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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 3.03 | ACUITE A | Stable | Assigned | - |
| Bank Loan Ratings | 10.25 | ACUITE A | Stable | Reaffirmed | - |
| Bank Loan Ratings | 116.97 | - | ACUITE A1 | Assigned |
| Bank Loan Ratings | 346.75 | - | ACUITE A1 | Reaffirmed |
| Total Outstanding | 477.00 | - | - |
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Rating Rationale |
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Acuité has reaffirmed the long-term rating to ‘ACUITE A’ (read as ACUITE A) and short-term rating to 'ACUITE A1' (read as ACUITE A one) on the Rs. 357.00 Cr. bank facilities of Jhajharia Nirman Limited. The outlook remains ‘Stable’.
Acuité has further assigned the long-term rating to ‘ACUITÉ A’ (read as ACUITE A) and short-term rating to 'ACUITE A1' (read as ACUITE A one) on the Rs.120.00 Cr. bank facilities of Jhajharia Nirman Limited. The outlook is ‘Stable’. Rationale of the Rating
The rating reaffimation reflects JNL’s strong project execution capabilities and healthy order size. The scale of operation had witnessed a substantial improvement in FY24 with revenues at Rs. 858.92 Cr. (Provisional) against revenues of Rs.565.24 Cr. in FY2023. This has been a result of rise in order flow and its healthy execution. The current order book of Rs. 3526.50 Cr. as on April 2024, indicates revenue growth is likely to continue in FY24 with medium to long term visibility. Although there is segmental concentration in revenues, but low geographic concentration provides some comfort to the business risk profile with the Company’s presence in various states. The rating also factors in the company’s comfortable financial risk profile marked by a conservative capital structure and strong coverage ratios. The financial risk profile is expected to remain healthy over the medium term. In addition, the company has adequate liquidity profile as reflected from its steady net cash accrual, minimum debt repayment and moderate current ratio. These rating strengths are partially offset by JNL’s high exposure to the railway sector and the intensity of competition in infrastructure business. |
| About the Company |
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Jhajharia Nirman Limited (JNL) was established in 1994 in Bilaspur Chhattisgarh by Mr. Sushil Kumar Agarwal as a proprietorship firm. In 2008, the firm was converted into a Private Limited concern and subsequently in 2011 the entity was into closely held public limited company. The company executes various kinds of projects such as earthworks, Railway sidings, construction of major bridges, railway track works, supply of track ballast, transportation among others. Presently, the company is managed by Mr. Sushil Kumar Agarwal and his sons.
Directors of Jhajharia Nirman Limited are Ms. Binita Agrawal, Mr. Sushil Kumar Agrawal, Mr. Sanjeev Gupta, Mr. Arunendra Kumar, Mr. Vinap Agrawal, Mr. Saransh Agrawal, Ms. Stuti Agrawal and Ms. Vaishali Agrawal. |
| Unsupported Rating |
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Not Applicable
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| Analytical Approach |
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Acuité has taken a standalone view of the business and financial risk profile of JNL to arrive at the rating.
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| Key Rating Drivers |
| Strengths |
| Healthy revenue growth and profitability
JNL has a long operational track record as the company is executing different kinds of civil projects since 1994. Over the years, company has successfully completed a large number of projects involving construction of building & platform, laying of railway track etc. The company has a strong order book as JNL has bagged several orders from Southeastern Railways, RITES Ltd, Ircon International Ltd among others. The company is executing orders in various states such as MP, UP, Chhattisgarh, Odisha, etc. This reduces geographical concentration. Currently company is headed by Mr Sushil Agarwal who has more than two decades of experience in construction business. The company had witnessed improvement in scale of operation as revenue stood at around Rs. 565.24 Cr. in FY23 as against Rs. 520.79 Cr. in FY22, a growth of 9 per cent on a year-on-year (y-o-y) basis. In FY2024, the management has indicated that they have attained a revenue of Rs.858.92 Cr. (Provisional). The company has a healthy profitability margin as reflected from its EBITDA margin of 10.51 percent in FY23 as against 9.04 percent in FY22 and 10.27 percent in FY21. RoCE of the company stood comfortable at 30.59 percent in FY23 as against 28.77 percent in FY22. The improvement in profitability is the result that the Company is successfully able to pass on the escalation in prices of raw materials to its principal. However, the profitability margin also depends on company’s selection of projects being bid for. The management has taken a policy to not indulge in work order where profits would be subdued. Acuite believes the profitability of the company will remain at a similar level over medium term. It further believes the scale of operation will improve over the medium term backed by strong order flow from new geographical locations. Strong Order Book providing revenue visbility JNL has strong orders in hand of Rs. 3526.50 Cr. as on April 10, 2024 (includes own orders of Rs.3160.98 Cr. and orders with JV of Rs.365.57 Cr.; these JVs are formed to meet technical and financial qualifications of project.). This imparts healthy revenue visibility over the medium term and ensures low counterparty risks. Almost 50% out of own outstanding orders are expected to be completed within FY25 thus providing comfortable revenue visibility. However, typically the work orders get delayed by 6 months to a year due to nature of business. The own OB/OI is at 3.67 times. The work orders are spread across various states such as Chhattisgarh, Gujarat, Uttar Pradesh, Maharashtra, Andhra Pradesh among others. Acuite believes that high budgetary allocations toward Indian Railways by Government of India will improve the overall order flow in this segment over the medium term. Healthy financial risk profile JNL has a healthy financial risk profile marked by its healthy net worth, low gearing and healthy debt protection metrics. The net worth of the Company remained at Rs.156.46 Cr. as on March 31, 2023 due to healthy accretion to reserves. The debt equity remained healthy, below unity at 0.28 times as on March 31, 2023 against 0.26 times as on March 31, 2022. Annually the company incurs about Rs.8-10 Cr. of capex towards equipment funded by mix of equipment finance and own fund. The Company is also availing short term loans from RXIL at lower interest rate to fund a part of its working capital requirement; although this is expected to weaken the leverage ratio but it is expected to remain below unity over the medium term. In FY2023, The interest coverage ratio and debt service coverage ratio (DSCR) remained heathy at 7.83 times and 2.38 times respectively. Acuite believes that financial risk profile will remain healthy backed by healthy accruals and absence of any major debt funded capex plan over the medium term. |
| Weaknesses |
| High segmental concentration
The company mainly executes projects of the Indian Railways thereby implying high segmental concentration. The company’s ability to successfully bid for different kind of projects beyond the railway sector would be a key to diversify its business profile. |
| Rating Sensitivities |
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| Liquidity Position |
| Adequate |
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The company has an adequate liquidity profile as net cash accrual stood at Rs 42.59 Cr. in FY23 as against the debt repayment of Rs.13.32 Cr. Moreover the company has moderate working capital utilization during 12 months ended December 2023 which stood at around 57.11 percent. JNL also has unencumbered cash & bank of Rs 0.72 Cr. during FY23. Current ratio stood at 2.32 times in FY23 as against 2.28 times in FY22. The company had witnessed slightly elevated but comfortable working capital requirement as GCA days stood at 107 days in FY23 as against 76 days in FY22. Acuite believes liquidity profile will remain adequate in medium term backed by healthy net cash accrual and absence of major debt funded capex plans over the medium term.
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| Outlook: Stable |
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Acuité believes the outlook on JNL will remain ‘Stable’ over the medium term backed by its long track record of operations, strong order book position and healthy financial risk profile. The outlook may be revised to ‘Positive’ if the company is able to ramp up its scale of operation along with sustenance in the profitability margins and working capital cycle. Conversely, the outlook may be revised to ‘Negative’ in case of deterioration in financial risk profile due to larger than expected increase in working capital borrowings and lower than expected scale of operations.
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 23 (Actual) | FY 22 (Actual) |
| Operating Income | Rs. Cr. | 565.24 | 520.79 |
| PAT | Rs. Cr. | 34.13 | 26.06 |
| PAT Margin | (%) | 6.04 | 5.00 |
| Total Debt/Tangible Net Worth | Times | 0.28 | 0.26 |
| PBDIT/Interest | Times | 7.83 | 9.43 |
| Status of non-cooperation with previous CRA (if applicable) |
| Not Applicable |
| Any other information |
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None
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| Applicable Criteria |
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• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm • Manufacturing Entities: https://www.acuite.in/view-rating-criteria-59.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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