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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 4.24 | ACUITE B+ | Reaffirmed & Withdrawn | - |
| Bank Loan Ratings | 0.38 | Not Applicable | Withdrawn | - |
| Total Outstanding | 0.00 | - | - |
| Total Withdrawn | 4.62 | - | - |
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Rating Rationale |
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Acuité has reaffirmed and withdrawn the long-term rating of 'ACUITE B+' (read as ACUITE B plus) on the Rs. 4.24 Cr. bank facilities TIEA Connectors Private Limited (TCPL). Further Acuité has withdrawn the proposed Long-term rating on the Rs. 0.38 crore bank facilities of TIEA Connectors Private Limited (TCPL) without assigning any rating as it is a proposed facility. The rating withdrawal is in accordance with Acuité's policy on withdrawal of rating as applicable to the respective facility / instrument. The rating has been withdrawn on account of the request received from the company along with no objection certificate received from the lender.
Rationale for rating The rating reaffirmation is driven by the improved operating revenue of the firm. The revenue from the operations of the company improved to Rs. 5.95 Cr. in FY24 (Prov.) as compared to Rs. 3.46 Cr. in FY23. Increase in revenue is owing to increasing demand from consumers. The operating margins stood at 17.76 percent in FY24 (prov.) as against a negative 2.10 percent in FY23. PAT margin stood at negative 4.61 percent in FY24 (prov.) as against negative 17.38 percent in FY23. Further, the rating also factors in the synergies derived from the Indian Institute of Science: absence of any demand risk with a competitive edge on the back of economic products and a positive industry outlook buoyed by support from the government. However, these strengths are partly offset by the company’s exposure to risks related to its scalability, ongoing projects, and expected leveraged capital structure. |
| About the Company |
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Bangalore Based, TIEA Connectors Private Limited was incorporated in 2020. The company engaged in the business of manufacturing and sales of wireless connectors, harsh environment connectors, electronic connectors and terminals and it is promoted by Mr. Punit Shridhar Joshi and Mr. Ajith Punnanikkattu Sasidharan. TIEA Connectors Private Limited is a B2B hardware start-up company, incubated start-up at Indian Institute of Science (Society for Innovation & Development-SID-IISc). Indian Scientific Innovation Company Limited (ISICL) owns equity in TIEA Connectors Private Limited and has facilitated the company for receiving various grant support from state government and central government. Currently the company is engaged in the research and development of aerospace and defence connectors. It has obtained four design patents and filed an application for a patent in the field of material science.
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| Unsupported Rating |
| Not Applicable |
| Analytical Approach |
| Acuite has considered the standalone business and financial risk profile of TCPL to arrive at the rating. |
| Key Rating Drivers |
| Strengths |
| Benefits expected from healthy business prospects for the domestic segment Indian connector market is expected to grow owing to increasing demand for consumer electronics, aerospace, defence applications, vehicle electrification, growing demand for light weight vehicles and safety features in the vehicles. Furthermore, as over 50 per cent of the connector market depends on imports, the company is primarily intended to penetrate the market to cater to the growing niche market of electric vehicles and drones, as well as automotive and consumer electronics through its economic product options. Though domestic connector market is still in a nascent stage, there is huge scope for growth given the low product penetration and import dependability. Considering strong demand and increasing penetration in the domestic market, the company is poised for strong double- digit growth over next two-three years. Economic products to provide competitive edge US based TE Connectivity, Molex INC and Japanese JST are the main competitors of TIEA along with Chinese equivalents. TIEA's unique designs of connectors and contact solutions offer performance improvement in harsh environment conditions at economical prices as compared to the imported items. This will help the Company to tide over its competitors over production quality and timely supply of finished goods. Revenue and Profitability The revenue from the operations of the company improved to Rs. 5.95 Cr. in FY24(Prov.) as compared to Rs. 3.46 Cr. in FY23. The Increase in revenue is owing to increasing demand from consumer. Further, EBDITA margin stood at 17.76 percentage in FY24 (Prov.) as against negative 2.10 Percentage in FY23.PAT margin stood at Negative 4.61 Percentage in FY24(Prov.) as against negative 17.38 in FY23. Acuité expects the technological tie-up with Indian Institute of Science (Society for Innovation & Development-SID-IISc), will augment the R&D and product prototyping process, thereby helping the company to cater to increasing demand of connectors in the domestic market going forward. |
| Weaknesses |
| Working capital intensive operations The company’s operations are working capital intensive, as evident from a gross current asset (GCA) of 680 days as on March 31, 2024 (prov.) as against 532 days as of March 31, 2023. The inventory days as on March 31, 2024 (prov.) stood at 175 days as against 124 days as on March 31, 2023. Further The debtor days stood at 115 days as of March 31, 2024 (prov.) as against 119 days in March 31, 2023. The creditor days of the company stood at 76 days as on March 31, 2024 (prov.) as against 178 days for FY23. Acuité believes that the working capital cycle will continue to remain at similar levels over the medium term. Exposure to intense competition and cyclicality in demand The electronic interconnect product business is marked by the presence of many players and the competitive bidding nature of business. This has resulted in pressure on the margin of the company and can impact growth in revenue and earnings. Acuite believes that the company would be susceptible to intensive competition over the medium term. |
| Rating Sensitivities |
| Not Applicable |
| Liquidity Position |
| Stretched |
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Liquidity profile of the company is stretched marked by low but comfortable net cash accruals against its maturing debt obligations. The Company generated cash accruals of Rs. 0.50 Cr. as on 31st March 2024(Prov.) against Rs. 0.15 Cr. of debt obligation for the same period. The current ratio stood comfortable at 3.19 times as on 31st March 2024(Prov.) as compared to 3.23 times as on 31st March 2023. Further, the fund-based limits remained moderately utilized at ~85.42 per cent for six months ended June 2024. Moreover ,company the cash and bank balances of the company stood at Rs. 3.48 Cr. in FY2024(Prov.).
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| Outlook |
| Not Applicable |
| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 24 (Provisional) | FY 23 (Actual) |
| Operating Income | Rs. Cr. | 5.95 | 3.46 |
| PAT | Rs. Cr. | (0.27) | (0.60) |
| PAT Margin | (%) | (4.61) | (17.38) |
| Total Debt/Tangible Net Worth | Times | 0.99 | 0.24 |
| PBDIT/Interest | Times | 1.88 | (0.33) |
| Status of non-cooperation with previous CRA (if applicable) |
| Not Applicable |
| 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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