| Radhika Opto Electronics Private Limited | ||||||
| Ratings migrated to 'CRISIL BB+ / Stable / CRISIL A4+ '; rated amount enhanced for Bank Debt | ||||||
| Rating Action | ||||||
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| & * Issuer did not cooperate; based on best-available information^ * Issuer did not cooperate; based on best-available information | ||||||
| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale Due to inadequate information and in-line with the Securities and Exchange Board of India guidelines, CRISIL Ratings had migrated its ratings on the bank facilities of Radhika Opto Electronics Private Limited (ROEPL; Part of R. K. group) to ‘CRISIL B+/CRISIL A4/issuer not cooperating'. However, ROEPL has started sharing the information necessary for a comprehensive review of the ratings. Consequently, CRISIL Ratings is migrating its ratings on the bank facilities of ROEPL to ‘CRISIL BB+/Stable/CRISIL A4+’ from ‘CRISIL B/CRISIL A4/Issuer Not Cooperating’.
The ratings reflect the extensive experience of R.K Group’s promoter in the electrical components industry and a reputed customer base. These strengths are partially offset by below average financial risk profile and working capital intensive operations. |
Analytical Approach CRISIL Ratings has combined the business and financial risk profiles of ROEPL and R. K. Lighting Pvt Ltd (RKLPL). The companies, collectively referred to as the R. K. group, operate in similar businesses, have a common management, and significant operational linkages. Please refer
Unsecured loans from the promoter of Rs. 15.49 crores as on March 31, 2020 have been treated as 75% equity and 25% debt as they are expected to remain in the business over the medium term and interest is ploughed back to the business.
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
The promoter’s experience of over three decades in the electrical components industry, his understanding of the dynamics of the market has helped established healthy relationship with reputed customers and suppliers. It has diversified its products portfolio over the years. Addition of new customers and repeat orders from existing customers have led to increase in revenues from from Rs 307.09 crore in fiscal 2018 to Rs 623.56 crore in fiscal 2020.
The group’s customer base comprise of large lighting products manufacturer such as Crompton Greaves Consumer Electricals Ltd ('CRISIL AA+/Stable/CRISIL A1+'), SYSKA LED Lights Pvt Ltd, Havells India Ltd etc. The group has a diversified customer base and longstanding relationship with customers leading to repeat orders. The top ten customers of ROEPL contributing 86% revenues in fiscal 2020 and 65% for RKLPL.
Weaknesses:
The networth is estimated at Rs 48-49 crores with total outside liabilities to adjusted networth (TOLANW) ratio high at 6.5-7 times, as on March 31, 2021. Gearing and TOLANW ratios are expected to improve over the medium term with repayment of debt and steady accretion to reserve, yet remain high. Debt protection metrics are subdued with interest coverage and net cash accrual to total debt ratios expected at 1.99 times and 0.17 times, respectively, for fiscal 2020, expected to remain at similar level in fiscal 2021.
The working capital cycle continues to remain intensive as reflected by gross current asset (GCA) of 210 days as on March 31, 2020, driven by moderate debtor of 70-75 day and inventory of 120-130 days. A credit of 60-120 days is offered to customers depending on the relationship. Inventory remains high as raw materials such as LED and wires, which don’t require any specifications have an inventory holding of more than two months. |
Liquidity: Stretched |
Outlook: Stable
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About the Group ROEPL was established as a proprietorship firm, Radhika Industries; the firm was reconstituted as a private limited company with the current name in October 2016. RK was incorporated in 1982. The group manfactures compact fluorescent lights, street lights, LED bulbs and others for original equipment manufacturers. It is promoted by Mr Suresh Khandelwal. The manufacturing units are located at Daman. |
Key financial indicators (Consolidated)
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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)
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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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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* - Issuer did not cooperate; based on best-available information
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| Annexure - Details of various bank facilities | ||||||||||||||||||||||||||||||||||||||||||
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