Rating Rationale
February 25, 2025 | Mumbai
Orbit Wires India Private Limited
Ratings upgraded to 'Crisil BBB/Stable/Crisil A3+'
 
Rating Action
Total Bank Loan Facilities RatedRs.42 Crore
Long Term RatingCrisil BBB/Stable (Upgraded from 'Crisil BBB-/Stable')
Short Term RatingCrisil A3+ (Upgraded from 'Crisil A3')
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 facilities of Orbit Wires India Pvt Ltd (OWIPL, part of the Orbit-wires group) to ‘Crisil BBB/Stable/Crisil A3+’ from ‘Crisil BBB-/Stable/Crisil A3’.

 

The rating upgrade reflects the improvement in the business risk profile of the company, backed by sustained growth in the scale while maintaining stable operating profitability. The scale of operations increased to Rs 555 crore in fiscal 2024 from Rs 378 crore in fiscal 2023, and is further expected to increase over 25% in fiscal 2025, supported by higher penetration into new geographies and increase in demand from the southern states of India including Tamil Nadu and Karnataka. The operating margin sustained at 7-8% in the last two fiscals and is expected to improve henceforth. The financial risk profile continues to be strong, with steady accretion to reserve and comfortable capital structure. In the absence of debt-funded capital expenditure (capex) plans, gearing and TOL/TNW would remain healthy. Liquidity is also adequate, with healthy cash accrual of Rs 32 crore against moderate debt obligations of Rs 7.96 crore and need-based promoter support in the form of unsecured loans. The sustained improvement in revenue while maintaining stable operating margin would support the overall credit profile of the Orbit-wires group.

 

The ratings reflect the extensive experience of the group's promoters in the cable and wire industry, and the healthy financial risk profile. These strengths are partially offset by exposure to risks related to raw material price fluctuation and working capital-intensive operations.

Analytical approach

For arriving at the ratings, Crisil Ratings has combined the business and financial risk profiles of OWIPL and Seetu Orbit Cable India Pvt Ltd (SOCIPL). This is because both entities operate in the same industry and have operational and financial linkages.

 

Crisil Ratings has treated unsecured loan of Rs 56.21 crore, extended by the promoters, as 75% equity and 25% debt, since the loan is expected to remain in the business over the medium term.

 

Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation.

Key rating drivers and detailed description

Strengths:

  • Extensive industry experience of the promoters and extensive customer base: The promoters have experience of over three decades in the cable and wire industry. This has given them an understanding of the market dynamics and enabled them to establish relationships with suppliers and customers. It has helped the Orbit-wires group in establishing a strong market position in the southern states of India, specifically Tamil Nadu which contributes 80% to the group’s revenue. The group has more than six thousand distributors associated with them in all over India, which has supported the group to report revenue of Rs 555.62 crore in fiscal 2024 and Rs 579 crore as of December 2024.

 

  • Healthy financial risk profile: The group’s capital structure has been healthy due to low reliance on external funds, yielding gearing of 0.45 time and moderate total outside liabilities to adjusted networth (TOLANW) ratio of 1.41 times, as on March 31, 2024. The debt protection metrics have also been healthy due to leverage and healthy operating profitability. The interest coverage and net cash accrual to total debt (NCATD) ratios were 15.87 times and 0.77 time, respectively, for fiscal 2024. The debt protection metrics are expected to remain at similar levels over the medium term.

 

Weaknesses:

  • Exposure to risks related to raw material price fluctuation: Operating margin also remained exposed to volatility in commodity prices, especially of copper and aluminium. Though the group passes on the price variations to its end customers, it remains susceptible to sharp changes in input prices. The raw material cost as a percentage of operating income remained at 88-90%, with sustenance of the operating margin at 5.8-8.3%, since the two fiscals ended 2024.

 

  • Working capital-intensive operations: Its intensive working capital management is reflected in its gross current assets (GCAs) of 148 days as on March 31, 2024. Its large working capital requirement arises from stretched receivables of over 95 days as on March 31, 2024, with similarly high payables of around 70 days. With the expected growth in scale, the working capital cycle will remain stretched over the medium term.

Liquidity: Adequate

Bank limit utilisation was low at 26% on average for the 12 months through December 2024. Annual cash accrual is expected to be over Rs 40 crore against yearly term debt obligation of Rs 7-8 crore over the medium term. The current ratio was healthy at 1.79 times as on March 31, 2024. The promoters are likely to extend equity and unsecured loans to meet the working capital requirement and debt obligations. SOCIPL maintained moderate cash and bank balance of around Rs 10 crore as on December 31, 2024. Low gearing and moderate networth support its financial flexibility and provides the financial cushion available in case of any adverse condition or downturn in the business.

Outlook: Stable

Crisil Ratings believes the Orbit-wires group will continue to benefit from the extensive experience of its promoters, and established relationships with clients.

Rating sensitivity factors

Upward factors:

  • Significant increase in the scale of operations, with operating margin of over 8%, leading to high net cash accrual
  • Improvement in the working capital cycle.
     

Downward factors:

  • Decline in the scale of operations leading to fall in revenue by 20% and profitability below 4%, resulting in low net cash accrual
  • Substantial increase in the working capital requirement weakening the liquidity and financial risk profile

About the company

Incorporated in 2007, OWIPL manufactures various types of wires and cables. It also deals in other merchandise such as CCTV cameras, PVC pipes and switches. OWIPL markets the products under the brand name Orbit. Its manufacturing facility is in Ahmedabad, Gujarat. OWIPL is owned and managed by Amit Agarwal, Govinda Agarwal and Lakshmi Agarwal.

 

Incorporated in 2020, SOCIPL trades in various types of wires and cables produced by its group company OWIPL. It is owned and managed by Amit Agarwal, Govinda Agarwal and Lakshmi Agarwal. OWIPL acquired SOCIPL on January 22, 2025 and henceforth, SOCIPL will be a fully owned subsidiary of OWIPL.

Key financial indicators

Combined

 

 

 

As on/for the period ended March 31

Unit

2024

2023

Operating income

Rs crore

555.62

378.44

Reported profit after tax (PAT)

Rs crore

29.63

21.23

PAT margin

%

5.33

5.61

Adjusted debt/adjusted networth

Times

0.45

0.51

Interest coverage

Times

15.87

19.28

 

OWIPL

 

 

 

As on/for the period ended March 31

Unit

2024

2023

Operating income

Rs crore

437.29

231.18

Reported PAT

Rs crore

20.63

16.70

PAT margin

%

4.72

7.33

Adjusted debt/adjusted networth

Times

0.45

1.15

Interest coverage

Times

15.85

23.89

 

SOCIPL

 

 

 

As on/for the period ended March 31

Unit

2024

2023

Operating income

Rs crore

317.21

301.10

Reported PAT

Rs crore

12.61

4.28

PAT margin

%

3.98

1.43

Adjusted debt/adjusted networth

Times

0.45

7.15

Interest coverage

Times

15.92

12.13

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 Bank Guarantee NA NA NA 10.00 NA Crisil A3+
NA Cash Credit NA NA NA 32.00 NA Crisil BBB/Stable

Annexure – List of entities consolidated

Names of entities consolidated

Extent of consolidation

Rationale for consolidation

Orbit Wires India Private Limited

Full consolidation

Parent Company

Seetu Orbit Cable India Private Limited

Full consolidation

Fully owned Subsidiary
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 32.0 Crisil BBB/Stable   --   -- 29-11-23 Crisil BBB-/Stable   -- --
Non-Fund Based Facilities ST 10.0 Crisil A3+   --   -- 29-11-23 Crisil A3   -- --
All amounts are in Rs.Cr.
Annexure - Details of Bank Lenders & Facilities
Facility Amount (Rs.Crore) Name of Lender Rating
Bank Guarantee 10 HDFC Bank Limited Crisil A3+
Cash Credit 32 HDFC Bank Limited Crisil BBB/Stable
Criteria Details
Links to related criteria
Basics of Ratings (including default recognition, assessing information adequacy)
Criteria for manufacturing, trading and corporate services sector (including approach for financial ratios)
Criteria for consolidation

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