| Confident Dental Equipments Private Limited | ||||
| 'CRISIL BB / Stable' assigned to Bank Debt | ||||
| Rating Action | ||||
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| 1 crore = 10 million | ||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL has assigned its ‘CRISIL BB/Stable’ rating to the long-term bank facilities of Confident Dental Equipments Pvt Ltd (CDEPL).
The rating reflects the extensive experience of the promoter and the company’s established position in the medical devices industry and moderate financial profile. These strengths are partially offset by its modest scale in the fragmented and competitive medical devices industry and working capital-intensive operations. |
Key Rating Drivers & Detailed Description Strengths: Promoter’s extensive experience and established position in the medical devices industry: The promoter, Dr B. Subhaschandra Shetty, has around four decades of experience, which has helped him gain strong insight into the industry and establish healthy relationships with suppliers, customers and logistic providers, which should continue to support the business risk profile.
Moderate financial profile: CDEPL’s capital structure was at moderately healthy level because of limited reliance on external funds yielding gearing of 0.76 time and total outside liabilities to adjusted networth ratio of 1.39 times as on March 31, 2020. CDEPL’s debt protection measures have also been comfortable, despite leverage, on account of moderately healthy profitability. The interest coverage and net cash accrual to total debt ratios were 1.81 times and 0.12 time, respectively, for fiscal 2020. CDEPL’s debt protection measures are expected to remain at similar level over the medium term.
Weakness: Modest scale in the fragmented and competitive medical devices industry: CDEPL is a small player in the dental and medical devices industry and has an operating income of Rs 105.32 crore in fiscal 2020. The dental and medical devices industry is highly fragmented, with the presence of both domestic and international players. Furthermore, the industry is intensely competitive, especially because of Chinese players. Despite a strong distribution network and diversified segmental revenue stream, scale will likely remain marginal, over the medium term, on account of exposure to intense competition and presence of large number of players in the industry.
Working capital-intensive operations: Gross current assets (GCAs) were 241-246 days over the three fiscals ended March 31, 2020. Large working capital requirement is reflected in GCAs of 246 days as on March 31, 2020, driven by high debtor and inventory levels. The company is required to extend long credit period. Furthermore, because of business need, it holds large work-in-process and inventory. |
Liquidity: Adequate Bank limit utilisation was moderate at 84.24% on average for the 13 months through November 2020. Cash accrual is expected to be at Rs 4-5.5 crore, which is tightly matched against term debt obligation of Rs 3.4 crore and Rs 4.7 crore in fiscals 2021 and 2022, respectively. Overdraft facility will act as a liquidity cushion. Current ratio was moderate at 1.24 times as on March 31, 2020. The company has not availed moratorium during March to August 2020. |
Outlook: Stable CRISIL believes CDEPL will continue to benefit from the extensive experience of its promoter and established relationships with clients. |
Rating Sensitivity factors Upward factors
Downward factors
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About the Company Incorporated in 1988, CDEPL manufactures dental and medical equipment such as dental chairs, dental airotor air compressor, dental x-ray, OT table, OT lights and ICU and homecare beds. CDEPL markets it under the brands Confident, NSK and Planmeca. The company’s manufacturing facility is located in Bangalore, Karnataka, and it is owned and managed by Dr B. Subhaschandra Shetty. |
*Provisional |
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 - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | |||||||||||||||||||||||||||||||||||||||
| Annexure - Details of various bank facilities | ||||||||||||||||||||||||
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