| Ammann India Private Limited | ||||||
| Ratings reaffirmed at 'CRISIL A+ / Stable / CRISIL A1 ' | ||||||
| Rating Action | ||||||
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| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has reaffirmed its ‘CRISIL A+/Stable/CRISIL A1’ ratings on the bank facilities of Ammann India Pvt Ltd (AIPL).
Revenue is estimated at Rs 672 crore for fiscal 2021, a growth of 5% over the previous fiscal, driven by faster-than-expected recovery in construction of national highways and increase in new projects being awarded by the government. The operating margin is estimated to have improved to 12.6% in fiscal 2021 from 8.9% in fiscal 2020, supported by cost rationalisation measures and greater production efficiency. The margin is expected to be sustained at 10-12% over the medium term. The financial risk profile remains strong with healthy liquid surplus of Rs 63 crore, as against total debt of Rs 14 crore, as of March 31, 2021. Repayment obligation of Rs 7 crore and moderate capital expenditure (capex) of Rs 10 crore, are expected to be comfortably funded from cash accrual of around Rs 40 crore, per fiscal. Unutilised bank lines and liquid cash balance further augment the strong liquidity profile.
The ratings continue to reflect an established market position in the road construction and maintenance equipment sector and a strong financial risk profile. These strengths are partially offset by vulnerability to cyclicality in the end-user industry, volatility in input prices, and intense competition. |
Analytical Approach Intangible assets, largely goodwill, were created in April 2013, following the Switzerland-based Ammann group’s acquisition of a 70% stake in AIPL (formerly known as Ammann Apollo India Pvt Ltd). CRISIL Ratings has excluded amortisation of intangibles while calculating the net profit and has adjusted it while calculating the networth. |
Key Rating Drivers & Detailed Description Strengths: Established market position, supported by a well-diversified clientele: The market position in the road construction and maintenance equipment sector is backed by a diversified clientele and geographical reach in key product categories, a well-known brand and a pan-India sales network. The company also has a leading position in the batch-mix plants, sensory pavers and mechanical pavers segments. Geographical diversification in revenue is supported by the company’s reach in the international markets through the Ammann group.
Strong financial risk profile and liquidity: The financial risk profile is supported by steady cash generation, a strong capital structure and healthy debt protection metrics. The gearing has remained below 0.15 time since December 2014 and should continue to be strong over the medium term, due to minimal capex of around Rs 10 crore in fiscal 2022 and no significant debt. The interest coverage and net cash accrual to total debt ratios are estimated at 53 times and 4.7 times, respectively, for fiscal 2021. Cash surplus was substantial, estimated at Rs 63 crore as on March 31, 2021. Further, liquidity is supported by a largely unutilised bank limit.
Weaknesses: Susceptibility to cyclicality in the road construction sector and volatility in input prices: Performance of the road construction equipment industry is linked to the state of the overall economy and the investment climate in India. Business performance is expected to improve with government’s focus on ramping up road project investments following the Covid-19 pandemic-induced slowdown over the last year. However, increase in commodity prices is expected to have a moderating effect on margins as players are not able to pass on the higher input costs to customers owing to stiff competition.
Exposure to intense competition: Intense competition from unorganised local entities and large, international players in the road construction and maintenance equipment industry restricts pricing flexibility and profitability. |
Liquidity: Strong There was a healthy liquid surplus of Rs 63 crore as on March 31, 2021, and unutilised bank lines. Utilisation of the fund-based bank limit of Rs 60 crore was minimal over the nine months through December 2020. Cash accrual is expected at around Rs 40 crore, against repayment obligation of Rs 7 crore, per fiscal over the medium term. Moderate capex of Rs 10 crore and incremental working capital requirement in fiscal 2022, should be comfortably met through cash accrual. Further, with the gearing at less than 0.10 time, there is sufficient headroom to raise additional debt, if required. |
Outlook Stable The company should continue to benefit from its strong financial risk profile and sustain the improvement in business performance over the medium term. Cash generation is likely to be maintained over this period, supported by steady revenue growth and sustained operating margin. |
Rating Sensitivity factors Upward factors
Downward factors
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About the Company Incorporated in 1997, AIPL designs and manufactures road construction equipment. Ammann group with its four-decade long presence in the sector, helped build a strong brand and market position for the company.
In April 2013, the group consolidated its entire operations (excluding the mining, crushing and screening business) under Apollo Construction Equipment Ltd (ACEL). Subsequently, the Ammann group acquired a 70% stake in ACEL (later renamed as AIPL), and the remaining was owned by Apollo Earth Movers Ltd, a 100% subsidiary of Gujarat Apollo Industries Ltd.
In June 2020, the Ammann group acquired the remaining 30% stake in AIPL from Apollo Earth Movers Ltd, making AIPL a 100% subsidiary of the Ammann group.
The Ammann group, based in Switzerland, is the world’s leading manufacturer of asphalt-mixing plants, compaction machines and asphalt pavers, with operations in Europe, China, Canada and Brazil. |
Key Financial Indicators
*Provisional |
Any other information: Not applicable |
| Note on complexity levels of the rated instrument: CRISIL complexity levels are assigned to various types of financial instruments. The CRISIL complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL complexity levels for instruments that they consider for investment. Users may also call the Customer Service Helpdesk with queries on specific instruments. |
Annexure - Details of Instrument(s)
*Interchangeable with working capital demand loan, export packing credit, packing credit foreign currency, foreign bills discounting, foreign usance bills discounting #Interchangeable with bank guarantee, buyer's credit and bank guarantee @ Foreign exchange pre-settlement risk limit, domestic letter of credit-backed bills discounting $Interchangeable with working capital demand loan, export packaging credit, packaging credit foreign currency, one-time short-term loan, inland bills purchase, inland bills discounting, post-shipment credit in foreign currency, foreign usance bills discounting, foreign usance bills purchase, bank guarantees and letters of credit |
| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of various bank facilities | ||||||||||||||||||||||||||||||||||||||||||||||||
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*Interchangeable with working capital demand loan, export packing credit, packing credit foreign currency, foreign bills discounting, foreign usance bills discounting
#Interchangeable with bank guarantee, buyer's credit and bank guarantee
@ Foreign exchange pre-settlement risk limit, domestic letter of credit-backed bills discounting
$Interchangeable with working capital demand loan, export packaging credit, packaging credit foreign currency, one-time short-term loan, inland bills purchase, inland bills discounting, post-shipment credit in foreign currency, foreign usance bills discounting, foreign usance bills purchase, bank guarantees and letters of credit
Criteria Details
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