ICRA has reaffirmed the long-term rating of [ICRA]BB- (pronounced ICRA double B minus) assigned to Rs. 3.50 crore (revised from Rs. 2.50 crore) fund based limits and Rs. 8.50 crore (revised from Rs. 8.00 crore) non fund based limits of Sri Sai Leela Electrical Projects (SSLEP)*. The outlook on the long term rating is Stable.
The reaffirmation of the rating continues to be constrained by the firm’s modest scale of operations in executing electrical installations with revenues of ~Rs. 30 crore in FY2015; high working capital intensity owing to high receivables; and risks arising from partnership nature of the business. The rating is further constrained by the weak order book position of the firm at Rs. 23.2 crore (0.77 times FY15 revenues, adjusting for slow moving Uttar Pradesh project), high project concentration risk with single order forming ~57% of the order book size; and high geographic concentration risk, with the firm’s operations restricted mostly to Andhra Pradesh and Telangana.
The reaffirmation of the rating continues to be constrained by the firm’s modest scale of operations in executing electrical installations with revenues of ~Rs. 30 crore in FY2015; high working capital intensity owing to high receivables; and risks arising from partnership nature of the business. The rating is further constrained by the weak order book position of the firm at Rs. 23.2 crore (0.77 times FY15 revenues, adjusting for slow moving Uttar Pradesh project), high project concentration risk with single order forming ~57% of the order book size; and high geographic concentration risk, with the firm’s operations restricted mostly to Andhra Pradesh and Telangana.
The ratings reaffirmation favourably factors in the longstanding experience of the promoter in the execution of electrical installation works; stable operating margins at ~10% for the last 4 years; and comfortable leverage and coverage indicators with gearing at 1.13 times and NCA/Debt at 34% for FY2015.
Going forward, the firm’s ability to increase its scale of operations, diversify its order book and manage its working capital requirements effectively will be the key credit rating sensitivities.
Firm Profile
Sri Sai Leela Electrical Projects (SSLEP) was set up in the year 2007 as a partnership firm by Mr. Ravi Gummadi. The firm is a class-I electrical and civil contractor in Andhra Pradesh, Maharashtra & Karnataka executing projects involving EHT (Extra High Tension), HT & LT (Low Tension) substations, transmission lines, internal & external electrification and underground cabling works for private and government clients.
Recent Results
- As per the audited results for FY2015, the company reported profit before tax of Rs 2.14 crore on turnover of Rs 30.10 crore as against profit before tax of Rs 1.92 crore on turnover of Rs 28.14 crore during FY2014.
Recent Comments