| Expo Gas Containers Limited | ||||||
| Ratings Reaffirmed | ||||||
| Rating Action | ||||||
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| Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||||
| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has reaffirmed its ‘CRISIL BB-/Stable/CRISIL A4+’ ratings on the bank facilities of Expo Gas Containers Limited (EGCL).
The ratings continue to reflect the extensive experience of the promoters in the EPC industry, and the reputed clientele served by the company. These strengths are partially offset by working capital-intensive nature of operations and susceptibility of the operating performance to the inherent risks faced by the companies in tender based businesses and cyclicality of capital expenditure incurred in the end-user industries |
Analytical Approach For arriving at the ratings, CRISIL Rating has treated unsecured loans of Rs 5 crore as on March 31, 2022 by its promoters as neither debt nor equity as the loans are expected to be retained in the business over the medium term |
Key Rating Drivers & Detailed Description Strengths: Extensive experience of the promoters and reputed clientele: The promoters have around 4 decades of experience in the fabrication and EPC industry resulting into better understanding of the industry dynamics and established track record for for manufacturing wide range of process plant equipment’s leading to better relations with clients.
Reputed Clientele and Order Book Visibility: Owing to around four-decade experience in the industry EGCL has developed healthy relations with various reputed public and private sector companies particularly in the oil, gas and petrochemical industry. Some of its clientele include Indian Oil Corporation Limited, Baharat Petroleum Corporation Limited and other private sector players like Reliance Industries and its group companies
Weakness: Working capital-intensive operations:Although on an improving trend the operations of the company are working capital intensive as evidenced by GCA days of around 318 days in fiscal 2022 mainly due to high debtor and inventory days. High debtor days are due to the contractual deposits retained by the customers due the nature of the business. Inventory days continue to remain high due to sizeable work in progress. This has resulted in high utilization of its fund-based bank limits.
Susceptibility of operating performance to tender based nature of operations along with cyclicality in capital expenditure patterns in end-user industry: Although the revenue of the company had increased by over 70% in fiscal 2022 the operations continue to remain modest within the range of Rs. 40-70 crore over the last 3 fiscal ended fiscal 2022, also the operating performance of the company remains vulnerable to tender based nature of business and cyclical demand from its major end user industries namely oil, gas and petrochemical industries. This is partially offset as current order book provides revenue visibility |
Liquidity: Stretched Liquidity is stretched as evidenced by almost full bank limit utilization for the last 12 months ended July 2022 despite enhancements in the working capital limits. Expected net cash accruals of over 1.75 crores should suffice to cover the debt obligations of around Rs 0.40 crores over the medium term. Current ratio was around 1.22 times as on Mach, 31 2022. Improvement in working capital management thus utilization of bank limits to remain monitorable |
Outlook: Stable CRISIL Ratings believes EGCL will continue to benefit from the extensive experience of its promoters and their established relationships with customers |
Rating Sensitivity Factors Upward factors
Downward factors
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About the Company EGCL was established in 1982 and is promoted by Mr Murtuza S Mewawala, Mr Hasanain S Mewawala, Mr S M Nathai and Mr Shailesh Shah. The company manufactures a wide range of process plant equipment such as coded pressure vessels and deaerators and undertakes turnkey projects and in-plant piping. It is based in Mumbai |
Key Financial Indicators
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Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
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| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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* - Issuer did not cooperate; based on best-available information
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| Annexure - Details of Bank Lenders & Facilities | |||
| Facility | Amount (Rs.Crore) | Name of Lender | Rating |
| Bank Guarantee | 14 | Saraswat Bank | CRISIL A4+ |
| Cash Credit | 12 | Saraswat Bank | CRISIL BB-/Stable |
| Letter of Credit | 0.35 | Saraswat Bank | CRISIL A4+ |
| Overdraft Facility | 4.88 | Saraswat Bank | CRISIL BB-/Stable |
| Overdraft Facility | 8.77 | Saraswat Bank | CRISIL BB-/Stable |
This Annexure has been updated on 27-Feb-23 in line with the lender-wise facility details as on 14-Feb-23 received from the rated entity.
Criteria Details
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