PR

Press Release
HIGHWAY INFRASTRUCTURE LIMITED
August 18, 2023
Rating Reaffirmed & Withdrawn and Withdrawn

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
Bank Loan Ratings	32.29	ACUITE BBB \| Reaffirmed & Withdrawn	-
Bank Loan Ratings	0.51	Not Applicable \| Withdrawn	-
Bank Loan Ratings	78.30	-	ACUITE A2 \| Reaffirmed & Withdrawn
Total Outstanding Quantum (Rs. Cr)	0.00	-	-
Total Withdrawn Quantum (Rs. Cr)	111.10	-	-

Rating Rationale

Acuité has reaffirmed and withdrawn the long-term rating of 'ACUITE BBB' (read as ACUITE triple B) and the short-term rating of 'ACUITE A2' (read as ACUITE A two) on the Rs.110.59 Cr. bank facilities and has withdrawn the proposed long term rating of Rs. 0.51 Cr. bank facilities of Highway Infrastructure Limited (HIL).

The rating withdrawal is in accordance with Acuité's policy on withdrawal of rating. The rating is being withdrawn on account of request received from the company and NOC received from the banker.

Rationale for reaffirmation
The rating reaffirmation takes into account the sustenance of the operating performance and financial risk profile of the company. The revenue of the company stood at Rs. 268.22 Cr. in FY2023(prov.) as against Rs. 291.80 Cr. in FY2022. The operating profit margin improved to 7.17% in FY2023(prov.) as against 5.80% in FY2022. The financial risk profile of the company continues to be moderate marked by moderate networth, moderate debt protection metrics and low gearing level. The tangible net worth of the company stood at Rs. 73.57 Cr. as on March 31, 2023(prov.) as against Rs.62.31 Cr. as on March 31, 2022. The company follows a conservative leverage policy as reflected in its gearing of 0.57 times as on March 31, 2023 (prov.) as against 0.68 times as on March 31, 2022. The rating, however, remains constrained on account of working capital-intensive operations

About the Company

Indore-based, HIL was incorporated in 2006 by the Agarwal and Jain family. The company is currently headed by Mr. Anoop Agarwal and Mr. Arun Kumar Jain. HIL is engaged in executing infrastructural construction projects for roads, bridges and buildings etc. Along with that, another line of business is real estate project development and toll projects.

Analytical Approach

Acuité has taken a standalone view of the business and financial risk profile of HIL to arrive at the rating.

Key Rating Drivers

Strengths

Experienced promoters and long track record of operations
HIL is promoted by Mr. Anoop Agarwal and Mr. Arun Kumar Jain. The promoters have a combined experience over 50 years in the construction industry. The top management of the company is aided by an equally experienced second line of management personnel. The company has been able to establish long and healthy relationship with its customers and suppliers owing to the promoter`s rich experience and the long track record of operations of over 15 years. Further, HIL has diversified its revenue streams into real estate projects and toll projects.

The revenue of the company stood at Rs. 268.22 Cr. in FY2023(prov.) as against Rs. 291.80 Cr. in FY2022. However, the operating profit margin improved to 7.17% in FY2023(prov.) as against 5.80% in FY2022. The PAT margin stood at 4.21% in FY2023 (prov.) as against 2.84% in FY2022.

Acuité believes HIL will continue to benefit over the medium term from its longstanding association with its key supplier as well as customers.

Moderate Financial Risk Profile
The financial risk profile of the company is moderate marked by moderate networth, moderate debt protection metrics and low gearing level. The tangible net worth of the company stood at Rs. 73.57 Cr. as on March 31, 2023(prov.) as against Rs.62.31 Cr. as on March 31, 2022. The company follows a conservative leverage policy as reflected in its gearing of 0.57 times as on March 31, 2023 (prov.) as against 0.68 times as on March 31, 2022. The debt protection metrics are moderate with interest coverage ratio (ICR) of 4.67 times for FY2023(prov.) as against 3.44 times for FY2022. The debt service coverage ratio (DSCR) stood at 2.33 times for FY2023(prov.) as against 2.00 times for FY2022.

Acuité believes that the financial risk profile of the company is expected to remain moderate backed by moderate net cash accruals.

Weaknesses

Working Capital intensive nature of operations
The operations of the company are of working capital intensive nature marked by high gross current asset (GCA) days. The GCA days stood at 127 days for FY2023(prov.) as against 121 days for FY2022. The inventory days stood at 59 days for FY2023 (prov.) as against 64 days for FY2022. The debtor days stood at 33 days for FY2023(prov.) as against 20 days for FY2022. The creditor days stood at 11 days for FY2023(prov.) as against 14 days for FY2022.

Rating Sensitivities

Growth in revenue with sustainability of the profitability margins.
Any deterioration of its financial risk profile and liquidity position.
Any elongation of the working capital cycle leading to deterioration in debt protection metrics.

Material covenants

None

Liquidity Position

Adequate

The liquidity position of the company is adequate marked by adequate net cash accruals against its maturing debt obligations. The company generated net cash accrual of Rs. 13.79 Cr. in FY2023(prov.) as against maturing debt obligations of Rs. 3.18 Cr. The cash and bank balance stood at Rs. 0.30 Cr. as on March 31, 2023(prov.).

Outlook : Not Applicable

Other Factors affecting Rating

None

Key Financials

Particulars	Unit	FY 23 (Provisional)	FY 22 (Actual)
Operating Income	Rs. Cr.	268.22	291.80
PAT	Rs. Cr.	11.29	8.29
PAT Margin	(%)	4.21	2.84
Total Debt/Tangible Net Worth	Times	0.57	0.68
PBDIT/Interest	Times	4.67	3.44

Status of non-cooperation with previous CRA (if applicable)

Brickworks vide its press release dated 31st March 2023, had downgraded the company to BWR B+/Stable/A4; Issuer Not Cooperating.

Any other information

None

Applicable Criteria

• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm
• Entities In Manufacturing Sector:- https://www.acuite.in/view-rating-criteria-59.htm
• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm

Note on complexity levels of the rated instrument

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.

Rating History

Date	Name of Instruments/Facilities	Term	Amount (Rs. Cr)	Rating/Outlook
24 May 2022	Cash Credit	Long Term	5.00	ACUITE BBB \| Stable (Reaffirmed)
	Working Capital Term Loan	Long Term	0.95	ACUITE BBB \| Stable (Reaffirmed)
	Working Capital Term Loan	Long Term	0.68	ACUITE BBB \| Stable (Reaffirmed)
	Cash Credit	Long Term	4.00	ACUITE BBB \| Stable (Reaffirmed)
	Bank Guarantee	Short Term	10.40	ACUITE A2 (Reaffirmed)
	Working Capital Demand Loan	Long Term	0.25	ACUITE BBB \| Stable (Reaffirmed)
	Cash Credit	Long Term	1.00	ACUITE BBB \| Stable (Reaffirmed)
	Bank Guarantee	Short Term	25.00	ACUITE A2 (Reaffirmed)
	Cash Credit	Long Term	0.10	ACUITE BBB \| Stable (Reaffirmed)
	Bank Guarantee	Short Term	3.00	ACUITE A2 (Reaffirmed)
	Proposed Bank Facility	Long Term	0.51	ACUITE BBB \| Stable (Reaffirmed)
	Dropline Overdraft	Long Term	8.20	ACUITE BBB \| Stable (Reaffirmed)
	Bank Guarantee	Short Term	5.00	ACUITE A2 (Reaffirmed)
	Cash Credit	Long Term	10.00	ACUITE BBB \| Stable (Reaffirmed)
	Bank Guarantee	Short Term	19.90	ACUITE A2 (Reaffirmed)
	Bank Guarantee	Short Term	15.00	ACUITE A2 (Reaffirmed)
	Working Capital Term Loan	Long Term	2.11	ACUITE BBB \| Stable (Reaffirmed)
11 Mar 2022	Working Capital Term Loan	Long Term	2.11	ACUITE BBB \| Stable (Reaffirmed)
	Cash Credit	Long Term	10.00	ACUITE BBB \| Stable (Assigned)
	Working Capital Term Loan	Long Term	0.95	ACUITE BBB \| Stable (Reaffirmed)
	Cash Credit	Long Term	1.00	ACUITE BBB \| Stable (Assigned)
	Bank Guarantee	Short Term	15.00	ACUITE A2 (Assigned)
	Bank Guarantee	Short Term	19.90	ACUITE A2 (Reaffirmed)
	Cash Credit	Long Term	4.00	ACUITE BBB \| Stable (Reaffirmed)
	Bank Guarantee	Short Term	10.40	ACUITE A2 (Reaffirmed)
	Bank Guarantee	Short Term	25.00	ACUITE A2 (Reaffirmed)
	Bank Guarantee	Short Term	5.00	ACUITE A2 (Assigned)
	Cash Credit	Long Term	10.00	ACUITE BBB \| Stable (Reaffirmed)
	Bank Guarantee	Short Term	3.00	ACUITE A2 (Assigned)
	Working Capital Term Loan	Long Term	0.68	ACUITE BBB \| Stable (Reaffirmed)
	Working Capital Demand Loan	Long Term	0.50	ACUITE BBB \| Stable (Assigned)
	Proposed Bank Facility	Long Term	0.26	ACUITE BBB \| Stable (Assigned)
	Cash Credit	Long Term	0.10	ACUITE BBB \| Stable (Reaffirmed)
	Dropline Overdraft	Long Term	3.20	ACUITE BBB \| Stable (Assigned)
02 Feb 2021	Bank Guarantee	Short Term	25.00	ACUITE A2 (Assigned)
	Working Capital Term Loan	Long Term	0.68	ACUITE BBB \| Stable (Assigned)
	Cash Credit	Long Term	0.10	ACUITE BBB \| Stable (Assigned)
	Cash Credit	Long Term	4.00	ACUITE BBB \| Stable (Assigned)
	Cash Credit	Long Term	10.00	ACUITE BBB \| Stable (Assigned)
	Bank Guarantee	Short Term	15.50	ACUITE A2 (Assigned)
	Working Capital Term Loan	Long Term	2.11	ACUITE BBB \| Stable (Assigned)
	Working Capital Term Loan	Long Term	0.95	ACUITE BBB \| Stable (Assigned)
	Bank Guarantee	Short Term	19.90	ACUITE A2 (Assigned)

Annexure - Details of instruments rated

Lender’s Name	ISIN	Facilities	Date Of Issuance	Coupon Rate	Maturity Date	Quantum (Rs. Cr.)	Complexity Level	Rating
HDFC Bank Ltd	Not Applicable	Bank Guarantee/Letter of Guarantee	Not Applicable	Not Applicable	Not Applicable	10.40	Simple	ACUITE A2 \| Reaffirmed & Withdrawn
Axis Bank	Not Applicable	Bank Guarantee/Letter of Guarantee	Not Applicable	Not Applicable	Not Applicable	25.00	Simple	ACUITE A2 \| Reaffirmed & Withdrawn
Axis Bank	Not Applicable	Bank Guarantee/Letter of Guarantee	Not Applicable	Not Applicable	Not Applicable	3.00	Simple	ACUITE A2 \| Reaffirmed & Withdrawn
Yes Bank Ltd	Not Applicable	Bank Guarantee/Letter of Guarantee	Not Applicable	Not Applicable	Not Applicable	19.90	Simple	ACUITE A2 \| Reaffirmed & Withdrawn
Yes Bank Ltd	Not Applicable	Bank Guarantee/Letter of Guarantee	Not Applicable	Not Applicable	Not Applicable	5.00	Simple	ACUITE A2 \| Reaffirmed & Withdrawn
Kotak Mahindra Bank	Not Applicable	Bank Guarantee/Letter of Guarantee	Not Applicable	Not Applicable	Not Applicable	15.00	Simple	ACUITE A2 \| Reaffirmed & Withdrawn
HDFC Bank Ltd	Not Applicable	Cash Credit	Not Applicable	Not Applicable	Not Applicable	5.00	Simple	ACUITE BBB \| Reaffirmed & Withdrawn
Axis Bank	Not Applicable	Cash Credit	Not Applicable	Not Applicable	Not Applicable	4.00	Simple	ACUITE BBB \| Reaffirmed & Withdrawn
Axis Bank	Not Applicable	Cash Credit	Not Applicable	Not Applicable	Not Applicable	1.00	Simple	ACUITE BBB \| Reaffirmed & Withdrawn
Yes Bank Ltd	Not Applicable	Cash Credit	Not Applicable	Not Applicable	Not Applicable	0.10	Simple	ACUITE BBB \| Reaffirmed & Withdrawn
Kotak Mahindra Bank	Not Applicable	Cash Credit	Not Applicable	Not Applicable	Not Applicable	10.00	Simple	ACUITE BBB \| Reaffirmed & Withdrawn
HDFC Bank Ltd	Not Applicable	Dropline Overdraft	Not Applicable	Not Applicable	Not Applicable	8.20	Simple	ACUITE BBB \| Reaffirmed & Withdrawn
Not Applicable	Not Applicable	Proposed Long Term Bank Facility	Not Applicable	Not Applicable	Not Applicable	0.51	Simple	Not Applicable\|Withdrawn
HDFC Bank Ltd	Not Applicable	Working Capital Demand Loan (WCDL)	Not available	Not available	Not available	0.25	Simple	ACUITE BBB \| Reaffirmed & Withdrawn
HDFC Bank Ltd	Not Applicable	Working Capital Term Loan	Not available	Not available	Not available	2.11	Simple	ACUITE BBB \| Reaffirmed & Withdrawn
Axis Bank	Not Applicable	Working Capital Term Loan	Not available	Not available	Not available	0.95	Simple	ACUITE BBB \| Reaffirmed & Withdrawn
Yes Bank Ltd	Not Applicable	Working Capital Term Loan	Not available	Not available	Not available	0.68	Simple	ACUITE BBB \| Reaffirmed & Withdrawn

Contacts

Analytical Details	Contact Details
Aditya Gupta Vice President - Rating Operations Tel: 022-49294041 aditya.gupta@acuite.in Vaishnavi Deshpande Analyst - Rating Operations Tel: 022-49294065 vaishnavi.deshpande@acuite.in	Contact Details Mob: +91 8069217456 Email ID: analyticalsupport@acuite.in Tel: 022-49294011 rating.desk@acuite.in

About Acuité Ratings & Research

Acuité is a full-service Credit Rating Agency registered with the Securities & Exchange Board of India (SEBI). The company received RBI Accreditation as an External Credit Assessment Institution (ECAI) for Bank Loan Ratings under BASEL-II norms in the year 2012. Acuité has assigned ratings to various securities, debt instruments and bank facilities of entities spread across the country and across a wide cross section of industries. It has its Registered and Head Office in Kanjurmarg, Mumbai.

Disclaimer: An Acuité rating does not constitute an audit of the rated entity and should not be treated as a recommendation or opinion that is intended to substitute for a financial adviser's or investor's independent assessment of whether to buy, sell or hold any security. Ratings assigned by Acuité are based on the data and information provided by the issuer and obtained from other reliable sources. Although reasonable care has been taken to ensure that the data and information is true, Acuité, in particular, makes no representation or warranty, expressed or implied with respect to the adequacy, accuracy or completeness of the information relied upon. Acuité is not responsible for any errors or omissions and especially states that it has no financial liability whatsoever for any direct, indirect or consequential loss of any kind, arising from the use of its ratings. Ratings assigned by Acuité are subject to a process of surveillance which may lead to a revision in ratings as and when the circumstances so warrant. Please visit our website (www.acuite.in) for the latest information on any instrument rated by Acuité.