believes that the liquidity of the group is likely to remain adequate over the medium term on account of healthy cash accruals and absence of any major debt funded capex plans over the medium term.
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| Outlook: Stable |
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Acuité believes the group will maintain a stable business risk profile over the medium term. The group will continue to benefit from its experienced management and established association with customers and suppliers along with moderate scale of operation. The outlook may be revised to “Positive” in case the group registers significant improvement in scale of operations while improving their profit margins and achieving improvement in working capital cycle. The outlook may be revised to ‘Negative’ in case of deterioration in the group’s scale of operations and profitability or capital structure, or in case of further elongation of working capital cycle.
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 23 (Actual) | FY 22 (Actual) |
| Operating Income | Rs. Cr. | 92.81 | 80.15 |
| PAT | Rs. Cr. | 1.03 | 0.86 |
| PAT Margin | (%) | 1.11 | 1.07 |
| Total Debt/Tangible Net Worth | Times | 0.48 | 0.69 |
| PBDIT/Interest | Times | 1.43 | 1.50 |
| Status of non-cooperation with previous CRA (if applicable) |
| Not Applicable |
| 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 • Manufacturing Entities: https://www.acuite.in/view-rating-criteria-59.htm • Rating Process and Timeline: https://www.acuite.in/view-rating-criteria-67.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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