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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 11.00 | ACUITE BBB- | Stable | Assigned | - |
| Bank Loan Ratings | 3.00 | ACUITE BBB- | Stable | Reaffirmed | - |
| Bank Loan Ratings | 14.00 | - | ACUITE A3 | Assigned |
| Bank Loan Ratings | 22.00 | - | ACUITE A3 | Reaffirmed |
| Total Outstanding Quantum (Rs. Cr) | 50.00 | - | - |
| Rating Rationale |
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Acuite has reaffirmed the long-term rating of ‘ACUITE BBB-’ (read as ACUITE triple B minus) and short-term rating of ‘ACUITE A3’ (read as ACUITE A three) respectively, to the Rs. 3 Crore facility and Rs.22.00 Crore bank facilities of Pan Intellecom Limited (PIL). Further Acuite assigned the long-term rating of ‘ACUITE BBB-’ (read as ACUITE triple B minus) and short- term rating of ‘ACUITE A3’ (read as ACUITE A three) respectively to the Rs. 11 Crore facility and Rs. 14.00 crore facility of PIL.
The outlook is ‘Stable’. Rating Rationale The rating takes into account the established track record of operations with experienced promoters, comfortable financial risk profile and improvement in total operating income of the company. Intensive working capital management marked by elongated Gross Current Asset days (GCA), debtor days, creditor days and risk in tender based nature of businesses underpins the above strengths. |
| About the Company |
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Pan Intellecom Limited (PIL), a Haryana based company was incorporated in May 1992. PIL is engaged in providing system integration of Audio/Video solutions, video surveillance, interactive solutions, security and allied products. The company has rendered services such as multi-media training facility for Police Training College (Delhi), Command and control Room for Defense and Naval HQ, professional sound system for Jawahar Lal Nehru Stadium, New Delhi, Golden Temple Plaza (Amritsar) etc. The company has also executed various projects for Government such as setting up of Board room for ministry of Finance, Ministry of Home Affairs, Ministry of Finance etc. It is promoted by Mr. Harbir Singh Panesar, Mr. Rupinder Panesar and Mr. Ranbir Singh Panesar.
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| Analytical Approach |
| Acuité has considered the standalone business and financial risk profile of PIL to arrive at the rating. |
Key Rating Drivers
| Strengths |
| Satisfactory Operating Performance
The total operating income of the company increased from Rs. 71.08 crore in FY21 to Rs. 102.82 crore in FY 22, thereby witnessing growth at the rate of 44.65%. The total operating income, improved significantly during FY22, mainly on account of executing orders pertaining to reputed clientele. Further, the company have order book size of Rs. 137,31 crore with client like Larsen & Toubro, JHANSI Space Musuem, BEL -Videowall supply- IACCS, etc.
Improved Profitability On profitability front, the company witnessed improvement wherein the operating profit increased to Rs.7.53 crore in FY22 against that of Rs. 5.09 crore in FY21. The increase in operating profit is mainly on account of company executing high value projects. The operating profit margin, remained at 7.32% during FY22 as against 7.16% in FY21. The net profit of the company also improved in tune with operating profit during past three years. The net profit increased significantly from Rs. 3.44 crore in FY21 to Rs.5.18 crore in FY22 and stood at 5.04% as on FY 22. Reputed Clientele The clientele of the company includes several companies of repute such as Bharat Electronics Limited, CPWD, Government of Uttar Pradesh, Government of Jharkhand, Larsen & Toubro etc. In addition to this, PIL has rendered services such as multi-media training facility for Police Training College (Delhi), Command and control Room for Defense and Naval HQ, professional sound system for Jawahar Lal Nehru Stadium, New Delhi, Golden Temple Plaza (Amritsar) etc. The company has also executed various projects for Government such as setting up of Board room for ministry of Finance, Ministry of Home Affairs, Ministry of Finance etc. |
| Weaknesses |
| Intensive Working Capital Management
The Gross Current Asset days of the company though improved it remained high at 220 days in FY 22 vis- à-vis 274 days in FY21. This is mainly due to higher debtors’ period of 190 days in FY 22. As the major projects are executed for Government bodies, the receipts are realised on milestone basis. Further, as company executes major portion of orders during last quarter, hence, debtors outstanding is at higher level during fiscal year end. The inventory days remains at lower level at 6 days. The creditor days are maintained at 243 days in FY 22 as against 241 days in FY 21. The company had utilized its cash credit facility at an average utilisation of 58.31% in the past 6 months ending February 2023. Tender based nature of business The company’s performance is susceptible to the tender based nature of business, where the business depends on the ability to bid for contracts successfully. Risk become more pronounced as tendering is based on minimum amount of biding of contracts. |
| Rating Sensitivities |
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| Material covenants |
| None |
| Liquidity Position |
| Adequate |
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The net cash accruals of the company remained at Rs. 5.48 crore as against Rs. 0.21 crore of debt obligation in FY 22. The current ratio of PIL remained low at 1.09 during FY22 showing stretched short-term liquidity however, the buffer available as undrawn WC limit gives additional liquidity. The cash and bank balance remained at Rs. 1.12 crore as on March 31, 2022 vis-à-vis Rs.2.23 crore as on March 31, 2021. The DSCR of the company declined yet comfortably maintained at 9.02 times in FY22 as against 12.28 times in FY21.
Acuite believes that liquidity profile of the company is expected to remain at adequate level, backed by moderate WC limit utilization, absence of debt repayment obligation and company’s ability to generate profit in coming years. |
| Outlook: Stable |
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Acuité believes that the outlook on PIL will remain 'Stable' over the medium term on account of its experienced promoter and improvement in operations of the company. The outlook may be revised to 'Positive' in case of significant improvement in scale of operations while maintaining the profitability and successful execution of orders. Conversely, the outlook may be revised to 'Negative' in case of any stretch in its working capital management or reduction in operating income of the company resulting into stretched liquidity.
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 22 (Actual) | FY 21 (Actual) |
| Operating Income | Rs. Cr. | 102.82 | 71.08 |
| PAT | Rs. Cr. | 5.18 | 3.44 |
| PAT Margin | (%) | 5.04 | 4.84 |
| Total Debt/Tangible Net Worth | Times | 0.09 | 0.01 |
| PBDIT/Interest | Times | 17.69 | 16.21 |
| Status of non-cooperation with previous CRA (if applicable) |
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Care Ratings vide its press release dated 2.6.2022, had reaffirmed the company to CARE BB-/A4 (Stable); INC Crisil vide its press release dated 16.11.2021 ahd reaffirmed the company to CRISIL BB/A4+ (Stable); INC |
| 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 |
| 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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| PS: LC of 10 crore is the sub-limit of Bank Guarantee. |
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