Rating Rationale
January 30, 2025 | Mumbai
Krystal Integrated Services Limited
Ratings upgraded to 'Crisil A-/Stable/Crisil A2+'; Rated amount enhanced for Bank Debt
 
Rating Action
Total Bank Loan Facilities RatedRs.288 Crore (Enhanced from Rs.188 Crore)
Long Term RatingCrisil A-/Stable (Upgraded from 'Crisil BBB+/Positive')
Short Term RatingCrisil A2+ (Upgraded from 'Crisil A2')
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

Detailed Rationale

Crisil Ratings has upgraded its ratings on the bank loan facilities of Krystal Integrated Services Limited (KISL; part of the Krystal group) to 'Crisil A-/Stable/Crisil A2+’ from 'Crisil BBB+/Positive/Crisil A2’.

 

The upgrade reflects a sustained improvement in the business risk profile backed by revenue diversification. The company’s financial risk profile continues to remain healthy.

 

KISL’s revenue from manpower segment has shown a compounded annual growth rate of around 27.45% over the last 4 years through fiscal 2024. This has resulted in the company’s revenue growth along with reducing reliance on the housekeeping service segment. The group reported an operating income of Rs 1027 crore in fiscal 2024, a year-on-year growth of over 45% as against a higher base of Rs 707 Cr in fiscal 2023. Group has also clocked in a revenue of Rs 799 Cr in the nine months ended December 31, 2024.

 

Furthermore, the group has diversified its segments by incorporating newer services like waste management and catering in the last two fiscal years. It also plans to enter the Business to Consumer segment in fiscal 2026.

 

Financial risk profile of the group continues to remain healthy with comfortable capital structure and debt protection metrics.

 

The ratings continue to reflect extensive industry experience of promoters, healthy financial risk profile and diversified revenue profile. These strengths are partially offset by customer concentration, moderate working capital requirement and intense competition amongst peers.

Analytical Approach

Crisil Ratings has consolidated the wholly owned subsidiaries of KISL, including Krystal Gourmet Private Limited and Flame Facilities Private Limited, together referred to as the Krystal group.

 

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 industry experience of the promoters: The promoters have more than two decades experience in the facility management services industry, which has helped KISL establish its market position. Group has more than 28 branches with over 41,000 guards operating across India across more than 2450 services. 

 

KISL primarily caters to healthcare, education, energy, and in various other sectors. The expertise of promoters has led to long-standing relationships with key stakeholders and leading to repeat orders from key customers.

 

  • Diversified revenue profile: Group has been providing a wide range of services from security services, staffing and payroll services, catering services and  housekeeping services over the last decade and has recently added new offerings like waste management services, and industrial waste water management services in its kitty in the last two fiscals. Group is also planning to enter the business to consumer segment in fiscal 2026.

 

These diversified services enable to company to service various end user industries and clients from government institutions and public sector undertakings to private companies. This insulates the company from any downturn in a particular sector.

 

  • Healthy financial risk profile: Net worth of the group is healthy at Rs 376 Cr as on March 2024 which increased to Rs 404.61 Cr as on September, 30 2024. Low reliance on external debt has led to the gearing ratio to be comfortable at 0.23 time as of March 31,2024, it is expected to remain comfortable over the medium term.

 

The debt protection metrics of the group are also comfortable with interest coverage and net cash accruals to adjusted debt 6 times and 0.65 time for fiscal 2024. Group plans on raising further Rs 300 Cr of capital which will further improve the financial risk profile.

 

Weaknesses:

  • Customer concentration in revenue: Despite servicing diverse end user industry, revenue from government entity continues to dominate the revenue contribution by contributing around 75% of the total revenue of the group. Of the total revenue of Rs 984Cr earned by KISL in fiscal year 2024 over 50% of the total revenue is from top 5 customers of the group. Any loss of top five customers could impact on the revenue profile of the group. However, this risk is partially mitigated by long-standing relationships and healthy growth in the number of customers.

 

  • Moderate working capital requirement: Although on an improving trend, group continues to have a moderate working capital requirement as reflected by 133 Gross Current Asset (GCA) Days as on March 31, 2024 as against 95 days as on March 31,2023 and 168 days as on March 31,2022.

 

High GCA days are a result of higher debtor days which stood at 83 days as on March 31, 2024. Sustained improvement in working capital cycle driven by lower debtor days will remain a key monitorable.

 

  • Intense competition: The facility management services industry has many organised as well as unorganised regional players which offer similar services at competitive pricing. This results in pressure pricing on organised players, such as KISL, which must have to incur high overheads to maintain quality. Moreover, KISL is also impacted high attrition amongst work force. The above risk is partially offset by company having yearly contracts with its clients.

Liquidity: Strong

Liquidity is supported by estimated net cash accrual of over Rs 60 crore against repayment obligations of Rs 0.25-0.50 Cr. Bank limit utilization averaged 86% for the last 12 months ended October 2024.

 

Current ratio was healthy at 1.87 times as on March 2024. Free cash and cash equivalent balance stood at Rs 72 Cr as on 30th September 2024.

Outlook: Stable

Crisil Ratings believes that group’s business risk profile will continue to benefit, over the medium term, from the extensive experience of the management and longstanding relationships with customers.

Rating sensitivity factors

Upward factors:

  • Sustenance of improved scale of operations leading to net cash accruals over Rs 90 Cr
  • Continued diversification in revenue profile while maintaining operating margin
  • Improvement in the working capital cycle and thus utilization of working capital limits.
  • Sustained financial risk profile

 

Downward factors:

  • Sustained decline in revenue and fall in operating margin leading to net cash accrual below Rs 35 Cr on a sustained basis.
  • Stretched working capital cycle, any further non-operational debt-funded capex or high dividend payout weakening the financial risk profile

About the Group

Established in 2000 in Mumbai and promoted by Mr Prasad Lad and Ms Neeta Lad, the Krystal group provides facilities management services, including security agency services, IT-enabled services, recruitment and housekeeping services. The Group has demerged its Smart City business to Volksara Techno Solutions Pvt Ltd.

Key Financial Indicators (consolidated)

As on / for the period ended March 31

Unit

2024

2023

Operating income

Rs crore

1026.84

707.64

Reported profit after tax (PAT)

Rs crore

49.80

38.44

PAT margin

%

4.85

5.43

Adjusted debt/adjusted networth

Times

0.23

0.29

Interest coverage

Times

6.02

5.26

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 and are included (where applicable) in the 'Annexure - Details of Instrument' in this Rating Rationale.

Crisil Ratings will disclose complexity level for all securities - including those that are yet to be placed - based on available information. The complexity level for instruments may be updated, where required, in the rating rationale published subsequent to the issuance of the instrument when details on such features are available.

For more details on the Crisil Ratings` complexity levels please visit www.crisilratings.com. Users may also call the Customer Service Helpdesk with queries on specific instruments.

Annexure - Details of Instrument(s)

ISIN Name Of Instrument Date Of Allotment Coupon Rate (%) Maturity Date Issue Size (Rs. Crore) Complexity Levels Rating Outstanding with Outlook
NA Auto Loans NA NA NA 5.13 NA Crisil A-/Stable
NA Bank Guarantee NA NA NA 98.00 NA Crisil A2+
NA Cash Credit NA NA NA 80.00 NA Crisil A-/Stable
NA Working Capital Demand Loan NA NA NA 4.00 NA Crisil A2+
NA Proposed Long Term Bank Loan Facility NA NA NA 15.00 NA Crisil A-/Stable
NA Proposed Short Term Bank Loan Facility NA NA NA 85.00 NA Crisil A2+
NA Proposed Short Term Bank Loan Facility NA NA NA 0.87 NA Crisil A2+

Annexure – List of entities consolidated

Names of Entities Consolidated

Extent of Consolidation

Rationale for Consolidation

Krystal Integrated Services Limited

Full

Common management and engaged in the same line of business

Krystal Gourmet Private Limited

Full

Common management and engaged in the same line of business

Flame Facilities Private Limited

Full

Common management and engaged in the same line of business
Annexure - Rating History for last 3 Years
  Current 2025 (History) 2024  2023  2022  Start of 2022
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Fund Based Facilities LT/ST 190.0 Crisil A-/Stable / Crisil A2+   -- 18-12-24 Crisil BBB+/Positive / Crisil A2   -- 30-11-22 Crisil BBB+/Positive / Crisil A2 Crisil BBB+/Stable / Crisil A2
      --   -- 28-02-24 Crisil BBB+/Positive / Crisil A2   --   -- --
Non-Fund Based Facilities ST 98.0 Crisil A2+   -- 18-12-24 Crisil A2   -- 30-11-22 Crisil A2 Crisil A2
      --   -- 28-02-24 Crisil A2   --   -- --
All amounts are in Rs.Cr.
Annexure - Details of Bank Lenders & Facilities
Facility Amount (Rs.Crore) Name of Lender Rating
Auto Loans 3.66 Bank of Maharashtra Crisil A-/Stable
Auto Loans 1.29 Union Bank of India Crisil A-/Stable
Auto Loans 0.18 HDFC Bank Limited Crisil A-/Stable
Bank Guarantee 55 Union Bank of India Crisil A2+
Bank Guarantee 25 Bank of Maharashtra Crisil A2+
Bank Guarantee 18 State Bank of India Crisil A2+
Cash Credit 20 Union Bank of India Crisil A-/Stable
Cash Credit 25 Bank of Maharashtra Crisil A-/Stable
Cash Credit 35 State Bank of India Crisil A-/Stable
Proposed Long Term Bank Loan Facility 15 Not Applicable Crisil A-/Stable
Proposed Short Term Bank Loan Facility 85 Not Applicable Crisil A2+
Proposed Short Term Bank Loan Facility 0.87 Not Applicable Crisil A2+
Working Capital Demand Loan 4 Tata Capital Financial Services Limited Crisil A2+
Criteria Details
Links to related criteria
CRISILs Approach to Financial Ratios
Rating criteria for manufaturing and service sector companies
CRISILs Bank Loan Ratings - process, scale and default recognition
CRISILs Criteria for Consolidation

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