`SP 3C` grading to Elmech Engineers

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)
jayanta@icraindia.com
Relationship Contacts:
Mr. Jayanta Chatterjee (Tel. No. +91 33 7150 1100)
jayantac@icraindia.com
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