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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 31.00 | ACUITE BBB+ | Stable | Downgraded | - |
| Bank Loan Ratings | 139.00 | - | ACUITE A2 | Downgraded |
| Total Outstanding Quantum (Rs. Cr) | 170.00 | - | - |
| Total Withdrawn Quantum (Rs. Cr) | 0.00 | - | - |
| Rating Rationale |
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Acuité has downgraded the long-term rating to 'ACUITE BBB+' (read as ACUITE Triple B plus) from ‘ACUITE A-’ (read as ACUITE A minus) and short-term rating to ‘ACUITE A2’ (read as ACUITE A two) from ‘ACUITE A2+’ (read as ACUITE A two plus) on the Rs.170.00 crore bank facilities of Anish Infracon India Private Limited (AIIPL). The outlook is ‘Stable’.
Reason for Rating Downgrade The rating downgrade is on account of the moderation in operating performance of AIIPL, marked by subdued operating income, slower-than-anticipated build up of order pipeline as reflected in the modest orderbook position of Rs.328 Cr (unexecuted order value) as on November, 2022 and moderation in financial risk profile of the company. The operating income of AIIPL stood at Rs. 249.33 Cr in FY2022 as against Rs.275.21 Cr in FY2021. In 9MFY2023 the company has booked revenue of Rs. 138.20 Cr and is expected to close the year in the range of Rs.280-300 Cr. The company aims to achieve execution of upto Rs.150-165 Cr by the end of FY23 and is awaiting bid opening of new orders worth Rs.387.98 Cr as on date. Further, the financial risk profile of AIIPL moderated slightly in FY2022 marked by increased gearing and abated debt protection metrics. The overall gearing rose to 1.09 times as on March 31, 2022 as against 0.30 times as on March 31, 2021 while the interest coverage ratio stood at 8.03 times for FY22 as against 14.11 times for FY2021, though the debt protection measures continue to remain healthy. Further, it may be noted that the surge in gearing is primarily on account of increase in inter-company borrowings. The adjusted gearing ratio stood at 0.38 times as on March 31, 2022. Going forward, AIIPL's ability to scale up its operations on the back improved orderbook position while maintaining its profitability margins and financial risk profile will remain a key rating monitorable. |
| About the Company |
| Gujarat-based, AIIPL was established as a partnership firm in the year 1978 by Vijapura family. Subsequently, the constitution changed to private limited company in 2010. AIIPL is engaged in civil construction work such as, road construction work, sanctioned by the Central and the state government. Currently, AIIPL is working in the states of Gujarat, Maharashtra and Madhya Pradesh. |
| Analytical Approach |
| Acuité has considered the standalone business and financial risk profiles of the AIIPL to arrive at this rating. |
Key Rating Drivers
| Strengths |
| > Experienced management and long track record of operations
The operations of AIIPL commenced in 1978. The company is promoted by Vijapura family and promoters have experience of more than four decades in civil construction industry. Extensive experience of the promoters has helped the company in establishing and maintaining healthy relations with clients and sanctioning authorities. As on November, 2022 AIIPL's unexecuted orderbook value stood at Rs.328 Cr and is awaiting bid opening of new orders worth Rs.387.98 Cr. AIIPL has a healthy track record of timely order completion across its various special purpose vehicles (SPVs). Acuité believes that AIIPL will continue to benefit from promoters’ extensive experience in the industry and its improve its business risk profile over the medium term. > Healthy financial risk profile The financial risk profile of the Company is healthy marked by healthy net-worth, modest gearing and comfortable debt protection metrics. The tangible net-worth improved to Rs. 112.05 Cr as on March 31, 2022 as against Rs. 90.41 Cr as on March 31, 2021. The improvement is on account of accretion of profits to reserves and issue of equity share capital of Rs.3.00 Cr. The overall gearing stood at 1.09 times as on March 31, 2022 as against 0.30 times as on March 31, 2021. The increase in gearing is due to surge in total debt which stood at Rs. 122.57 Cr as on March 31, 2022 as against Rs.26.94 Cr as on March 31, 2021. As on March 31, 2022, the total debt comprised of Rs. 8.86 Cr of long term borrowing, Rs.8.08 Cr of unsecured loan from promoters and directors and short term debt of Rs. 105.67 Cr. The short term debt includes Rs. 79.56 Cr of inter-corporate borrowing from Karmala Road Project Private Limited (KRPPL). AIIPL along with its joint venture partner GHV (India) Private Limited (GIPL) has undertaken development, maintenance and management of National Highway No. – 561A in the state of Maharashtra to be executed on Design, Build, Operate and Transfer (DBOT), Hybrid Annuity Model basis under KRPPL. The EPC contract of the project is assigned to AIIPL and the debt availed from KRPPL will be written off over the course of construction period against EPC bills raised. As on December, 2022 the outstanding debt towards KRPPL stood at ~Rs.33 Cr. The adjusted gearing ratio, excluding the inter-corporate debt from KRPPL stood at 0.38 times as on March 31, 2022. The TOL to TNW ratio of AIIPL stands at 1.86 times as on March 31, 2022 as against 1.16 times as on March 31, 2021. The interest coverage stood at 8.03 times as on March 31, 2022 as against 14.11 times as on March 31, 2021. The DSCR stood at 5.84 times for FY2022 as against 6.52 times for FY2021.
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| Weaknesses |
| > Project execution risk
AIIPL undertakes civil projects for government entities. Further, timely completion of projects is dependent upon the time taken for handing over of land from the concerned authorities and for execution of work without any hindrances. The financial risk profile of AIIPL will be directly impacted due to any delays caused by the above two factors. Further, AIIPL, being a sponsor, would have to extend support to its SPVs, in case of any delays occur in the project execution or delays in receipt of Government grant. Further, the ability of the company to timely completion of a project will be a key rating sensitivity. > Competitive and fragmented industry AIIPL is into the business of civil construction. This particular sector is marked by the presence of several mid to big size players. AIIPL faces intense competition from the other players in the sectors. Risk become more pronounced as tendering is based on minimum amount of biding of contracts. However, this risk is mitigated to an extent as management has been operating in this environment for last four decades. |
| Rating Sensitivities |
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> Significant growth in operating performance leading to overall improvement in financial risk profile. > Elongation of working capital cycle leading to deterioration in liquidity position. |
| Material covenants |
| None |
| Liquidity Position |
| Adequate |
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Liquidity of AIIPL is adequate marked by sufficient net cash accruals in the range of Rs.20-22 crore for the period of FY2020-22 against repayment obligation of around Rs.0.40-1.35 crore over the same period. The Company is expected to generate net cash accruals in the range of Rs.28-32 Cr over the medium term against repayment obligations in the range of Rs.2-5 Cr. AIIPL’s working capital operations are intensive, as the company is catering to the government entities, marked by gross current asset (GCA) days of 295 in FY2022. The company maintains unencumbered cash and bank balances of Rs.16.82 crore as on March 31, 2022. The current ratio of the company stood at 1.23 times as on March 31, 2022. Acuité believes that the liquidity of the company will remain adequate over near to medium term on account of stable net cash accruals, low repayment obligations and absence of any major debt funded capex plans.
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| Outlook: Stable |
| Acuité believes AIIPL will maintain a 'Stable' outlook in the medium term on account of its experienced management and healthy financial risk. The outlook may be revised to 'Positive' in case of substantial growth in revenues with timely execution of orders. Conversely, the outlook may be revised to 'Negative' in case delays in receipt of new orders or detrioration of financial risk profile or stretch in working capital cycle. |
| Particulars | Unit | FY 22 (Actual) | FY 21 (Actual) |
| Operating Income | Rs. Cr. | 249.33 | 275.71 |
| PAT | Rs. Cr. | 18.64 | 16.62 |
| PAT Margin | (%) | 7.48 | 6.03 |
| Total Debt/Tangible Net Worth | Times | 1.09 | 0.30 |
| PBDIT/Interest | Times | 8.03 | 14.11 |
| 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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