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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 775.00 | ACUITE A- | Stable | Reaffirmed | - |
| Bank Loan Ratings | 780.00 | - | ACUITE A2+ | Assigned |
| Bank Loan Ratings | 1375.00 | - | ACUITE A2+ | Reaffirmed |
| Total Outstanding Quantum (Rs. Cr) | 2930.00 | - | - |
| Rating Rationale |
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Rating Rationale
Acuité has reaffirmed its long-term rating of ‘ACUITÉ A-’ (read as ACUITÉ A minus) and its short term rating of ‘ACUITÉ A2+’ (read as ACUITÉ A two plus) on the Rs.2150.00 crore bank facilities of Skipper Limited (SL) The outlook is ‘Stable’. Furthermore, Acuité has assigned a short term rating of ‘ACUITÉ A2+’ (read as ACUITÉ A two plus) on the Rs.780.00 crore bank facilities of SL. The outlook is ‘Stable’. Rationale for rating action The rating takes into cognizance the sound business risk profile of the company majorly driven by diversified revenue streams and a well-established customer base, including prestigious government undertakings in the power sector, Indian railways, reputable EPC contractors, and telecom companies. The revenue from operations of the company increased to Rs. 1980.30 Cr. in FY2023 compared to Rs. 1708.12 Cr. in FY2022 on account of healthy order inflow in the engineering division and improved operations in the polymer business during the period. The improvement in operating performance of the company was also supported by improvement of business from the overseas market which share to the overall revenues increased to 36 percent in FY2023 as compared to 23 percent in FY 2022. The rating also factors in the healthy order book of the company which stood at Rs. 4551 Cr. as on 31 March, 2023, which is the highest among all orders received till date. The rating also draws comfort from management’s extensive experience and healthy financial position, characterized by a strong net worth base and low gearing. The debt protection metrices however remain moderate for FY2023. However, these strengths are partially offset by the company’s moderation in profitability margins due to the increase in forex losses. The operating profit margin decreased to 9.77 per cent in FY2023 from 9.92 percent in FY 2022 accruing due to exchange difference resulting in loss to the tune of Rs.30.03 Cr in FY 2023. The rating is further constrained by intensive working capital management reflected by high Gross Current Asset (GCA) days. |
| About the Company |
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Skipper Limited, a company based in Kolkata and established in 1981, is currently governed by directors including Mr. Mamta Binani, Mr. Pramod Kumar Shah, Mr. Sharan Bansal, Mr. Sajan Kumar Bansal, Mr. Ashok Bhandari, Mr. Yash Pall Jain, Mr. Devesh Bansal, Mr. Amit Kiran Deb, Mr. Siddharth Bansal, and Mr. Raj Kumar Patodi. The company operates in three distinct business segments: engineering, polymer, and infrastructure. Its engineering division, which has a manufacturing capacity of 3,00,000 MTPA, focuses on producing transmission tower, telecom towers, poles, distribution poles, angles, fasteners, and railway structures, accounting for approximately 77 percent of the total revenue. The polymer segment, with a manufacturing capacity of 51,000 MTPA, is involved in the production of UPVC pipes, CPVC pipes, SWR pipes used for plumbing and irrigation purposes, contributing around 20 percent of the total revenue. The remaining 3 percent of revenue comes from the EPC segment, where the company undertakes power transmission projects. Skipper Limited operates four manufacturing units, with three located in West Bengal and one in Assam.
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| Analytical Approach |
| Acuité has considered the standalone business and financial risk profiles of Skipper Limited to arrive at this rating. |
Key Rating Drivers
| Strengths |
Skipper Limited, originally known as Skipper Investments Limited, was established by the Bansal family in 1981, primarily focusing on manufacturing poles and towers. The company underwent a name change in 2009. In 2006, it secured its initial orders from Power Grid Corporation of India Limited (PGCIL) for the supply of transmission powers. Subsequently, in 2014, Skipper Limited got listed on the Bombay Stock Exchange (BSE). The company benefits from a seasoned management team, led by Mr. Sajan Kumar Bansal, with over three decades of experience in the same industry. He is supported by his three sons and a team of qualified personnel. This wealth of experience and expertise has established Skipper Limited as one of the leading players in the power transmission tower sector in India.
The company exhibits a versatile business profile, evident through its three distinct divisions - engineering goods, polymer, and infrastructure, contributing 77%, 20%, and 3% respectively to its revenue. It boasts a strong customer base, comprising renowned construction, power transmission, and distribution firms like Tata Projects Limited, Power Grid Corporation of India Limited, and UP Power Transmission Corporation Limited, among others. With over three decades of operational experience, it holds a prominent position in the power transmission and distribution structure manufacturing segment. Additionally, the company serves both domestic and international markets, including Middle Eastern countries, the UK, and African nations. Moreover, in the polymers division, it maintains an extensive distribution network with 30,000 retail touch points across various states such as West Bengal, Odisha, and the North-eastern Indian states. Acuité believes that the diversified business profile and experience management will continue to benefit the operations of the company over the medium term.
The revenue from operations of the company improved to Rs. 1980.30 Cr. in FY2023 registering a growth of 13.74 percent YoY compared to Rs. 1708.12 Cr. in FY2022. The growth was majorly on account of improvement in business operations from the engineering and polymer divisions. The expansion of the distribution channel boosted revenue from the polymer division, while effective execution of orders led to increased revenue from the engineering division.
Furthermore, the order book position of the company remained healthy and stood at Rs.4551 Cr. as on 31 March 2023. Approximately 80 percent of these orders originate from the domestic market, with 62 percent coming from sectors like telecom, railways, solar, fasteners, and other steel structural items (Non T&D), and 18% from the Power Transmission & Distribution (T&D) sector. The remaining 20 percent of orders are from international markets. A significant order, valued at Rs.2570 Cr, was obtained from Bharat Sanchar Nigam Ltd. (BSNL) for the supply and installation of ground-based telecom towers, with subsequent O&M for five years, extendable to an additional five years, under India’s 4G saturation initiative in uncovered villages. Furthermore, the company actively pursues projects worth Rs. 6600 Cr on the international front and about Rs. 3520 Cr domestically. However, the company’s profitability saw deterioration marked by decline in operating profit margin to 9.77 percent in FY2023 from 9.92 per cent in FY2022, mainly due to foreign exchange losses. Furthermore, the net profitability margin decreased to 1.65 percent in FY2023 as compared to 1.68 percent in FY2022. Acuite believes that revenues of the company will continue to show improvement on account of timely execution of orders and healthy order book position over the medium term.
The financial risk profile of the company is healthy marked by healthy net worth, low gearing and moderate debt protection metrics. The tangible net worth of the company stood at Rs.766.74 Cr as on March 31, 2023 as compared to Rs.734.73 Cr as on March 31, 2022 due to accretion of reserves. Furthermore, its capital structure remains leveraged, marked by the gearing of the company of 0.63 times as on 31 March 31, 2023, despite a significant increase in external borrowings in FY2023. The Total Outside Liabilities/Tangible Net Worth (TOL/TNW) stood at 1.90 times as on March 31, 2023 as compared to 1.84 times as on March 31, 2022. The debt protection matrices of the company remain moderate marked by Interest coverage ratio (ICR) of 2.01 times and debt service coverage ratio (DSCR) of 1.07 times for FY2023. The net cash accruals to total debt (NCA/TD) stood healthy at 0.16 times in FY2023. Furthermore, the company initiated an expansion plan during current financial year to establish a new distribution line in the Uluberia unit with a total cost of Rs. 60 Cr, and this capital expenditure was fully financed using the company’s internal cash accruals.
Going forward, Acuité believes that going forward the financial risk profile will likely remain healthy over the medium term, supported by healthy networth and low gearing levels of the company |
| Weaknesses |
The operation of the company is working capital intensive marked by high gross current asset days of 263 days in 31st March 2023 as compared to 288 days in 31st March 2022. The high GCA days are mainly on account of high inventory days. The inventory days of the company stood at 187 days in 31st March 2023 as compared to 186 days in 31st March 2022. Further, the GCA days of the company has also emanates from the high other current asset of Rs.152.43 Cr. in 31st March 2023, which mainly consists of other loans & advances and materials on loan. However, the debtor days of the company stood at 67 days for in 31st March 2023 as against 94 days in 31st March 2022. Acuité believes that the working capital operations of the company will remain at the similar levels over the medium term.
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| ESG Factors Relevant for Rating |
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In April 2022, a 90 KLD capacity STP was installed to promote water conservation and explore opportunities for reusing treated sewage water. The treatment of generated sewage utilized specially designed engineered bacteria. Additionally, in April 2022, FO was replaced with LPG for furnace operation in Jangalpur. In the same period, a Process Effluent Treatment facility (ETP unit Integrated with MBBR, Clarifier & Tertiary treatment Facilities) was established. Later, in July 2022, an encapsulated GI process with an integrated APCD arrangement was implemented. Subsequently, in August 2022, RO water from the STP treated water (20 KLD) was utilized for GI operation, and water recirculation through Chiller & Cooling tower units HDPE was implemented. Furthermore, a 1.38 MW rooftop solar plant in Uluberia was set up in September 2022. It is expected to generate 1605164 units per year on average and 40129109 KWH in 25 years, providing clean energy and reducing carbon emissions by approximately 1360 MT/year. Additionally, numerous Tree Plantation Initiatives were undertaken at Skipper.
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| Rating Sensitivities |
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| All Covenants |
| None |
| Liquidity Position |
| Adequate |
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The company has an adequate liquidity marked by adequate net cash accruals of Rs.79.48 Cr. as on March 31, 2023 as against Rs.67.88 Cr. long term debt obligations over the same period. The current ratio of the company stood comfortable at 1.33 times in FY2023. The cash and bank balance stood at Rs. 2.11 Cr for FY 2023. Moreover, the bank limit of the company has been ~56.63 percent utilized for the twelve months ended in March 2023. However, the working capital intensive marked by high gross current asset days of 263 days for FY2023 as compared to 288 days for FY2022. Acuité believes that going forward the company will maintain adequate liquidity position due to steady accruals.
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| Outlook: Stable |
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Acuité believes the outlook of SL will remain ‘Stable’ over the medium term backed by its long track record of operations, strong business profile, healthy order book and comfortable financial risk profile. The outlook may be revised to ‘Positive’ if the company is able to improve its coverage and leverage parameters significantly with sustained revenue growth. Conversely, the outlook may be revised to ‘Negative’ in case of a deterioration in its profitability margin or liquidity profile due to stretched working capital requirement.
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| Other Factors affecting Rating |
| Not Applicable |
| Particulars | Unit | FY 23 (Actual) | FY 22 (Actual) |
| Operating Income | Rs. Cr. | 1980.30 | 1708.12 |
| PAT | Rs. Cr. | 32.71 | 28.61 |
| PAT Margin | (%) | 1.65 | 1.68 |
| Total Debt/Tangible Net Worth | Times | 0.63 | 0.77 |
| PBDIT/Interest | Times | 2.01 | 1.84 |
| Status of non-cooperation with previous CRA (if applicable) |
| Not Applicable |
| Any other information |
| Not Applicable |
| 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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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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