| Mecamidi HPP India Private Limited | ||||||
| Ratings Reaffirmed | ||||||
| Rating Action | ||||||
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| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has reaffirmed its ‘CRISIL BBB-/Stable/CRISIL A3’ ratings on the bank facilities of Mecamidi HPP India Private Limited (Mecamidi HPP). The ratings continue to reflect the extensive experience of its promoters and above-average financial risk profile. These strengths are partially offset by the susceptibility of business risk profile to delay in erection and commissioning work, and working capital-intensive operations. |
Key Rating Drivers & Detailed Description Strengths: Extensive experience of the promoters and established market position backed by technology tie-up: The company’s promoters, Mr Sanjeev Kapoor, Ms Mala Garg, Mr Anagh Garg and Mr Amarjeet Singh (minority stakeholders with 43.5%), have been in the engineering industry for over two decades. Prior to establishing Mecamidi HPP, they were employed with Triveni Engineering & Industries Ltd and Bharat Steel Tubes Ltd. Benefits from the extensive experience of the promoters, their understanding of local market dynamics, and established relationships with suppliers and customers will continue. The company also receives repeat orders due to the expertise and experience of Mecamidi S.A. France (Mecamidi).
Comfortable financial risk profile: Total outside liabilities to tangible networth ratio was moderate at 1.98 times and gearing healthy at 0.26 time, as on March 31, 2021. Bulk of the liabilities are in the form of payables and customer advances, with limited long-term debt and low utilisation of working capital limit. Interest coverage ratio was healthy at 5.86 times in fiscal 2021, aided by moderate operating margin and limited utilisation of fund-based limit. Weaknesses: Susceptibility of business risk profile to delay in erection and commissioning work: The company undertakes design, fabrication, supply, erection and commissioning of electro mechanical equipment at customer site; however, it does not undertake civil construction activities. This exposes the company to uncertainty in revenue despite receiving orders. Delay in getting requisite approvals or completion of civil construction work can impact timelines of the erection and commissioning work. Revenue thus remains contingent upon execution/completion of projects at customers' end.
Working capital-intensive operations: Gross current assets were 362 days on account of stretched receivables and sizeable inventory of 144 days and 149 days, respectively, as on March 31, 2021. |
Liquidity: Adequate Bank limit utilisation was just 14.3% for the 12 months through August 2021. Cash accrual is expected to be over Rs 3.2 crore against annual term debt obligation of Rs 0.20 crore over the medium term; the remaining will cushion liquidity. The company also has mutual funds of Rs 5.8 crore as on March 31, 2021. |
Outlook: Stable The company will continue to benefit from its association with an established European brand (Mecamidi) and the extensive experience of its promoters in the hydro power industry. |
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About the Company Mecamidi HPP was set up in February 1995 by Mr Sanjeev Kapoor, Ms Mala Garg, Mr Anagh Garg and Mr Amarjeet Singh. In January 2012, 55% of its equity shares were bought by France-based Mecamidi. Mecamidi HPP undertakes design, fabrication, erection, testing and commissioning of electro-mechanical equipment for small hydro power projects on an EPC (engineering, procurement and construction) basis. It also modernises and renovates hydropower plants. |
Key financial indicators
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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. The CRISIL Ratings' complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL Ratings' 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 Bank Lenders & Facilities | |||||||||||||||
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Criteria Details
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