Rating Rationale
August 03, 2022 | Mumbai
Pratap Technocrats Private Limited
Ratings reaffirmed at 'CRISIL A-/Stable/CRISIL A2+'; Rated amount enhanced for Bank Debt
 
Rating Action
Total Bank Loan Facilities RatedRs.78 Crore (Enhanced from Rs.55 Crore)
Long Term RatingCRISIL A-/Stable (Reaffirmed)
Short Term RatingCRISIL A2+ (Reaffirmed)
1 crore = 10 million
Refer to Annexure for Details of Instruments & Bank Facilities

Detailed Rationale

CRISIL Ratings has reaffirmed its ‘CRISIL A-/Stable/CRISIL A2+’ ratings to the bank facilities of Pratap Technocrats Private Limited (PTPL; a part of the Pratap Technocrats group).

 

The ratings reflect established market position of the Pratap Technocrats group in providing operations and maintenance (O&M) services to telecommunication (telecom) infrastructure (infra), backed by strong project execution capability and reputed clientele. The ratings also factor in healthy financial risk profile, driven by comfortable capital structure and strong debt protection metrics. These strengths are partially offset by susceptibility to intense competition and cyclicality inherent in the telecom infra industry and large working capital requirement.

 

CRISIL Ratings has assigned its ‘CRISIL A-/Stable/CRISIL A2+’ ratings to the bank facilities of PTPL on April 29, 2022.

Analytical approach

CRISIL Ratings has combined the business and financial risk profiles of PTPL with its subsidiaries; collectively referred to as Pratap Technocrats group because of strong financial and business synergy

 

Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation.

Key rating drivers & detailed description

Strengths:

  • Established market position in O&M of telecom infra and reputed customer base: PTPL is one of the leading players in the domestic telecom infra O&M space, it provides services to more than 77,000 telecom towers and fibre network of over 232,000 kilometre. The company undertakes preventive, breakdown maintenance of passive/active infra, and site upgrade work. It benefits from the three-decade entrepreneurial experience of the promoters and around track record of 15 years in providing managed services to the telecom infra segment. Further, the promoters have been foraying into turnkey projects for telecom infra and set up a fibre cable manufacturing facility to leverage the company’s presence in the industry and derive synergies.

 

PTPL provides O&M services to reputed customers in the industry such as Indus Towers, Reliance Jio, ATC, BSNL, and RailTel, from which it receives contracts having duration of 3-4 years. The company has strong presence in central and western parts of India and manages direct and indirect workforce of around 14,000.

 

  • Increasing scale of operations amidst benefits derived from foray into engineering, procurement and construction (EPC) and manufacturing segments: Scale of operations has been steadily increasing; revenue grew to Rs 454 crore in fiscal 2021 from Rs 306 crore in fiscal 2018 and further rose by an estimated 10% in fiscal 2022, aided by addition of new telecom tower sites and fibre network cable. Further, large upcoming investments in the telecom infra and PTPL’s established presence and association with large industry players augur well for the company’s growth over the medium term. Also, PTPL has recently diversified into EPC with laying of fibre cables and commissioning of other telecon infra and manufacturing of fibre cables through its subsidiaries. This widens the revenue sources and provides integration to existing operations.

 

  • Healthy financial risk profile: Financial risk profile should remain supported by steady operating profitability and the absence of any large, debt-funded capital expenditure (capex). Gearing and total outside liabilities to tangible networth ratio were comfortable at 0.23 time and 1.97 times, respectively, as on March 31, 2021, and improved to around 0.18 time and 1.63 times in fiscal 2022.

 

Debt protection metrics got stronger, aided by lower dependence on external debt. Interest coverage and net cash accrual to adjusted debt ratios were sound at 9.41 times and 0.99 time, respectively, in fiscal 2021; the metrics improved to over 14 times and 1 time in fiscal 2022.

 

Weaknesses:

  • Susceptibility to intense competition and cyclicality inherent in the telecom infra industry: Revenue remains susceptible to economic cycles that impact the telecom infra industry. Furthermore, the company mainly caters to telecom operators, infra providers, service providers and government projects. The telecom infra segment is highly fragmented; the consequent intense competitive pressure and tender-based nature of business may continue to constrain scalability, pricing power and profitability.

 

  • Large working capital requirement: Gross current assets have been 160-220 days for the past four fiscals through 2022, driven by higher receivables. Though the company provides credit of 60-90 days post raising of bill, payments from few customers sometimes get delayed; receivables remained at 84-161 days for the past four fiscals. However, the group has back-to-back arrangement with contracts and suppliers, which partially aids in managing the working capital without much reliance on fund-based bank lines; inventory has been low at around 10 days. Efficient management of receivables amid increasing scale of operations remains critical.

Liquidity: Adequate

Cash accrual is projected at more than Rs 36-40 crore per annum, sufficient to meet the repayment obligation of just Rs 3-4 crore; the surplus cash will aid financial flexibility. Utilisation of the fund-based bank limit has been minimal as PTPL majorly uses bank guarantee for its business needs. Free liquidity in the form of fixed deposits/bank balances were around Rs 20 crore as which further provides support to the liquidity. Current ratio was comfortable at 1.31 times on March 31, 2021 and is expected to remain stable over the medium term. Absence of any large, debt-funded capex also aids liquidity.

Outlook: Stable

The Pratap Technocrats group will continue to benefit from extensive experience of its promoters and reputed clientele.

Rating sensitivity factors

Upward factors

  • Substantial and sustainable increase in revenue and operating profitability margin, leading to cash accrual of over Rs 60 crore
  • Steady improvement in the working capital cycle and maintenance of healthy financial risk profile

 

Downward factors

  • Decline in revenue or operating profits, caused by loss of contracts, resulting in cash accrual below Rs 30 crore
  • Further stretch in the working capital cycle

About the Pratap Technocrats group

Based in Jaipur, Rajasthan, PTPL was incorporated in 2015; the business was earlier done in a proprietorship. PTPL is a flagship company of the Pratap Group of Companies. The company offers diversified range of services for telecom infra sector such as O&M of telecom towers, optical fibre cable networks, installation and commissioning of telecom infra, O&M of solar cell sites and execution of captive power projects. PTPL is managed by Mr Devendra Singh and Mr Shakti Singh.

 

Beckhaul Digital Technologies Pvt Ltd, incorporated in fiscal 2018, is a subsidiary of PTPL. It primarily undertakes EPC contracts for deployment and laying of optical fiber. Pratap Digital Communication Pvt Ltd, another subsidiary of PTPL is involved into manufacturing of optical fiber cables.

Key financials (consolidated)

As on / for the period ended March 31

 

2021

2020

Operating income

Rs crore

453

491

Reported profit after tax (PAT)

Rs crore

29

39

PAT margin

%

6.3

8.0

Adjusted debt/adjusted networth

Times

0.23

NA

Interest coverage

Times

9.41

88.81

CRISIL Ratings-adjusted numbers

Any other information: Not applicable

Note on complexity levels of the rated instrument:
CRISIL Ratings' complexity levels are assigned to various types of financial instruments. The CRISIL Ratings' complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL Ratings' 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)

ISIN

Name of

instrument

Date of

allotment

Coupon
rate (%)

Maturity

date

Issue size
(Rs crore)

Complexity level

Rating assigned

with outlook

NA

Bank Guarantee

NA

NA

NA

65

NA

CRISIL A2+

NA

Long Term Loan

NA

NA

Mar-35

12

NA

CRISIL A-/Stable

NA

Overdraft Facility

NA

NA

NA

1

NA

CRISIL A-/Stable

Annexure – List of entities consolidated

Names of entities consolidated

Extent of consolidation

Rationale for consolidation

Pratap Technocrats Pvt Ltd

Full

Parent company

Beckhaul Digital Technologies Pvt Ltd

Full

Subsidiary

Pratap Digital Communication Pvt Ltd

Full

Subsidiary

Pratap Globezone Technologies Pvt Ltd

Full

Subsidiary

Pratap Industries Pvt Ltd

Full

Subsidiary
Annexure - Rating History for last 3 Years
  Current 2022 (History) 2021  2020  2019  Start of 2019
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Fund Based Facilities LT 13.0 CRISIL A-/Stable 29-04-22 CRISIL A-/Stable   --   --   -- --
Non-Fund Based Facilities ST 65.0 CRISIL A2+ 29-04-22 CRISIL A2+   --   --   -- --
All amounts are in Rs.Cr.
Annexure - Details of Bank Lenders & Facilities
Facility Amount (Rs.Crore) Name of Lender Rating
Bank Guarantee 22 Kotak Mahindra Bank Limited CRISIL A2+
Bank Guarantee 43 ICICI Bank Limited CRISIL A2+
Long Term Loan 12 ICICI Bank Limited CRISIL A-/Stable
Overdraft Facility 1 Kotak Mahindra Bank Limited CRISIL A-/Stable

This Annexure has been updated on 03-Aug-2022 in line with the lender-wise facility details as on 29-Apr-2022 received from the rated entity.

Criteria Details
Links to related criteria
Rating criteria for manufaturing and service sector companies
CRISILs Bank Loan Ratings - process, scale and default recognition
CRISILs Approach to Financial Ratios
CRISILs Criteria for rating short term debt
CRISILs Criteria for Consolidation

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