Detailed Rationale CRISIL Ratings has reaffirmed its ratings on the bank facilities of RMC Switchgears Ltd (RMCSL). The ratings have been withdrawn, following a request from the company, and on receipt of a no-objection certificate from the banker. The rating action is in line with the policy of CRISIL Ratings on withdrawal of bank loan ratings.
The reaffirmation reflects the extensive industry experience of the promoters of RMCSL, the company’s healthy orderbook providing revenue visibility and moderate financial profile. These strengths are partially offset by the modest scale of operations with limited track record of sustained and significant improvement in scalability and large working capital requirement. |
Analytical Approach CRISIL Ratings has evaluated the standalone business and financial risk profiles of RMCSL. |
Key Rating Drivers & Detailed Description Strengths: Extensive industry experience of the promoters with long track record of operations: The promoters have more than two decades of industry experience and have established a strong market position with timely execution of the projects allotted by central and state government agencies. Thus, the company successfully executes orders in various segments of meters and switchgears. In fiscal 2024 and fiscal 2025 so far, the market position has strengthened on account of healthy tender flow from government authorities towards smart meters and capability of RMCSL to successfully bid for the tenders and execute the same thereafter.
Moderate financial risk profile: RMCSL’s capital structure is expected to remain healthy due to limited reliance on external funds yielding a gearing of 0.5 time and total outside liabilities to adjusted tangible networth (TOL/ANW) ratio of 0.8 time as on March 31, 2025. RMCSL’s debt protection measures have also been at comfortable levels despite leverage due to moderately healthy profitability. The interest coverage and net cash accrual to total debt (NCATD) ratios are expected at 5-6 times and 0.6-0.7 time, respectively, for fiscal 2025. With no major debt funded capital expenditure (capex), the capital structure will remain comfortable over the medium term.
Weaknesses: Modest scale of operations with limited track record of sustained and significant improvement in operating profitability: Despite ~60% compound annual growth rate in the three fiscals through 2024, operating income of the company was moderate at Rs 170 crore in fiscal 2024. For fiscal 2025, the company achieved substantial growth in the topline, with recorded revenue of Rs 100 crore till September 2024 and expecting around Rs 200-220 crore for the full fiscal. Though revenue visibility over the medium term remains supported by healthy unexecuted orderbook of Rs 500-700 crore outstanding as of September 2024, its timely execution with sustained operating profitability and managing working capital requirements efficiently needs to be monitored.
Working capital intensive operations: Gross current assets (GCAs) are expected at a sizeable 240-250 days as on March 31, 2025 driven by debtors of 150-160 days and inventory of 70-85 days. Considering the major dealing with government entities, the debtor days are expected remain on the higher side. Bank limit utilisation has also increased and averaged 92% in the 12 months ended August 2024. Further, with the focus of management on keeping in-time inventory and quick realisation from debtors, GCAs are expected to be at 160-180 days over the medium term. Efficient management of the working capital cycle leading to lower reliance on working capital limits amid a sustained increase in operating income would therefore remain a key monitorable. |
Liquidity: Stretched Bank limit utilisation averaged a high 92% for the 12 months ended August 2024. Cash accruals are expected to be Rs 28-30 crore, which are sufficient against term debt obligation of Rs.4-5 crore over the medium term. In addition, it will act as a cushion to the liquidity of the company. The current ratio is expected to remain healthy at 1.9 times as on March 31, 2025. Need-based funding support from the promoters is expected to continue. |
Outlook: Stable CRISIL Ratings believe RMCSL will continue to benefit from the extensive experience of its promoters, and established relationships with clients. |
Rating Sensitivity Factors Upward factors:
Downward factors:
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About the Company RMCSL was initially incorporated as RFH Metal Castings Pvt Ltd in 1994 and later renamed as RFH Metal Castings Ltd in 2008. Subsequently, its name was changed to RMCSL in 2016 and got listed on BSE - SME platform in 2017. It is in Jaipur, Rajasthan.
RMCSL is primarily engaged in the business of designing and manufacturing enclosures of energy meters, LT/HT distribution boxes and panels, junction boxes, feeder pillars and other power distribution and circuit protection switchgears. It also undertakes contracts involving laying of energy transmission lines and establishing electric substation, fixing of new energy meters and shifting of existing energy meters. Its facility is at Village Badodiya, Tehsil Chaksu, Jaipur.
RMCSL’s key promoters are Mr Ashok Kumar Agarwal (Chairman & Managing Director), Mr Ankit Agarwal (Whole Time Director & Chief Financial Officer) and Mrs Neha Agarwal (Executive Director). |
Key Financial Indicators
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Status of non cooperation with previous CRA RMC has not cooperated with Brickwork Ratings India Pvt Ltd, which published its ratings as ‘issuer not co-operating’ through release dated June 19, 2023. The reason provided by the agency was non-furnishing of information by RMC for monitoring the ratings.
RMC has not cooperated with Credit Analysis & Research Ltd., which published its ratings as ‘issuer not co-operating’ through release dated 21-Sep-2020. The reason provided by the agency was non-furnishing of information by RMC for monitoring the ratings. |
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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| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||||||
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Criteria Details
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