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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 4.00 | ACUITE B+ | Reaffirmed & Withdrawn | - |
| Bank Loan Ratings | 15.00 | - | ACUITE A4 | Reaffirmed & Withdrawn |
| Total Outstanding Quantum (Rs. Cr) | 0.00 | - | - |
| Total Withdrawn Quantum (Rs. Cr) | 19.00 | - | - |
| Rating Rationale |
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Acuité has reaffirmed and withdrawn the long-term rating of ‘ACUITE B+’ (read as ACUITE B Plus) and the short-term rating of ‘ACUITE A4’ (read as ACUITE A Four) on the Rs. 19.00 crore bank facilities of Supreme Power Equipment Private Limited (SPEPL).
The rating has been withdrawn on Acuite's policy of withdrawal of ratings. The rating has been withdrawn on account of the request received from the company, and the NOC received from the banker. Rationale for the reaffirmation The rating reaffirmation takes into account the improvement in the operating income of the company, The rating also draws comfort from the experienced promoter and the company’s long track record in the industry. These strengths are, however, offset by the working capital intensive in nature of operations along with the average financial risk profile. |
| About the Company |
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Incorporated in 2005, Supreme Power Equipment Private Limited (SPEPL) is engaged in the business of manufacturing of power and distribution transformers, windmill transformers and various special application transformers. Its customer profile includes Tamil Nadu Generation and Distribution Corporation Ltd (TANGEDCO) and Tamil Nadu Transmission Corporation Ltd (TANTRANSCO), Vestas Wind Technology India Private Limited, Siemens Gamesa Renewable Power Private Limited among others; its manufacturing facility is located near Chennai (Tamil Nadu). The company is promoted by Mr. Vee Rajmohan and Mr. K V Pradeep, who have been in the business of transformer manufacturing since 2000. SPEL is an ISO 9001: 2008 certified company.
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| Analytical Approach |
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Acuité has considered the standalone business and financial risk profiles of SPEPL to arrive at the rating. |
Key Rating Drivers
| Strengths |
| Established track record of operations and experienced management.
SPEPL was established in 2005 and has been involved in the business of manufacturing transformers. The promoters of SPEPL Mr. Vee Rajmohan and Mr. K V Pradeep, have two decades of experience in the transformer industry helped the firm to establish relationships with several suppliers and customers as is demonstrated by repeat business orders from its clientele including Tamil Nadu Electricity Boards (TANGEDCO and TANTRANSCO), Confidence Electrical Company, Oman Transformer & Switchgear LLC, Siemens Gamesa Renewable Power Private Limited and among others. Increase in revenues along with profitability margins. The company's operational income amounted at Rs. 46.60 Cr. as of March 31, 2022, as compared to Rs. 35.35 Cr. as of March 31, 2021. Also, as of March 31st, 2022, the company's operating margin stood at 7.43 percent from 7.82 percent the previous year. On March 31, 2022, the PAT margin increased to 1.11 percent from 0.95 percent in 2021. As of March 31, 2022, the company's RoCE was 25.55 percent, compared to 22.71 percent as of March 31, 2021. |
| Weaknesses |
| Working capital intensive nature of operations
The working capital-intensive nature of operations of the company is marked by high Gross Current Asset days (GCA) of 226 as on 31st March 2022 as compared to 301 days of 31st March 2021 due to significantly changes in high other current asset which consists of other deposit, prepaid expenses material on loans etc. However, the debtor days stood comfortable at 140 days as on 31st March 2022 as compared to 161 days as on 31st March 2021. The inventory period stood relatively low at 83 days as on 31st March 2022 as compared to 93 days 31st March 2021 respectively. Acuité believes that the working capital management of SPEPL’s will remain intensive given the nature of the industry. |
| Rating Sensitivities |
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None |
| Material covenants |
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None |
| Liquidity Position: Adequate |
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The company’s liquidity position is adequate marked by net cash accruals of Rs.0.83 Cr as on 31st March 2022 as against Rs. 2.57 Cr. long-term debt repayment during the same period. The current ratio stood at 1.31 times as on 31st March 2022, as compared to 1.21 times as on 31st March 2021. The cash and bank balances stood at Rs. 0.34 Cr. 31st March 2022. However, the working capital-intensive nature of operations of the company is marked by Gross Current Assets (GCA) of 226 days as on 31st March 2022 as compared to 301 days as on 31st March 2021, due to high other current asset which signifies FD’s and interest receivables. Acuité believes that going forward the liquidity position of the company will remain adequate due to the improving net cash accruals.
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| Outlook: Not Applicable |
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 22 (Actual) | FY 21 (Actual) |
| Operating Income | Rs. Cr. | 46.60 | 35.35 |
| PAT | Rs. Cr. | 0.52 | 0.34 |
| PAT Margin | (%) | 1.11 | 0.95 |
| Total Debt/Tangible Net Worth | Times | 0.88 | 0.73 |
| PBDIT/Interest | Times | 1.40 | 1.38 |
| Status of non-cooperation with previous CRA (if applicable) |
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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 |
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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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