Rating Rationale
February 02, 2024 | Mumbai
Nsure Reliable Power Solutions Private Limited
Ratings reaffirmed at 'CRISIL BBB-/Stable/CRISIL A3'
Rating Action
Total Bank Loan Facilities Rated Rs.30 Crore
Long Term Rating CRISIL BBB-/Stable (Reaffirmed)
Short Term Rating CRISIL A3 (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 loan facilities of Nsure Reliable Power Solutions Private Limited
(NRPSPL) at ‘CRISIL BBB-/Stable/CRISIL A3’.
The rating continues to reflect NRPSPL's strong parentage - Ramalingam Construction Company Private Limited (RCCPL)
and expectation of need-based financial support from the parent along with experience of the company in the lithium ion
segment. These strengths are partially offset by moderate scale of operations, exposure to project risk and working capital
intensive operations.
Analytical Approach
CRISIL Ratings has factored in the support from the parent, RCCPL, by applying the parent notch-up criteria. The unsecured
loans of Rs 27.86 crore is treated as No debt No equity
Key Rating Drivers & Detailed Description
Strengths:
Strong parentage and need-based financial support from RCCPL: NRPSL will benefit from strong parentage and need
based financial support from its parent, RCCPL. RCCPL, which holds 63.85% in NRPSL, is an established player in the
construction industry with presence of over 4 decades. RCCPL is registered as a civil contractor with several
departments of Tamil Nadu and Karnataka. RCCPL has extended need-based financial support in the form of unsecured
loans and also in the form of corporate guarantee to NRPSPL on its entire bank limits. Unsecured loans from RCCPL
(treated as debt) stood at Rs. 28.75 crores as on March 31, 2023. The parent and the promoter group will also support
the ongoing capex by funding the margin money and RCCPL will provide corporate guarantee for the incremental debt
being taken.
Experience in the lithium ion trading business and existing clientele: The company has been dealing with lithium ion
battery segment for the past few years and established healthy relationships with stakeholders in the industry. Their
experience and existing client base is expected to support the new lithium ion cell manufacturing business; once it is
operational.
Weaknesses:
Moderate scale of operation: NRPSPLs business profile is constrained by its scale of operations in the intensely
competitive electrical components & equipment industry. Revenues were small at Rs. 52.97 crores for Fiscal 2023
which was lower than expected for the year. While marginal improvement in revenues is envisaged with the increased
contribution from the lithium cell distribution segment, NRPSPLs scale of operations will continue to remain moderate
over next two fiscals. Revenue and profitability is expected to expand significantly once the new lithium ion
manufacturing project starts its operations and remains a key monitorable.
Exposure to risks related to ongoing project: NSURE is scheduled to commence its 1GW project for EV batteries.
Demand risk is also expected to be moderate as the industry is highly fragmented. Also, will be exposed to intense
competition from other players in the segment, domestically and internationally. Timely completion and successful
stabilization of its operations will remain a key rating sensitivity factor.
Working capital intensive operations: Gross current assets have remained over 300 days over the three fiscals ended
March 31, 2023 on account of long collection cycle and high inventory levels. With the company catering mainly to
government counterparties, the payment cycle is usually stretched. However, working capital requirement is expected to
moderate with improved contribution from lithium cell segment; where the working capital cycle is relatively lower
Liquidity: Adequate
Net cash accruals are expected to be around Rs 3-5 crores, which are sufficient against nil term debt obligations over the
medium term. Bank limit utilization is moderate at around 79 percent for the past twelve months ending November
2023. The margin contribution for the ongoing capex will be funded by the parent and promoters. Support from parent and
promoter group is expected in case of any exigency
Outlook: Stable
CRISIL Ratings believes NRPSPL will continue to benefit over the medium term from its support from its parent.
Rating Sensitivity factors
Upward factors:
Significant growth in revenue and operating margins leading to net cash accruals of over Rs 10 crore.
Tie up of debts required for the capex and staggering of the project cycles as forecasted; coupled with materially better
than expected leverage levels owing to higher than expected equity contribution.
Improvement in working capital cycle and sustained financial risk profile.
Downward factors:
Lower than expected revenues/profitability leading to accruals of less than Rs.4 crore.
Larger than expected debt funded capex or stretch in working capital cycle resulting in deterioration in the financial risk
profile.
Any time or cost overrun in the capex or delay in achieving financial closure for the new project.
Any change in articulation of support from the parent.
About the Company
Incorporated in 2016, NRPSPL is engaged in supply, installation and maintenance of smart meters for power distribution
companies and trading in lithium cells. The company is based out of Bengaluru (Karnataka) and is owned and managed by
Mr. Ramalingam Chandrakanth and Mr. Ramalingam Suryakanth
Key Financial Indicators
As on / for the period ended March 31 Unit 2023 2022
Operating income Rs crore 52.97 24.26
Reported profit after tax Rs crore 3.08 1.40
PAT margins % 5.88 5.87
Adjusted Debt/Adjusted Net worth Times 1.48 0.72
Interest coverage Times 4.36 7.64
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 [Link]. Users may also call the
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Annexure - Details of Instrument(s)
Date of Coupon Maturity Issue size Complexity Rating assigned
ISIN Name of the instrument
Allotment Rate (%) Date (Rs. Crore) Level with outlook
NA Letter of credit & Bank Guarantee NA NA NA 20 NA CRISIL A3
NA Cash Credit NA NA NA 10 NA CRISIL BBB-/Stable
Annexure - Rating History for last 3 Years
Start of
Current 2024 (History) 2023 2022 2021
2021
Outstanding
Instrument Type Rating Date Rating Date Rating Date Rating Date Rating Rating
Amount
Fund Based CRISIL CRISIL CRISIL
LT 10.0 -- -- 04-11-22 06-12-21 --
Facilities BBB-/Stable BBB-/Stable BB+/Stable
Non-Fund Based
ST 20.0 CRISIL A3 -- -- 04-11-22 CRISIL A3 06-12-21 CRISIL A4+ --
Facilities
All amounts are in [Link].
Annexure - Details of Bank Lenders & Facilities
Facility Amount ([Link]) Name of Lender Rating
Cash Credit 10 CSB Bank Limited CRISIL BBB-/Stable
Letter of credit & Bank
20 CSB Bank Limited CRISIL A3
Guarantee
Criteria Details
Links to related criteria
Rating criteria for manufaturing and service sector companies
CRISILs Approach to Financial Ratios
Rating Criteria for Auto Component Suppliers
Criteria for notching down standalone ratings of companies based on support extended to parent
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