­Experienced management and established track record of operations
Incorporated in the year 2002 as a partnership firm and later reconstituted as a private limited company in the year 2010, the company has a long track record of operation of about two decades as a façade contractor. The company is promoted by Mr. Jawahar Hariram Hemrajani and Mr. Kamlesh Arjunlal Choudhari who have an experience of more than two decades in the same business. The promoters of the company are ably assisted by a second line of management which constitutes a large team of qualified and experienced professionals who manages the day-to-day operation of the company. The industry is very niche, followed by majority of the unorganized players. However, there are very limited organized renowned players who undertake the façade construction work, thereby limiting the competition among the big players and having the advantage of higher bargaining power. The company is the only Façade contractor in India with an ISO 14001:2015 certification qualifying it to be environmental friendly. The company also has ISO 9001:2015 certification. The company has completed an array of projects from all real estate segments-residential, commercial and retail. Some of the renowned projects of the company include Antilia, Reliance Petroleum Headquarter, One Indiabulls Finance Center, L&T Infotech Building and subcontracted façade work for Wankhade Stadium and 'World One'. Acuité believes that the company will benefit from the management experience, long track record of operations and reputed clientele, over the medium term.

Moderate order book position
GWSIPL has an unexecuted order book position of ~Rs.537 Cr as on June 30,2023. Of the total, ~Rs. 300 Cr are international orders. Also, the company is trying to bid for more international orders in medium term. The company has a reputed clientele base including Bagmane Developers Private Limited, L&T Limited, Indiabull and Monzoon Towers. The moderate order book position provides adequate revenue visibility.

­Average financial risk profile
The tangible net worth of the company stood at Rs. 93.84 crore as on March 31, 2023, as against the net worth of Rs.94.47 crore as on March 31, 2022, and Rs.155.61 crore as on March 31, 2021. The company follows a conservative financial policy. The gearing of the company stood at 0.50 times as on March 31, 2023, as against gearing of 0.63 times as on March 31, 2022, and 0.24 times as on March 31, 2021. The total debt of the company stood at Rs.47.01 crore consisting of long-term debt of Rs.9.49 crore and short-term debt of Rs.35.96 crore as on March 31, 2023. The company has reduced the bank limits in FY23 and are expected to reduce the limits further in medium term. The interest coverage ratio stood at 1.40 times for FY2023 as against (10.41) times in FY2022 and (2.07) times in FY2021. The DSCR stood at 1.40 times in FY2023 as against (10.63) times in FY2022 and (1.20) times in FY2021. Acuite believes that the ability of the company to improve its financial risk profile will remain monitorable in medium term.

Deterioration in operating performance
The operating income of the company declined and stood at Rs.240.51 crore in FY2023 as against Rs.256.55 crore in FY2022 and Rs.89.58 crore in FY2021. The order book stood at Rs.537 crore as on June 30, 2023. The operating margins stood at 4.27 percent for FY23 as against (20.66) percent in FY2022 and (26.86) percent in FY2021. The margins of the company had declined in FY22 due to high aluminium prices and the increase in the other raw material prices. The company was not able to pass on the raw material price escalation to the customers. However, from FY23 the company has started including the raw material escalation clause due to which the margins are protected to some extent in FY23. There was also an increase in other costs like subcontracting charges, bad debts written off, etc in FY22. The PAT margins stood at 0.09 percent in FY2023 as against (23.50) percent in FY2022 and (27.18) percent in FY2021. Acuite believes that the ability of the company to improve the operating performance in medium term will remain key rating monitorable.

Working capital intensive nature of operations
The operations of the company are working capital intensive as evident from the GCA days of 271 days in FY2023 as against 239 days in FY2022 and 827 days in FY2021. The inventory days stood at 34 days in FY2023 as against 24 days in FY2022 and 47 days in FY2021. The average inventory holding period is around 60 days. The debtors’ days stood at 154 days in FY2023 as against 129 days in FY2022 as against 434 days in FY2021. The average credit period allowed to the customers is around 45 days. The company has changed its financial policy to taking advances from the customers, which supports its working capital requirements. The creditors days stood at 122 days in FY2023 as against 106 days in FY2022 and 376 days in FY2021. The average credit period received from the customers is around 60-90 days. The average bank limits utilization is high at ~82 percent for last 6 months ended July 2023. Acuite believes the ability of the company to improve its working capital management will remain key rating sensitivity in medium term.

Exposure to risk related to cyclical nature of real estate industry
The company caters to all the segments of real estate sector. However, there is a risk associated to the residential segment in terms of realization of payment. The residential real estate segment is subject to the cyclical nature of real estate business (drop in property prices) and interest rate risk, among others, which could affect the operations of the developer, delaying payments to GWSIPL. However, to mitigate the risk of real estate cyclicality the company is currently focusing on the infrastructural projects (Commercial and Corporate Parks) from institutional clients having better credit quality and diversifying to exports.