Rating Rationale
March 24, 2025 | Mumbai
Tranter India Private Limited
Ratings reaffirmed at 'Crisil A / Stable / Crisil A1 '
 
Rating Action
Total Bank Loan Facilities RatedRs.70.7 Crore
Long Term RatingCrisil A/Stable (Reaffirmed)
Short Term RatingCrisil A1 (Reaffirmed)
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 reaffirmed its ratings on the bank facilities of Tranter India Private Limited (TIPL) at ‘Crisil A/Stable/Crisil A1’.

 

The ratings derive comfort from the strong parentage of Alfa Laval AB, Sweden (rated ‘S&P BBB+/Stable’ by S&P Global Ratings), which offers technological and managerial support to TIPL. The parent has also provided a corporate guarantee on the company’s external debt. Both TIPL and Alfa Laval (which owns 100% stake in the former through PHE Holdings [direct subsidiary]) are in the same business.

 

The ratings also reflect the improvement in operating performance in fiscal 2024, though remain at a modest scale, with an operating income of Rs 130 crore in the 15 months[1]  period during Jan 23-Mar 24 against Rs 85 crore in calendar year 2022. On a like-to-like comparison, this translates into on-year growth of ~22% supported by growth in volumes and realisation. During the first nine months of fiscal 2025, the company reported revenue of Rs 70 crore and is estimated to close the full year in the range of ~Rs 90-95 crore; translating to a degrowth by ~9% owing to slower execution of orders due to customer reprioritizations seen during this fiscal. Growth in the near to medium term, however, remains aided by a stable orderbook size and customer enquiries as the unexecuted order book position stood at Rs 90 crore as on October 2024.

 

Also, improvement in product mix amid higher spare and services sales led to an increase in operating margin to 17% in the 15 months period of fiscal 2024 from 8.1% in calendar year 2022. Going forward, operating margins will benefit and remain steady at 12-13% from a healthy product mix and improving scale of operations.

 

Financial risk profile will remain adequate, with expected cash accrual of Rs 12-15 crore per annum against minimal maintenance capital expenditure (capex) of Rs 1-2 crore and nil debt obligation. As on December 31, 2024, total debt stood at Rs 3.69 crore. Gearing is expected to be strong at below 0.10 over the medium term. Debt protection metrics will remain stable, with expected interest coverage and net cash accrual to total debt ratios of 7-8 times and 1-2 times, respectively.

[1] Change in financial reporting year to FY from an earlier CY basis

Analytical Approach

Crisil Ratings has applied its criteria for notching up ratings to factors in support from the parent, Alfa Laval AB.

Key Rating Drivers & Detailed Description

Strength

  • Strong parentage and support from group companies: TIPL benefits from a strong parent and its need-based financial support. The company also imports high-quality raw materials from group companies around the world.

 

Weaknesses

  • Modest scale of operations and networth: Scale of operations remains modest, as reflected in revenue of Rs 70 crore till December 2024. Furthermore, modest profitability limits accretion to networth; estimated to be around Rs 60-65 crore as on March 31, 2025. However, gearing was healthy at below 0.05 time as on December 31, 2024, due to small debt; while interest coverage ratio was strong at above 10 times for the same period. Any large, debt-funded capex or increase in working capital requirement will remain monitorable.

 

  • Susceptibility to cyclicality in the capital goods sector and fluctuations in input prices: The engineering and capital goods industry remains highly vulnerable to economic cycles. Tranter India has seen periodic slowdowns in revenue growth owing to deferment of capex by customers. Besides, turnkey projects in the process technology division, with a gestation period of 9-11 months, have limited cushion to accommodate any escalation in raw material prices.

Liquidity: Adequate

Though cash balance remains low, liquidity is supported by need-based support from the Alfa Laval group and unutilised fund-based bank limit.

Outlook Stable

TIPL will maintain its operating performance over the medium term and continue to benefit from the Alfa Laval group.

Rating sensitivity factors

Upward factors

  • Sustained growth in revenue by over 10% and steady operating margins
  • Improvement in the working capital cycle

 

Downward factors

  • Decline in operating margin below 6% on a sustained basis
  • Change in stance of parent support and or downgrade in the parent’s rating by more than one notches

About the Company

Incorporated in 2005, TIPL manufactures gasketed and welded plate heat exchangers. In March 2006, Alfa Laval acquired Tranter PHE from Dover Corporation, the USA, for $150 million. Consequently, TIPL became a wholly owned subsidiary of Alfa Laval, and the operations of Dover India Ltd were shifted to TIPL. The company has an independent marketing channel in India through which it offers own products under the Tranter brand.

About the Group

Alfa Laval AB is a leading global supplier of heat transfer, separation, and fluid-handling products and solutions such as:

  • Heat exchangers used in heating, cooling, and ventilation systems
  • Separators and decanters
  • Sanitary fluid-handling equipment, including pumps, valves and fittings

These products have industrial applications for heating, cooling, separation, and transportation of oil, water, chemicals, beverages, food, pharmaceuticals and starch. Energy-related industries account for over 40% of sales.

Key Financial Indicators

As on Mar 31

Unit

FY2024

2022*

Revenue

Rs crore

130

85

Profit after tax (PAT)

Rs crore

15

1

PAT margin

%

11.7

0.8

Adjusted debt/adjusted networth

Times

0.17

0.44

Interest coverage

Times

13.45

4.86

The financials were on a calendar year basis

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 Letter of credit & Bank Guarantee NA NA NA 30.00 NA Crisil A1
NA Overdraft Facility NA NA NA 20.00 NA Crisil A/Stable
NA Working Capital Demand Loan NA NA NA 20.70 NA Crisil A/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 40.7 Crisil A/Stable   --   -- 27-12-23 Crisil A/Stable 31-01-22 Crisil AA (CE) /Stable Crisil AA (CE) /Stable
      --   --   -- 23-01-23 Crisil A/Stable   -- --
Non-Fund Based Facilities ST 30.0 Crisil A1   --   -- 27-12-23 Crisil A1 31-01-22 Crisil A1+ (CE) Crisil A1+ (CE)
      --   --   -- 23-01-23 Crisil A1   -- --
All amounts are in Rs.Cr.
Annexure - Details of Bank Lenders & Facilities
Facility Amount (Rs.Crore) Name of Lender Rating
Letter of credit & Bank Guarantee 30 The Hongkong and Shanghai Banking Corporation Limited Crisil A1
Overdraft Facility 20 Standard Chartered Bank Crisil A/Stable
Working Capital Demand Loan 20.7 The Hongkong and Shanghai Banking Corporation Limited Crisil A/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 factoring parent, group and government linkages

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