ICRA Reaffirms Ratings for Thermax Engineering Construction Company Limited

Strategic Insights -

Thermax Engineering Construction Company Limited (TECC), a wholly-owned subsidiary of Thermax Limited, has had its ratings reaffirmed by ICRA Limited. The ratings, which include a long-term non-fund-based instrument rating of [ICRA]AA+(SO) and a long-term fund-based cash credit limit rating of [ICRA]AA, reflect the company's strong parentage and operational, financial, and managerial linkages with Thermax Limited. ICRA notes that TECC's business risk profile is supported by its long-standing experience in erection and installation of boiler and heaters, as well as its large orders received in FY14, which provided revenue visibility in the near term.

Key Takeaways:

  • TECC's long-term non-fund-based instrument rating of Rs. 90.00 crore has been reaffirmed at [ICRA]AA+(SO), with a stable outlook.
  • The rating reflects the company's strong parentage and operational, financial, and managerial linkages with Thermax Limited.
  • ICRA notes that TECC's business risk profile is supported by its long-standing experience in erection and installation of boiler and heaters, as well as its large orders received in FY14, which provided revenue visibility in the near term.
  • The company's prospects over the long term are exposed to its inherent cyclicality, and the recent slowdown in order inflows has impacted its working capital intensity and resultantly cash flow position.
  • TECC is expecting order inflow position to improve in the second half of the current fiscal, which will lend support to its working capital position.
  • The company's cash and liquid investments improved considerably in FY15, and hence working capital facilities remained largely unutilized.

Statistics:

  • Operating income of Rs. 205.5 crore and PAT of Rs. 5.8 crore for the twelve months ended March 31, 2015.
  • 17 years of operation as a wholly-owned subsidiary of Thermax Limited.
  • Rs. 7.00 crore in fund-based cash credit limits.
  • Rs. 90.00 crore in long-term, non-fund-based bank facilities.
  • 40+ countries supported by Thermax's products and systems.

Sources:

  • ICRA Limited (For further details, please contact: Analyst Contacts: Mr. Subrata Ray, Tel. No. +91 22 6114 3408, subrata@icraindia.com)
  • Thermax Limited's website (www.thermax.co.in)