| Wonder Electricals Limited | ||||
| Rating removed from 'Watch Developing'; Rating Reaffirmed and Withdrawn | ||||
| Rating Action | ||||
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| 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 removed its rating on the long-term bank facilities of Wonder Electricals Limited (WEL; formerly known as Wonder Fibromats Ltd) from 'Rating Watch with Developing Implications' and reaffirmed the rating at ‘CRISIL BBB-’ while assigning a ‘Stable’ outlook. CRISIL Ratings has simultaneously withdrawn the rating at the request of the company and on receipt of no-objection certificate from the bankers. This rating action is in line with the withdrawal policy of CRISIL Ratings.
The rating was placed on watch on September 8, 2023, post the announcement made by WEL to acquire the business of its group partnership firm -- Uttaranchal Industries (UI) -- under a slump sale transaction. The total value of the purchase consideration stood at Rs 23.43 crore, which will be discharged by WEL via issuance of 23,42,665, 5% non-convertible, non-participating and non-cumulative redeemable preference shares worth Rs 100 each. This acquisition would lead to a combination of resources (of WEL and UI) and result in synergistic benefits. This transaction is completed on October 21, 2023. However, complete information regarding the same and the request to withdraw the rating have been received. Hence, the rating has been removed from watch.
The rating reflects an expected improvement in the scale of operations; however, operating profitability may moderate owing to inorganic expansion during fiscal 2024 with acquisition of UI.
The rating continues to consider the extensive experience of the promoters in the ceiling and exhaust fans industry, established relationships with prominent customers and healthy financial risk profile of WEL. These strengths are partially offset by exposure to intense competition in the consumer durables sector in India. |
Key rating drivers and detailed description Strengths:
WEL is an original equipment manufacturer of ceiling, exhaust, pedestal and brushless direct current (BLDC) fans for reputed customers. The promoters -- Mr Harsh Anand, Mr Yogesh Anand and Mr Yogesh Sahni -- have over four decades of experience and are actively engaged in the operations of WEL. Expertise of the promoters, their strong understanding of market dynamics and healthy relationships with suppliers and customers helped WEL become one of the largest players in this segment.
The financial risk profile should remain supported by steady accretion to reserve and the absence of any large, debt-funded capital expenditure (capex). Networth was Rs 59.24 crore with gearing at 0.41 time and total outside liabilities to tangible networth ratio at 2.92 times as on March 31, 2023. Debt protection metrics were healthy, with interest coverage ratio of 5.84 times and net cash accrual to adjusted debt ratio of 0.47 time for fiscal 2023.
Weakness:
The consumer durables sector in India comprises several large players; the consequent intense competition may continue to constrain scalability, pricing power and profitability. Volatility in raw material price further accentuates the pressure on profitability. |
Liquidity: Adequate Liquidity should remain supported by the ample surplus available in cash accrual and bank lines. Bank limit utilisation was moderate at 69.66% for the 12 months through September 2023. Cash accrual is projected at more than Rs 14 crore per annum, against term debt obligation of Rs 1.0-1.5 crore over the medium term. The current ratio stood at 1.19 times on March 31, 2023. |
Outlook: Stable WEL will continue to benefit from the extensive experience of its promoters and their established relationship with clients. |
Rating sensitivity factors Upward factors
Downward factors
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About the company Incorporated in 2009 as a private-limited company, the entity got reconstituted into a public-limited company in July 2018. WEL manufactures ceiling, exhaust, pedestal and BLDC fans. It was listed on the small and medium enterprises platform of the National Stock Exchange in August 2019.
WEL has total installed capacity to manufacture 6.15 lakh fans per month. It has one manufacturing plant at Roorkee in Haridwar, Uttarakhand, and another at Medak in Hyderabad (which commenced operations from December 2020).
Mr Harsh Anand and Mr Yogesh Sahni along with their family members are the promoters. |
Key Financial Indicators
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Any other information: Not Applicable |
Note on complexity levels of the rated instrument: |
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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