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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 1.00 | ACUITE A | Stable | Assigned | - |
| Bank Loan Ratings | 100.00 | - | ACUITE A1 | Reaffirmed |
| Bank Loan Ratings | 24.00 | - | ACUITE A1 | Assigned |
| Bank Loan Ratings | 25.00 | ACUITE A | Stable | Reaffirmed | - |
| Total Outstanding Quantum (Rs. Cr) | 150.00 | - | - |
| Total Withdrawn Quantum (Rs. Cr) | 0.00 | - | - |
| Rating Rationale |
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Acuité has reaffirmed and assigned the long term rating of ‘ACUITE A’ (read as ACUITE A ) and also reaffirmed and assigned the short term rating of ‘ACUITE A1’ (read as ACUITE A one) on the Rs. 150 Cr bank facilities of Anupam Nirman Private Limited (ANPL). The outlook is ‘Stable’.
Rationale for the rating The rating factors in the improvement in the financial risk profile of ANPL led by deleveraging of its capital structure translating into negligible gearing and strong debt coverage indicators due to lower reliance on external debt apart from a sustained healthy operating performance. The ratings favourably factor in ANPL’s strong order book position providing healthy medium-term revenue visibility buoyed by strong execution capabilities. The rating reflects the extensive experience of the promoters in the construction industry, along with reputed client profile of the company. The rating also derives comfort from the adequate liquidity position of the company marked by unutilized lines of fund-based limits, sufficient accruals and efficient collection mechanism. These strengths are partially offset by moderate level of working capital intensity attributable to retention money blockage, order book concentration risks and geographical concentration. |
| About the Company |
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Incorporated in 2010, Anupam Nirman Private Limited (ANPL) is engaged in construction of roads and bridges for the state government of Assam and West Bengal, Central Government and Indian Railways. The business was started as a sole proprietorship firm in 1999 in the name of Anupam Sharma and changed constitution to a closely held company in 2010 with name changed to its current name. Currently, the company is headed by Mr. Anupam Sharma, Mr. Prakash Agarwal, Mr Anindya Sharma and Mr Ashok Agarwal, who all are promoter directors. ANPL is a registered contractor with various Public Works Department (PWD) departments in Assam and PWD departments in West Bengal, National Highway Works in Assam, National Building Construction Corporation (NBCC), National Projects Construction Corporation Limited (NPCC) and North East Frontier Railways.
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| Analytical Approach |
| Acuité has considered the standalone business and financial risk profiles of ANPL to arrive at the rating. |
Key Rating Drivers
| Strengths |
| Experienced management and established relationship with customers
Mr. Anupam Sharma is the leading promoter of the Company who is supported by other partners Mr. Prakash Agarwal, Mr. Anindya Sharma and Mr. Ashok Agarwal. Anupam Nirman Private Limited (ANPL) has a long operational track record of more than two decades in the civil construction industry, through their erstwhile proprietorship concern, Anupam Sharma, established in 1999. It has successfully completed various projects under different departments of government like rural development, water resources, National Highway, Railway, PWD, Assam Construction Corporation, National Building Construction Corporation (NBCC), National Projects Construction Corporation Limited (NPCC). The long standing experience of the promoter and long track record of operations has helped him 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 customers. Sound business risk profile supported by strong order book position The operating revenue of the company improved to Rs 519.98 Cr in FY 2022 (Provisional) as compared to Rs 393.84 Cr in FY 2021. Till September 2022, the company has been able to achieve a revenue of Rs. 282.17 Cr (Prov). However, high labour cost amid the economic slowdown and higher cost inventory kept the margin under pressure both in FY 2021 and FY2022. The profitability margins of the company declined with operating margin at 11.25 per cent in FY2022 (Provisional) as compared to 12.38 per cent in the previous year. The PAT margins also declined to 6.82 per cent as on FY2022 (Provisional) as against 718 per cent as on FY2021. The RoCE levels for the company stood comfortable at 28.24 per cent in 2022 (Provisional) as against 27.44 per cent in FY2021. Though the company’s profitability is exposed to volatility in raw material prices as their prices are volatile in nature, it has an in-built price escalation clause for major raw materials (such as steel, cement, fuel and bitumen) in most of its contracts. Going forward, the improvement in profitability margins will remain a key rating sensitivity. The company has a strong order book position with unexecuted orders in hand for infrastructure projects worth around Rs. 2220.15 crore which are to be executed in the upcoming two to three years, thereby providing strong revenue visibility in the medium term. Nearly 48.40 per cent of the Company’s order book comprises the road infrastructure, 25.22 per cent from the bridge construction, 5.76 per cent from the Indian Railways, 9.44 per cent from the building and 11.17 per cent from the water infrastructure. The orders are from both the central government and the state government of Assam. Acuité believes that the company will continue to sustain its order book position and maintain its business risk profile over the medium term. Improvement in credit metrics, led by accelerated deleveraging The considerable reduction in the debt levels following the repayment of term loans and conversion of major portion of unsecured loans into equity, lower working capital borrowings and a comfortable net worth position have supported the company’s healthy capital structure. The tangible net worth of the company improved to Rs.173.65 Cr as on March 31,2022 (provisional) from Rs.113.64 Cr as on March 31, 2021 mainly on account of an equity infusion of Rs. 24.54 Cr (Rs 0.29 Cr as Equity Share Capital and Rs 24.26 Cr securities premium) and the conversion of the unsecured loan along with accretion of reserves. Gearing of the company further improved to 0.11 times as on March 31, 2022 (provisional) as compared to 0.56 times as on March 31, 2021. With higher retained earnings and net worth, the Total outside Liabilities/Tangible Net Worth (TOL/TNW) improved to 1.24 times as on 31st March,2022 (prov.) as against 2.05 times as on 31st March, 2021. The strong debt protection metrics of the company is marked by Interest Coverage Ratio at 17.05 times and Debt Service coverage ratio at 3.20 times as on 31st March, 2022 (prov.). Net Cash Accruals/Total Debt (NCA/TD) stood high at 2.37 times as on 31st March, 2022 (prov.). Acuité believes that going forward the financial risk profile of the company will remain healthy backed by steady accruals and no major debt funded capex plans. |
| Weaknesses |
| Working capital intensiv e nature of operation
The working capital management of the company has improved in FY22, although marked by Gross Current Assets (GCA) of 167 days in 31st March 2022 (prov) as compared to 216 days on 31st March with increased efficiencies in inventory and debtor management. The high GCA days are mainly led by significant margin money and retentions kept by the tendering authorities. Moreover, the retention amount in PWD projects cannot be released before the completion of the projects, with a portion remaining blocked during the defect liability period as well. The debtor period stood low at 12 days as on March 31, 2022 (Provisional) as compared to 16 days as on March 31, 2021. The receivables cycle has improved, with payments received in 5-10 days from billing, which supports the working capital management. Further, the inventory holding is low at 9 days as on March 31, 2022 (Provisional) as compared to 27 days as on March 31, 2021. The company focuses on easy mobilisation of its resources, thereby improving the turnaround time and reducing the idleness of machinery and equipment. Acuité believes that the working capital operations of the company will remain almost at the same levels as evident from efficient collection mechanism and low inventory levels over the medium term. Nonetheless, the company has substantial dependence on its suppliers and creditors to support the working capital; creditors stood high at 164 days as on March 31, 2022 (Provisional). Sustained improvement in creditors will remain a key monitorable. |
| Rating Sensitivities |
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| Material covenants |
| None |
| Liquidity Position: Strong |
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Liquidity is strong, supported by adequate cash accruals, unutilised bank lines, and adequate cash and cash equivalents. The net cash accruals stood at Rs. 46.98 Cr as on March 31, 2022 (Provisional) as against debt repayment of Rs. 12.16 Cr. over the same period. The large portion of its security deposits are being met through deposit from subcontractor (in proportionate to given work), which partly funds the working capital requirements of the company and therefore lower requirement of funds in business. As a result, the fund-based limit of Rs 25 Cr. was hardly utilized during the 9 months through September 2022. The cash and bank balances of the company stood at Rs.78.68 Cr as on March 31, 2022 (Provisional), of this Rs.77.11 Cr is retained as cash credit account balance and remaining as unencumbered cash. The current ratio stood comfortable at 1.46 times as on March 31, 2022 (Provisional). However, the non-fund based limit remained highly utilized at ~88.39 per cent over the nine months ended September, 2022. Moreover, the working capital intensive management of the company is marked by Gross Current Assets (GCA) of 167 days in 31st March 2022 (Provisional) as compared to 216 days in 31st March 2021. Acuité believes that going forward the company will maintain adequate liquidity position due to steady accruals.
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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 experience of the promoters, long track record and healthy order book position. The outlook may be revised to ‘Positive’ in case the company continues to register consistent growth in revenues while achieving sustained improvement in operating margins, capital structure and working capital management. Conversely, the outlook may be revised to ‘Negative’ in case of deterioration in the company’s financial risk profile and liquidity position or delay in completion of its projects or further deterioration in its working capital cycle.
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 22 (Provisional) | FY 21 (Actual) |
| Operating Income | Rs. Cr. | 519.98 | 393.84 |
| PAT | Rs. Cr. | 35.47 | 28.29 |
| PAT Margin | (%) | 6.82 | 7.18 |
| Total Debt/Tangible Net Worth | Times | 0.11 | 0.56 |
| PBDIT/Interest | Times | 17.05 | 10.93 |
| Status of non-cooperation with previous CRA (if applicable) |
| None |
| 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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