Key rating drivers & detailed description

Weaknesses:

Susceptibility to cyclicality in the automotive industry: Since the company primarily supplies robotics/automated welding lines and precision components to the automobile players, business risk profile will remain vulnerable to cyclicality in that industry. For instance, slowdown in the end user because of the pandemic had adversely impacted operating performance in fiscal 2021.  

Working capital-intensive operations: Gross current assets were over 500 days as on March 31, 2021, because of significantly stretched receivables and sizeable inventory. Despite improvement in the current fiscal, operations will remain working capital intensive over the medium term; its management will remain critical.

Strengths:

Extensive experience of the promoter: Benefits from the promoter experience of over a decade in the industrial automation business and established relationships with key customers should continue to support the business.

Moderate capital structure: Networth was healthy at Rs 45.49 crore and gearing strong at 0.58 time, as on March 31, 2021. The company had incurred PAT (profit after tax) loss in fiscal 2021 due to decline in revenue amid Covid-led disruptions. This led to subdued debt protection metrics, as reflected in interest coverage ratio of 0.35 time in fiscal 2021. With better revenue following revival in the overall economic scenario, the debt protection metrics are estimated to improve in fiscal 2022.

Key financial indicators

Annexure - Details of Instrument(s)

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