Elmech Engineers ICRA has assigned a SP 3C grading* to Elmech Engineers indicating ‘Moderate Performance Capability’ and ‘Moderate Financial Strength’ of the channel partner to undertake solar projects. The grading is valid for a period of two years from the date of assignment of grading i.e. till March 19, 2017 after which it will be kept under surveillance. Grading Drivers Strengths Technical and manpower training agreement of the business group with Tata Power Solar Systems Limited (graded SP1A by ICRA) Authorization given to the firm by Tata Power Solar Systems Limited for participating in tenders on its behalf mitigates the business risks of a new entrant and provides additional comfort to the grading Long track record in power equipment assembling business although largely in diesel generator (DG) systems; existing technical and management team would be utilized for solar business as well Existing set up of marketing offices across major cities in India is likely to lend strength to operation and maintenance capability for solar business Risk Factors Lack of experience of execution of projects in the solar photovoltaic space, mitigated to an extent by the technical agreement in place Adverse outside liabilities relative to networth position as on March 31, 2014 coupled with low interest coverage indicators, that limits the overall financial strength of the firm Large number of organized and unorganized players in the solar power sector making it highly competitive Year of Establishment Office Address Fact Sheet Partners * 1979 Plot No-6, Jayshree Complex, Alampur, P.O:Newkalorah, N.H-6, Distt-Howrah, West Bengal-711302 Mr. Ashutosh Mohan Mr. Paritosh Mohan M/s. Elmech Gensets Pvt Ltd Incorporated in 1979, Elmech Engineers (EE) is a partnership firm with two partners Mr Ashutosh Mohan and Mr Paritosh Mohan. The firm is an Authorized Genset Original Equipment Manufacturer (AGOEM) of Kirloskar (Kirloskar Oil Engines Limited) brand DG Sets and supply to government and semi government institutions across India. Group Entity: Generons Power Private Limited (GPL) is a company wherein Mr. Ashutosh Mohan and Mr. Paritosh Mohan are shareholders with 50% shareholding each. Tata Power Solar Systems Limited (TPSSL) has entered into an agreement with GPL and appointed the same as a Value Added Reseller (VAR) for integration of TPSSL solar photo voltaic (SPV) systems. TPSSL has also authorized EE to participate in government tenders for integration of Tata Power Solar brand PV systems. The grading is for Solar PV SI Related Business – Moderate Performance Capability Promoters’ Track Record: The partners of the firm have strong academic background and extensive experience in the power sector which includes assembling of DG sets. However, the business group, including the firm, is a new entrant in the solar photovoltaic space and has not executed any projects in solar business as yet. Technical competence and adequacy of manpower: The firm has a pool of technically qualified management staff and support staff with long standing experience in power sector. The entity has an existing facility at Kolkata for assembling of DG sets armed with testing equipment for testing of SPV systems. The agreement of the group company with TPSSL provides for technical and manpower training to strengthen the execution capabilities of the firm in SPV space. Authorization given to the firm by TPSSL for participating in tenders on its behalf mitigates the business risks of a new entrant and provides additional comfort to the grading. Quality of suppliers and tie ups: The major components in a SPV system are solar panel, inverter, battery, control panel. Panel would be obtained from TPSSL carrying a standard MNRE warranty on the product. The inverter and other parts would be obtained from vendor as prescribed in customer contracts/ approved by TPSSL. ICRA takes comfort from TPSSL’s experience in the sector, which would benefit the firm in choosing its vendors. Customer and O&M Network: EE has not executed any SPV project as yet. However, as stated by the management, the firm proposes to bid for tenders floated by government departments. Since, the firm is one of the largest suppliers of DG sets to government and paramilitary forces, the firm already shares a business relationship with these government departments. EE has sales offices/support staff at 11 locations across India including major cities like Kolkata, Delhi, Mumbai, Bangalore, Guwahati, Pune, Bhubaneshwar, thus, lending support to the operations and maintenance capabilities. Financial Strength – Moderate Revenues Return on Capital Employed (RoCE) Total Outside Liabilities/Tangible Net worth Interest Coverage Ratio Net-Worth (Entity) Current Ratio Relationship with bankers The revenue was favorable at Rs 63.17 crores in FY14. However, the entire revenue was registered from the firm’s existing business as it is yet to execute any solar project Moderate return on capital employed of 8.51% during 2013-14, which improved from 4.91% in 2012-13. The improvement was because of overall improvement in profitability The ratio stood at high level of 2.56 time as on March 31, 2014, due to its high level of trade creditors Adverse interest cover ratio of 0.88 time as on March 31, 2014, which although was an improvement from -1.21 registered during 2012-13 The net worth of the entity was comfortable at Rs 20.61 crore as on 31 March 2014 The ratio was moderate at 1.37 time as on March 31, 2014 which however decreased from 1.60 time registered as on March 31, 2013 Positive feedback has been received The overall financial profile of the firm is Moderate. March 2015 For further details please contact: Analyst Contacts: Mr. Jayanta Roy, (Tel. No. +91-33-22876617 / 22800008) [email protected] Relationship Contacts: Mr. Jayanta Chatterjee (Tel. No. +91 33 7150 1100) [email protected] © Copyright, 2015, ICRA Limited. All Rights Reserved. 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