| Goldmedal Electricals Private Limited | ||||
| Rating upgraded to 'CRISIL A+/Stable' | ||||
| Rating Action | ||||
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| Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||
| 1 crore = 10 million | ||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
CRISIL Ratings has upgraded its rating on the long-term bank facilities of Goldmedal Electricals Pvt Ltd (GEPL) to 'CRISIL A+/Stable' from 'CRISIL A/Positive'.
The upgrade reflects the expectation of sustained improvement in the business risk profile of GEPL, marked by steady growth in operating income, the diversified product profile, established brand presence and extensive distribution network across the country. The rating action also factors in the strong financial risk profile, supported by the healthy cash accrual, which should more than suffice to cover the capital expenditure, and the strong debt protection metrics.
Operating income has grown to Rs 2,421 crore in fiscal 2023, from Rs 2,292 crore in fiscal 2022. Revenue is likely to grow by 10-12% per fiscal over the medium term, driven by geographic expansion and new product launches. Moreover, increased marketing efforts undertaken over the past few fiscals have enhanced the brand presence of GEPL. While the operating margin has contracted to 11.5% in fiscal 2023, (from 15.6% in fiscal 2022) due to higher marketing spends, it should improve to 12-13% over the medium term, led by diversity in the product basket and segmental coverage, and stabilisation of marketing spends, to an extent.
GEPL is incurring significant capex to set up manufacturing units for the existing and new products. Nonetheless, cash accrual of Rs 250-330 crore, expected per annum over the medium term, is likely to cover bulk of the capex.
The rating continues to factor in exposure to stiff competition from both unorganised and organised brands and susceptibility of operating margin to fluctuations in raw material prices. |
CRISIL Ratings has considered the standalone business and financial risk profiles of GEPL, and has included the lease liabilities and channel financing in the borrowings. |
Key Rating Drivers & Detailed Description Strengths:
GEPL also has a strong distribution network, both within India and to neighboring countries such as Nepal and Bhutan, backed by its channel partners and regional team. The company has implemented digital initiatives at various levels to directly connect with end-customers. It has launched various applications and has collaborated with leading digital payment solution providers to facilitate digital invoice collections, accept digital orders, provide unified incentive schemes and reward customers, and accept digital payments which has benefitted the company significantly. Furthermore, the company has manufacturing units in Maharashtra and Rajasthan and an in-house product design facility in Mumbai. It continues to invest in its own designing, tooling, and testing facilities. This enables the company to manufacture electronic equipment with unique designs at affordable rates and diversify into various product categories.
Weaknesses:
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Liquidity: Adequate Liquidity is marked by cash and investment surplus of over Rs 31 crore as on November 30, 2023. The fund-based bank limit of Rs 147 crore was utilised negligibly, averaging 5% over the 12 months through November 2023. Expected cash accrual of Rs 250-330 crore per annum should more than suffice to cover the planned capex of around Rs 300 crore in the medium term, thereby reducing reliance on external debt. |
Outlook: Stable CRISIL Ratings believes the business risk profile of GEPL will benefit from its diversified product portfolio, strong distribution network, implementation of digital initiatives at various levels and the in-house R&D capabilities, enabling new product development at affordable rates. The financial risk profile should also be healthy, despite the large ongoing capex, supported by strong cash generation and the management’s commitment to exercise prudence. |
Rating Sensitivity factors Upward factors
Downward factors
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About the Company Incorporated in 2007 and headquartered in Mumbai, GEPL manufactures a wide range of electrical products, including switches, wires and cables, LEDs and lighting fixtures, fans, home automation systems, security systems, entertainment devices, doorbells and PVC pipes for residential buildings as well as commercial establishments.
It operates through 22 branches and experience centres in major cities across India. The dealership network comprises more than 8,000 direct and indirect dealers all over India. Manufacturing units are located in Vasai (Maharashtra), Bhiwadi (Rajasthan) and Vijaywada (Andhra Pradesh). |
The group entered the electrical components and equipment sector in 1979, as a retailer of leading electrical brands such as Anchor, Kona etc and subsequently ventured into manufacturing and marketing of wires and cables under the Goldmedal brand in 1981. |
Key Financial Indicators
*Debt also includes lease liabilities and channel financing borrowing. |
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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