Rating Rationale
January 09, 2018 | Mumbai
Suyog Telematics Limited
Revised from 'CRISIL BBB-/Stable/CRISIL A3' to 'CRISIL D/CRISIL D' and simultaneously upgraded to 'CRISIL BB+/Stable/CRISIL A4+' 
 
Rating Action
Total Bank Loan Facilities Rated Rs.90 Crore
Long Term Rating CRISIL BB+/Stable (Revised from 'CRISIL BBB-/Stable' to 'CRISIL D' and Simultaneously Upgraded to 'CRISIL BB+/Stable')
Short Term Rating CRISIL A4+ (Revised from 'CRISIL A3' to 'CRISIL D' and Simultaneously Upgraded to 'CRISIL A4+')
1 crore = 10 million
Refer to annexure for Details of Instruments & Bank Facilities
Detailed Rationale

CRISIL has revised its ratings on the bank facilities of Suyog Telematics Limited (STL) from 'CRISIL BBB-/Stable/CRISIL A3' to 'CRISIL D/CRISIL D' and simultaneously upgraded the ratings to 'CRISIL BB+/Stable/CRISIL A4+'.

The revision in rating to 'CRISIL D/CRISIL D' reflects delay in payment - that was due on December 28, 2017 - of principal on one of the term loans. This was on account of delayed realization from one of its customers, whose receivables were used to make the repayment. While STL had sufficient current account balance with another bank, the same was not utilized in servicing the principal payment. However, the company has cleared all dues as on date.

The simultaneous upgrade to 'CRISIL BB+/Stable/CRISIL A4+' reflects CRISIL's understanding that the payment delay was a one-off event and that STL's ability and willingness to service debt on time continue to remain comfortable. The company has undertaken to ensure timely servicing of debt going forward and to strengthen its internal controls and instill higher financial discipline. The company's business and financial profile continues to remain stable; however owing to the current problems faced by the telecommunication sector, delays in payments may cause a stretch in liquidity. Further, the ongoing capex of Rs.90 crore, which is being funded with internal accruals to the tune of Rs.23 crore, puts additional demands on the cashflow generation of the company.

The ratings factors in STL's established regional market position in the passive telecom infrastructure segment, supported by its healthy presence in low cost sites. Financial risk profile is marked by above-average total outside liabilities to adjusted net worth (TOL/ANW) ratio and comfortable debt protection metrics. These rating strengths are partially offset by STL's moderate scale of operations, geographical concentration in revenue profile, extended receivables and sizeable capital expenditure.

Key Rating Drivers & Detailed Description
Strengths
* Established regional market position in the passive telecom infrastructure segment, supported by healthy presence in low-cost sites: The company is a passive telecom infrastructure provider, engaged primarily in the business of installing and commissioning of poles, towers and optical fibre cable systems since 1995. It is registered as Infrastructure Provider Category-I (IP-I) with Department of Telecommunications (DoT).  The company has a strong presence in the government sector in Mumbai supported by the fact that it has sole licensee to install towers and poles for Mumbai Metropolitan Region Development Authority (MMRDA) and Mumbai State Road Development Corporation Ltd (MSRDC) sites across Mumbai region such as flyovers, sea link and skyways.

* Above-average financial risk profile: Networth was comfortable at Rs 52 crore and total outside liabilities to adjusted networth (TOLANW) ratio was healthy at 1.7 times as on March 31, 2017. Debt protection metrics were strong, with interest coverage and net cash accrual to total debt ratios of 6.27 times and 0.33 time, respectively, in fiscal 2017.

Weaknesses
* Moderate scale of operations and geographical concentration in revenue profile: Scale of operation is moderate with operating income of Rs 60.53 crore in fiscal 2017. Geographical concentration risk also persists, as the bulk of projects are in and around Mumbai.

* Extended receivables and significant capital expenditure plans
The receivable cycle has been stretched in fiscal 2017 to 131 days on account of delay in payments from some of the financially stressed telecom service providers. Capital expenditure plans of around Rs 60 crore to be completed over the next two years and its stabilization thereof will be a key rating sensitive factor. In fiscal 2017, capital expenditure of Rs 31.45 crore has been incurred.
Outlook: Stable

STL will benefit from its promoter's experience in the telecom tower industry and relationships with customers. The outlook may be revised to 'Positive' in case of significant ramp-up in scale of operations, backed by improvement in receivable cycle and in tenancy ratios and/or geographical diversification in revenue profile. Conversely, the outlook may be revised to 'Negative' if decline in profitability and revenue or in financial risk profile due to stretch in receivable cycle and sizeable debt-funded capital expenditure.

About the Company

STL, incorporated in 1995 by Mr Shivshankar Lature, is a passive telecommunication infrastructure provider, engaged primarily in the business of installing and commissioning poles, towers and optical fibre cable systems.

Key Financial Indicators
Particulars Unit 2017 2016
Revenue Rs crore 60.5 43.8
Profit After Tax (PAT) Rs crore 17.0 12.1
PAT Margins % 28.1 27.6
Adjusted Debt/Adjusted Networth Times 1.2 0.8
Interest coverage Times 6.27 8.8

Any other information: Not applicable

Note on complexity levels of the rated instrument:
CRISIL complexity levels are assigned to various types of financial instruments. The CRISIL complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL 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)
ISIN Name of Instrument Date of Allotment Coupon Rate (%) Maturity Date Issue Size
(Rs Cr)
Rating Assigned
with Outlook
NA Bank Guarantee NA NA NA 3.00 CRISIL A4+
NA Term Loan NA NA Oct-2021 20.00 CRISIL BB+/Stable
NA Term Loan NA NA Aug-2025 20.00 CRISIL BB+/Stable
NA Term Loan NA NA Jun-2022 11.34 CRISIL BB+/Stable
NA Term Loan NA NA Jun-2022 35.66 CRISIL BB+/Stable
Annexure - Rating History for last 3 Years
  Current 2018 (History) 2017  2016  2015  Start of 2015
Instrument Type Quantum Rating Date Rating Date Rating Date Rating Date Rating Rating
Fund-based Bank Facilities  LT/ST  87  CRISIL BB+/Stable    No Rating Change    No Rating Change  29-02-16  CRISIL BBB-/Stable    --  -- 
Non Fund-based Bank Facilities  LT/ST  CRISIL A4+    No Rating Change  07-04-17  CRISIL A3    --    --  -- 
Table reflects instances where rating is changed or freshly assigned. 'No Rating Change' implies that there was no rating change under the release.
Annexure - Details of various bank facilities
Current facilities Previous facilities
Facility Amount (Rs.Crore) Rating Facility Amount (Rs.Crore) Rating
Bank Guarantee 3 CRISIL A4+ Bank Guarantee 3 CRISIL A3
Term Loan 87 CRISIL BB+/Stable Term Loan 87 CRISIL BBB-/Stable
Total 90 -- Total 90 --
Links to related criteria
CRISILs Approach to Financial Ratios
CRISILs Bank Loan Ratings - process, scale and default recognition
Rating criteria for manufaturing and service sector companies
CRISILs Bank Loan Ratings
CRISILs Criteria for rating short term debt
The Rating Process
Understanding CRISILs Ratings and Rating Scales

For further information contact:
Media Relations
Analytical Contacts
Customer Service Helpdesk
Saman Khan
Media Relations
CRISIL Limited
D: +91 22 3342 3895
B: +91 22 3342 3000
saman.khan@crisil.com

Naireen Ahmed
Media Relations
CRISIL Limited
D: +91 22 3342 1818
B: +91 22 3342 3000
naireen.ahmed@crisil.com

Jyoti Parmar
Media Relations
CRISIL Limited
D: +91 22 3342 1835
B: +91 22 3342 3000
 jyoti.parmar@crisil.com

Arvind Rao
Director - CRISIL Ratings
CRISIL Limited
D:+91 22 4097 8278
arvind.rao@crisil.com


Nitika Singh
Rating Analyst - CRISIL Ratings
CRISIL Limited
D:+91 22 3342 4180
Nitika.Singh@crisil.com


Timings: 10.00 am to 7.00 pm
Toll free Number:1800 267 1301

For a copy of Rationales / Rating Reports:
CRISILratingdesk@crisil.com
 
For Analytical queries:
ratingsinvestordesk@crisil.com


 

Note for Media:
This rating rationale is transmitted to you for the sole purpose of dissemination through your newspaper / magazine / agency. The rating rationale may be used by you in full or in part without changing the meaning or context thereof but with due credit to CRISIL. However, CRISIL alone has the sole right of distribution (whether directly or indirectly) of its rationales for consideration or otherwise through any media including websites, portals etc.


About CRISIL Limited

CRISIL is an agile and innovative, global analytics company driven by its mission of making markets function better. We are India’s foremost provider of ratings, data, research, analytics and solutions. A strong track record of growth, culture of innovation and global footprint sets us apart. We have delivered independent opinions, actionable insights, and efficient solutions to over 100,000 customers.

We are majority owned by S&P Global Inc., a leading provider of transparent and independent ratings, benchmarks, analytics and data to the capital and commodity markets worldwide.

For more information, visit www.crisil.com 


Connect with us: TWITTER | LINKEDIN | YOUTUBE | FACEBOOK


About CRISIL Ratings
CRISIL Ratings is part of CRISIL Limited (“CRISIL”). We pioneered the concept of credit rating in India in 1987. CRISIL is registered in India as a credit rating agency with the Securities and Exchange Board of India (“SEBI”). With a tradition of independence, analytical rigour and innovation, CRISIL sets the standards in the credit rating business. We rate the entire range of debt instruments, such as, bank loans, certificates of deposit, commercial paper, non-convertible / convertible / partially convertible bonds and debentures, perpetual bonds, bank hybrid capital instruments, asset-backed and mortgage-backed securities, partial guarantees and other structured debt instruments. We have rated over 24,500 large and mid-scale corporates and financial institutions. CRISIL has also instituted several innovations in India in the rating business, including rating municipal bonds, partially guaranteed instruments and microfinance institutions. We also pioneered a globally unique rating service for Micro, Small and Medium Enterprises (MSMEs) and significantly extended the accessibility to rating services to a wider market. Over 1,10,000 MSMEs have been rated by us.


CRISIL PRIVACY NOTICE

CRISIL respects your privacy. We use your contact information, such as your name, address, and email id, to fulfil your request and service your account and to provide you with additional information from CRISIL and other parts of S&P Global Inc. and its subsidiaries (collectively, the “Company) you may find of interest.

For further information, or to let us know your preferences with respect to receiving marketing materials, please visit www.crisil.com/privacy. You can view the Company’s Customer Privacy at https://www.spglobal.com/privacy

Last updated: April 2016


DISCLAIMER

This disclaimer forms part of and applies to each credit rating report and/or credit rating rationale that we provide (each a “Report”). For the avoidance of doubt, the term “Report” includes the information, ratings and other content forming part of the Report. The Report is intended for the jurisdiction of India only. This Report does not constitute an offer of services. Without limiting the generality of the foregoing, nothing in the Report is to be construed as CRISIL providing or intending to provide any services in jurisdictions where CRISIL does not have the necessary licenses and/or registration to carry out its business activities referred to above. Access or use of this Report does not create a client relationship between CRISIL and the user.

We are not aware that any user intends to rely on the Report or of the manner in which a user intends to use the Report. In preparing our Report we have not taken into consideration the objectives or particular needs of any particular user. It is made abundantly clear that the Report is not intended to and does not constitute an investment advice. The Report is not an offer to sell or an offer to purchase or subscribe for any investment in any securities, instruments, facilities or solicitation of any kind or otherwise enter into any deal or transaction with the entity to which the Report pertains. The Report should not be the sole or primary basis for any investment decision within the meaning of any law or regulation (including the laws and regulations applicable in the US).

Ratings from CRISIL Rating are statements of opinion as of the date they are expressed and not statements of fact or recommendations to purchase, hold, or sell any securities / instruments or to make any investment decisions. Any opinions expressed here are in good faith, are subject to change without notice, and are only current as of the stated date of their issue. CRISIL assumes no obligation to update its opinions following publication in any form or format although CRISIL may disseminate its opinions and analysis. CRISIL rating contained in the Report is not a substitute for the skill, judgment and experience of the user, its management, employees, advisors and/or clients when making investment or other business decisions. The recipients of the Report should rely on their own judgment and take their own professional advice before acting on the Report in any way.

Neither CRISIL nor its affiliates, third party providers, as well as their directors, officers, shareholders, employees or agents (collectively, “CRISIL Parties”) guarantee the accuracy, completeness or adequacy of the Report, and no CRISIL Party shall have any liability for any errors, omissions, or interruptions therein, regardless of the cause, or for the results obtained from the use of any part of the Report. EACH CRISIL PARTY DISCLAIMS ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE. In no event shall any CRISIL Party be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of any part of the Report even if advised of the possibility of such damages.

CRISIL Ratings may receive compensation for its ratings and certain credit-related analyses, normally from issuers or underwriters of the instruments, facilities, securities or from obligors. CRISIL’s public ratings and analysis as are required to be disclosed under the regulations of the Securities and Exchange Board of India (and other applicable regulations, if any) are made available on its web sites, www.crisil.com (free of charge). Reports with more detail and additional information may be available for subscription at a fee – more details about CRISIL ratings are available here: www.crisilratings.com.

CRISIL and its affiliates do not act as a fiduciary. While CRISIL has obtained information from sources it believes to be reliable, CRISIL does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives and / or relies in its Reports. CRISIL keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of the respective activity. As a result, certain business units of CRISIL may have information that is not available to other CRISIL business units. CRISIL has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with each analytical process. CRISIL has in place a ratings code of conduct and policies for analytical firewalls and for managing conflict of interest. For details please refer to: http://www.crisil.com/ratings/highlightedpolicy.html

CRISIL’s rating criteria are generally available without charge to the public on the CRISIL public web site, www.crisil.com. For latest rating information on any instrument of any company rated by CRISIL you may contact CRISIL RATING DESK at CRISILratingdesk@crisil.com, or at (0091) 1800 267 1301.

This Report should not be reproduced or redistributed to any other person or in any form without a prior written consent of CRISIL.

All rights reserved @ CRISIL