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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 31.00 | ACUITE BBB | Stable | Reaffirmed | - |
| Bank Loan Ratings | 20.00 | - | ACUITE A3+ | Assigned |
| Bank Loan Ratings | 115.00 | - | ACUITE A3+ | Reaffirmed |
| Total Outstanding | 166.00 | - | - |
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Rating Rationale |
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Acuité has reaffirmed the long-term rating to ‘ACUITE BBB’ (read as ACUITE triple B) and short-term rating to 'ACUITE A3+' (read as ACUITE A three plus) to the Rs.146.00 Cr. bank facilities of Amar Infrastructure Limited. The outlook is ‘Stable'.
Acuité has assigned the short-term rating of 'ACUITE A3+' (read as ACUITE A three plus) to the Rs.20.00 Cr. bank facilities of Amar Infrastructure Limited. Rationale for reaffirmation: The rating takes into account the improved operating performance and healthy financial risk profile of AIL. The operating income of AIL has been consistently growing since the last two years ended FY2023. The Company's revenue stood at Rs.380.84 Cr. in FY2023 as against Rs. 172.16 Cr. in FY2022. The operating margins ranged between 13.38-10.53 percent for the last two years ended FY2023. The ratings are supported by AIL’s comfortable order book position of Rs. 1355.10 Cr. as on February 29, 2024, which is ~3.56 times of the FY2023 revenue which provides medium-term revenue visibility. The financial risk profile of AIL continues to be healthy with healthy debt protection metrics and minimal gearing. The overall gearing of the Company stood at 0.69 times as on March 31, 2023 as against 0.74 times as on March 31, 2022. The interest coverage ratio stood at 5.13 times in FY2023 as against 5.08 times in FY2022.
The rating is constrained by working capital intensive operations, exposure to execution-related risks, tender-driven nature of the business.
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| About the Company |
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Incorporated in 2009, Amar Infrastructure Limited (AIL) is a Chhattisgarh based company engaged in the construction of roads, bridges, buildings, infrastructure development across the country for last 32 years. The current directors are Mr. Surendra Rathi, Mr. Narendra Rathi, Mr. Sushil Chandak Kumar, Mr. Purushottam Das Bhutda and Ms. Meena Bhutda.
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| Unsupported Rating |
| Not applicable |
| Analytical Approach |
| Acuité has considered the standalone business and financial risk profile of AIL while arriving at the rating. |
| Key Rating Drivers |
| Strengths |
AIL has a track record of more than three decades in the construction sector. The company is promoted by Mr. Chaturbhuj Rathi, Mr. Narendra Rathi and Mr. Surendra Rathi, who have an experience of over three decades in civil construction work. They are well supported by a team of experienced and qualified professionals. It has successfully completed various projects under different departments of government like M.P. Public Works Deptt., Bhopal, C.G. Public Works Deptt., South Eastern Railway, C.G. Water Resources Division, C.G. Housing Board and NHAI. The long-standing experience of the promoter and long track record of operations has helped the company to establish comfortable relationships with key suppliers and reputed customers. Acuité believes that the long track record and rich experience of the promoters augur well for the relationship with their key suppliers and customer.
The revenue of the company improved to Rs. 380.84 Cr. in FY2023 as against Rs.172.16 Cr. in FY2022 registering a growth of 121 percent y-o-y basis. The reason behind the improvement in the revenues is due to better execution of projects and healthy orders. Till February 2024, the company has been able to achieve a revenue of Rs. 325.01 Cr. The operating margins of the company declined to 10.53 per cent in FY2023 as compared to 13.38 per cent in the previous year on account of increase in raw material prices which could not immediately be passed on to the customers. The PAT margins increased to 5.70 per cent as on FY2023 as against 8.69 per cent as on FY2022. The company having an unexecuted order book position of Rs.1355.10 Cr. as on February 29, 2024. The outstanding order book is 3.56x of the FY2023 revenue. Going forward, the improvement in profitability margins will remain a key rating sensitivity. Acuité believes that the company will continue to sustain its order book position and maintain its business risk profile over the medium term.
The financial risk profile of the company is healthy marked by healthy networth, low gearing and healthy debt-protection metrics. The tangible net worth of the company improved to Rs. 104.19 Cr. as on March 31, 2023 from Rs. 82.47 Cr. as on March 31, 2022 on account of accretion to reserves. Gearing stood at 0.69 times in FY2023 as against 0.74 times in FY2022. The debt-protection metrics of the company are healthy marked by interest coverage ratio (ICR) of 5.13 times in FY2023 as against 5.08 times in FY2022 and debt-service coverage ratio (DCSR) of 2.41 times in FY2023 as against 4.14 times in FY2022. The total outside liabilities to total tangible net worth (TOL/TNW) improved to 1.53 times in FY2023 as against 1.68 times in FY2022. The debt to EBITDA of the company stood at 1.57 times as on March 31, 2023 as against 1.93 times as on March 31, 2022. Going forward, Acuite believes the financial risk profile of the company will remain healthy on account of steady net cash accruals and no major debt funded capex plan over the near term.
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| Weaknesses |
The operations of the company are of working capital-intensive nature marked by high GCA days The Gross Current Asset (GCA) days stood at 170 for FY2023 as against 282 days for FY2022. However, GCA days improved as compared in FY2023 from FY2022. The inventory days stood at 9 days for FY2023 as against 33 days for FY2022. The debtor days stood at 49 days for FY2023 as against 74 days for FY2022. Subsequently, the payable period stood at 74 days as on March 31, 2023 as against 78 days as on March 31, 2022 respectively. The average bank limit utilisation of the fund based working capital limits stood at 86 percent and 41 percent for Non- fund based limits for past 11 months ended February 2024.
Major raw materials used in civil construction activities are steel & cement and in road construction activities are stone, asphalt/bitumen and sand which are usually sourced from large players/dealers at proximate distances. The raw material & labour cost forms the majority chunk of the total cost of sales for the last three years. As the raw material prices & labour cost are volatile in nature, the profitability of the company is subject to fluctuation in raw material prices & labour cost. However, the company has an in-built price variation clause for major raw materials like cement, bitumen & steel in majority of its contracts which protects its margin to an extent.
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| Rating Sensitivities |
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| Liquidity Position: Adequate |
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The liquidity position of the company is adequate marked by sufficient net cash accruals against the maturing debt obligations. The company generated net cash accruals of Rs. 30.52 Cr. against maturing debt obligation of Rs. 7.45 Cr. Going ahead, the net cash accruals are expected to be in the range of Rs. 34.77-39.60 Cr. against the debt obligations of Rs. 6.02-10.83 crore during the period FY2024-2025. The current ratio of the company stood at 1.34 times in FY2023 and the unencumbered cash and bank balance stood at Rs.6.40 Cr. as on March 31,2023. Acuité believes that the liquidity of the company is likely to remain adequate over the medium term on account of comfortable cash accruals against long debt repayments over the medium term.
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| Outlook: Stable |
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Acuité believes the company’s outlook will remain 'stable' over the medium term on account of its experienced management, moderate business risk profile and financial risk profile. The outlook may be revised to 'Positive' in case the company registers higher than expected growth in revenues while sustaining its operating margins. Conversely, the outlook may be revised to 'Negative' in case of further decline in revenues or stretch in working capital cycle leading to deterioration in the liquidity position of the company.
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 23 (Actual) | FY 22 (Actual) |
| Operating Income | Rs. Cr. | 380.84 | 172.16 |
| PAT | Rs. Cr. | 21.72 | 14.96 |
| PAT Margin | (%) | 5.70 | 8.69 |
| Total Debt/Tangible Net Worth | Times | 0.69 | 0.74 |
| PBDIT/Interest | Times | 5.13 | 5.08 |
| Status of non-cooperation with previous CRA (if applicable) |
| Not applicable |
| Any other information |
| None |
| Applicable Criteria |
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• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm • Infrastructure Sector: https://www.acuite.in/view-rating-criteria-51.htm • Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm |
| Note on complexity levels of the rated instrument |
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In order to inform the investors about complexity of instruments, Acuité has categorized such instruments in three levels: Simple, Complex and Highly Complex. Acuite’ s categorisation of the instruments across the three categories is based on factors like variability of the returns to the investors, uncertainty in cash flow patterns, number of counterparties and general understanding of the instrument by the market. It has to be understood that complexity is different from credit risk and even an instrument categorized as 'Simple' can carry high levels of risk. For more details, please refer Rating Criteria “Complexity Level Of Financial Instruments” on www.acuite.in.
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