Rating Rationale
March 27, 2025 | Mumbai
Pai International Electronics Limited
'Crisil BBB+/Stable' assigned to Bank Debt
 
Rating Action
Total Bank Loan Facilities RatedRs.311 Crore
Long Term RatingCrisil BBB+/Stable (Assigned)
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 Rating has assigned its ‘Crisil BBB+/Stable’ rating to the long term bank facilities of Pai International Electronics Limited (PIE).

 

The rating reflect PIE's established regional position in consumer electronics and home appliances retail business and its healthy financial profile. These strengths are partially offset by its high regional concentration, exposure to intense competition and working capital intensive operations.

Analytical Approach

Crisil Ratings has evaluated the standalone business and financial risk profiles of PIE

Key Rating Drivers & Detailed Description

Strengths:

  • Established regional position in consumer electronics and home appliances retail business: PIE  moderate scale provides it  an operating flexibility in an intensely competitive industry .Also , PIE has been retailing electronic products for more than two decades and has an established presence particularly in Karnataka region , with 210 outlets at present across Karnataka , Telangana, and Andhra Pradesh. It also has a diverse product portfolio in the consumer electronics segment, offering television sets, refrigerators, washing machines, air conditioners, mobiles, laptops and accessories. PIE benefits from its established relationship with multiple brands which has translated into relatively healthier operating margin partly backed by increased commissions from its principal suppliers. Owing to longstanding relationships with the suppliers, the company gets incentives in the form of cash discount, trade discount, and rewards for exceeding sales targets. Turnover was strong at Rs 2043 crore in fiscal 2024 and, with sales of Rs 1,539 crore in the first nine months of this fiscal, revenue growth is expected to be similar in 2025.  Further, it also benefits from the promoters' experience of over the  decades, their strong understanding of market dynamics, and healthy relations with customers and suppliers and will continue to support the business.

 

  • Healthy financial profile :PIE  capital structure have been at healthy level due to lower reliance on external funds yielding gearing of 0.98x and low total outside liabilities to adj tangible networth (TOL/ANW) of 1.76 for year ending on 31st March  2024.. PIE  debt protection measures have also been at healthy level due to leverage and healthy profitability.  The interest coverage and net cash accrual to total debt (NCATD) ratio are  at 2.20  times and 0.12  times for fiscal 2024 .PIE debt protection measures are expected to remain at similar level over medium term.

 

Weaknesses:

  • High regional concentration and exposure to intense competition: The entities in this segment faces competition from retail giants such as Vijay Sales, Croma, Reliance Digital, and ecommerce companies. Hence, it is a needs to offer lucrative discounts to customers. Despite the established brand, sustenance of footfall remains a key rating sensitivity factor, especially in a sluggish demand scenario.

 

  • Working capital intensive operations : Gross current assets were at 90-95 days over the three fiscals ended March 31,  2024. External borrowings largely comprise of working capital and creditors for purchase of inventory ahead of peak summer sales which commence in Q1, reflected in average inventory of 60-75 days. Sales are to retail customers and hence, receivables have been minimal at 3-5 days in the past three fiscals. However, working capital cycle is expected to remain stretched over the medium term with no change in inventory policy.

Liquidity: Adequate

Bank limit utilisation is low at around 34.16 percent for the past twelve months ended January 2025 for cash redit limit. Cash accrual are expected to be over Rs 35-40 crore which are sufficient against term debt obligation of Rs 4-5 crore over the medium term. Current ratio are healthy at 1.45 times on March31, 2024. The promoters are likely to extend support in the form of equity and unsecured loans to meet its working capital requirements and repayment obligations

Outlook: Stable

Crisil Rating believe PIE will continue to benefit from the extensive experience of its promoter, and its efficient working capital cycle.

Rating sensitivity factors

Upward factors:

  • Sustenance of operating margins at above 3.2% leading higher net cash accruals.
  • Significant growth in networth and improved capital structure, yielding TOL/TNW ratio of less than 1.5 times on sustained basis
  • Improvement in working capital cycle.
     

Downward factors:

  • Decline in performance of new showrooms leading to decline in average revenue per showroom
  • Decline in ebidta below 2.5% on account higher operating costs and lower discounts from suppliers.
  • Large, debt-funded capital expenditure, investments in non-core assets and/or substantial increase in outside liabilities

About the Company

Founded in 2000 by Mr. Rajkumar Sreenivasa Pai and subsequently converted into a private limited company, PIE. PIE is a multi brand dealer and retailer of consumer electronics, home appliances and mobile phones with a network of 210  showrooms across Karnataka, Telangana, and Andhra Pradesh

Key Financial Indicators

As on / for the period ended March 31

Unit

2024

2023

Operating income

Rs crore

2,043.53

1,777.69

Reported profit after tax

Rs crore

22.92

27.29

PAT margins

%

1.10

1.50

Adjusted Debt/Adjusted Net worth

Times

0.98

1.08

Interest coverage

Times

2.45

3.03

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 5.00 NA Crisil BBB+/Stable
NA Cash Credit NA NA NA 89.00 NA Crisil BBB+/Stable
NA Inventory Funding Facility NA NA NA 110.00 NA Crisil BBB+/Stable
NA Proposed Fund-Based Bank Limits NA NA NA 7.50 NA Crisil BBB+/Stable
NA Working Capital Loan NA NA NA 74.50 NA Crisil BBB+/Stable
NA Term Loan NA NA 31-Dec-30 25.00 NA Crisil BBB+/Stable
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 306.0 Crisil BBB+/Stable   --   --   --   -- --
Non-Fund Based Facilities LT 5.0 Crisil BBB+/Stable   --   --   --   -- --
All amounts are in Rs.Cr.
Annexure - Details of Bank Lenders & Facilities
Facility Amount (Rs.Crore) Name of Lender Rating
Bank Guarantee 5 Axis Bank Limited Crisil BBB+/Stable
Cash Credit 89 HDFC Bank Limited Crisil BBB+/Stable
Inventory Funding Facility 70 Axis Bank Limited Crisil BBB+/Stable
Inventory Funding Facility 40 Bajaj Finance Limited Crisil BBB+/Stable
Proposed Fund-Based Bank Limits 7.5 Not Applicable Crisil BBB+/Stable
Term Loan 25 HDFC Bank Limited Crisil BBB+/Stable
Working Capital Loan 74.5 Citi Bank 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)

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