| Quality Power Electrical Equipments Private Limited | ||||||
| Ratings Reaffirmed and Withdrawn | ||||||
| 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 rating on the bank loan facilities of Quality Power Electrical Equipments Private Limited (QPEEPL; part of the Quality Power group) and simultaneously withdrawn the rating at the company's request and on receipt of a no-objection certificate from the banker. The withdrawal is in line with CRISIL Ratings policy on withdrawal of bank loan ratings.
The ratings continue to reflect the extensive experience of the promoters in the electrical components industry along with the group’s established market position and healthy financial risk profile. These strengths are partially offset by average scale of operations, and large working capital requirement. |
Analytical Approach For arriving at the ratings, CRISIL Ratings has combined the business and financial risk profiles of QPEEPL, Quality Power Engineering Projects Pvt Ltd (QPEPPL), and Endoks Energy Systems (Endoks). That is because these entities, collectively referred to as the Quality Power group, are in the same business and are managed by the same promoters. Further QPEPPL is 51% subsidiary of QPEEPL and Endoks is 51% sub-subsidiary of QPEEPL.
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: Extensive experience of promoters and an established market position Benefits from the promoters’ experience of over 15 years, their strong understanding of market dynamics and technical expertise, and healthy relations with customers (both domestic and overseas) and suppliers should continue to support the business risk profile.
Healthy financial risk profile Financial risk profile is expected to remain strong over the medium term due to negligible debt levels and no major capex/investment plans. Networth was healthy at Rs 139 crore as on March 31, 2021, with gearing low at 0.1 time. Debt protection were also robust, with interest coverage and net cash accrual to total debt ratios of 46 times and 3 times, respectively, in fiscal 2021. The financial metrics are estimated to remain strong over medium term as well because of strong accretions and limited reliance on debt.
Weakness: Moderate scale of operations Group’s revenue stood at around Rs. 155 crore in fiscal 2021. The revenue is expected to improve gradually over the medium term; however, should continue to remain moderate. The strong revenue flow through domestic entities and sustained revenue in overseas business will be critical for business scale up.
Large working capital requirement Operations may remain working capital intensive over the medium term. Gross current assets were around 410 days as on March 31, 2021. This was driven by high receivables and moderate inventory of 138 days and 49 days The working capital requirements are met through internal accruals and liquidity without any dependence on external debt. Nonetheless control over debtors remains critical and hence will be monitored. |
Liquidity: Adequate Bank limit utilisation is low at around 48 percent for the past twelve months ended August 2021. Cash accrual are expected to be over Rs. 26-29 cr which are sufficient against minimal term debt obligation of Rs 2 cr over the medium term. In addition, it will act as cushion to the liquidity of the company. Current ratio is healthy at 2.58 times on March 31, 2021. High cash and bank balance of around Rs. 80 crore (Rs.32 crore in Indian operations and rest in Turkey) as on March 31, 2021, cushions the liquidity. |
Outlook: Stable CRISIL Ratings believes the Quality Power group will continue to benefit from the strong association with key customers, leading to stable demand. |
Rating Sensitivity Factors Upward factors
Downward factors
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About the Group Quality Power, incorporated in 2001, is a Sangli (Maharashtra)-based company that manufactures reactors, line traps, and metal enclosed capacitor banks. Mr Bharnidharan Pandyan and family are the promoters.
QPEPPL, established in 2010, is a Sangli-based company that undertakes projects for capacitor banks and harmonic filters. It is a 51% subsidiary of QPEEPL.
Endoks, based in Turkey, makes power electric automation devices for the renewable energy, metal, and utilities industries. It is 51% subsidiary of QPEPPL. |
Key Financial Indicators
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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)
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Annexure - List of Entities Consolidated
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| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||
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Criteria Details
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