ICRA Revises Electromech Material Handling Systems Rating to BBB+ (Stable)

Strategic Insights -

Electromech Material Handling Systems (India) Private Limited, a leading manufacturer of electric overhead travelling cranes, has seen a revision in its long-term rating from ICRA, a leading credit ratings agency. The revised rating, BBB+ (Stable), reflects the company's healthy operating performance in FY15, where it is expected to report a higher double-digit growth in operating income and improved profitability. The rating also takes into account the company's diversified customer profile, expanding product portfolio, and strong management profile.

Key Takeaways:

  • The revised long-term rating of BBB+ (Stable) reflects Electromech Material Handling Systems' healthy operating performance, diversified customer profile, and strong management profile.
  • The company's operating income is expected to grow by a double-digit percentage in FY15, with improved profitability.
  • The rating agency, ICRA, has reaffirmed the short-term rating of A2 for the company's short-term fund-based and non-fund-based facilities.
  • Electromech Material Handling Systems has a diversified customer profile, with a presence in various industries and geographies, including the Middle East and Africa.
  • The company has been expanding its product portfolio, with technological tie-ups with well-known European counterparts.
  • The rating is constrained by the company's exposure to capital investments in the manufacturing industries, which is susceptible to cyclicality.
  • The operating margins are also susceptible to intense competition and sizeable fixed overheads.
  • The company's working capital intensity has remained high over the years, but there has been some improvement in the working capital cycle in the current fiscal.

Statistics:

  • Operating Income: Rs. 130 crore in 9M FY15 (provisional financials)
  • Total installed manufacturing capacity: 1,500 cranes annually
  • Subsidiary setup: Cranedge (DUBAI), wholly-owned subsidiary in Mauritius (DUBAI - wholly-owned subsidiary)
  • Revenue exposure to capital investments in manufacturing industries: (cyclicality of industries)
  • Operating margins susceptible to intense competition and sizeable fixed overheads

Sources:

  • [ICRA] (Rating Agency)
  • Provisional financials of Electromech Material Handling Systems (India) Private Limited (9M FY15)
  • Company Profile: Electromech Material Handling Systems (India) Private Limited
  • Official announcements and press releases from Electromech Material Handling Systems (India) Private Limited

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