Press Release March 04, 2024 KRAM INFRACON PRIVATE LIMITED Rating Assigned and Reaffirmed

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
Bank Loan Ratings	22.50	ACUITE BBB | Stable | Assigned	-
Bank Loan Ratings	59.50	ACUITE BBB | Stable | Reaffirmed	-
Bank Loan Ratings	50.50	-	ACUITE A3+ | Assigned
Bank Loan Ratings	17.50	-	ACUITE A3+ | Reaffirmed
Total Outstanding	150.00	-	-

Rating Rationale

­Acuité has reaffirmed the long term rating of ‘ACUITE BBB' (read as ACUITE triple B)  and the short term rating of 'ACUITE A3+' (read as ACUITE A three plus) on the Rs 77.00 crore  bank facilities­ of Kram Infracon Private Limited. The outlook is ‘Stable’. ­Further, ­Acuité has assigned the long term rating of ‘ACUITE BBB‘ (read as ACUITE triple B)  and the short term rating of  'ACUITE A3+' (read as ACUITE A three plus) on the Rs.73 Crore bank facilities­ of Kram Infracon Private Limited. The outlook is ‘Stable’. Rationale for Reaffirmation  The rating reaffirmation takes into account the improved business risk profile of the company marked by growth in  business operations. The revenue from operations of the company witnessed improvement  to Rs. 340.29 crore in FY2023 as against Rs. 209.43 crore in FY2022. Furthermore, the Working capital operations  of the company witnessed improvement over FY2022-23. The GCA  Days of the company improved to 188 Days in FY2023  as against 277 Days in FY2022. The profitability of the company witnessed deterioration in FY2022-23. The operating profit margin of the company deteriorated to 8.84 percent in FY2023  as against 12.66 percent in FY2022. Likewise, the company reported Profit after Tax (PAT) of Rs. 14.82 crore in FY2023 as against Rs. 15.49 crore in FY2022 with decline of 303 bps in PAT Margin which stood at 4.36 Percent in FY 23 as against 7.39 percent in FY 22. Company has booked operating income of Rs ~302 crore in 9M of FY 24. The rating further draws comfort from the adequate liquidity position and healthy financial risk profile of the company. The rating is however constrained on account of working capital intensive nature of operations, Moderation in coverage indicator. Acuité believes that the company’s ability to grow its scale of operations and profitability while maintaining a healthy capital structure remains a key rating indicator.

About the Company

Kram Infracon Private Limited (KIPL) was incorporated in February 2016, by Mr. Rahul Kumar and Mr. Sachin Gaur. It is registered in Noida (UP) Himanshu Kant & Navin Mittal are director of company The company is engaged in construction of roads, highways, bridges, irrigation, and other infrastructure projects. In addition to this, the KIPL also provides consultancy and advisory services in the fields of engineering and constructions services to other entities. The present directors are Mr. Himanshu Kant, Mr. Avadhesh Chandra Srivastava, Mr. Navin Kumar Mittal, and Mr. Deepesh Kumar Sharma.

Unsupported Rating

­Not Applicable

Analytical Approach

­Acuité has considered the standalone business and financial risk profile of Kram Infracon Private Limited to arrive at the rating.

Key Rating Drivers

Strengths

­Business risk profile KIPL’s operation witnessed substantial improvement which is apparent from growth in revenue from operations by ~62% in FY2023 to 340.29 crore as against Rs. 209.43 crore for FY2022.Company has current unexecuted order in hand of Rs ~600 crore to be executed till FY25. It is expected that the company will achieve Revenue of Rs 450 crore in FY 24.Company has booked operating income of Rs~302 crore in Nine Months of FY 24.Operating Profit Margin of company stood at 8.84% in FY2023 as against 12.66% in FY2022 Financial Risk Profile- Healthy Company has healthy financial risk profile marked by strong net worth, comfortable gearing and coverage indicators The Total Tangible net worth stood at Rs. 99.34 Cr as on 31st March 2023 as against Rs. 80.61 Cr a year earlier. Increase in net worth is on account of Profit accretion. Company follows conservative policy marked by low gearing. Debt to Equity ratio improved and stood at 0.18 times in FY 2023 as against 0.31 times in FY 22. Improvement in gearing is on account of increase in Net Worth and fall in total debt. Gearing is expected to remain same in near medium term. Interest coverage ratio decreased by 111 bps and yet stood strong at 5.51 times for FY2023 as against 6.62 times in FY2022. Deterioration in Interest coverage ratio is on account of high interest cost in FY 23 in comparison to FY 22 and decrease in Operating Margin. Likewise, Debt Service coverage ratio moderated by 29 bps and yet stood comfortable 1.75 times for FY2023 as against 2.04 times in FY2022. Total outside liabilities to total net worth (TOL/TNW) stood at 1.26 times as on FY2023 vis-à-vis 1.39 times as on FY2022. Debt-EBITA improved and stood at 0.64 times as on 31st March 2023 as against 0.93 times as on 31st March 2022. The Net Cash Accruals to Total debt stood at 0.99 times as on FY2023 and 0.71 times for FY2022.

Weaknesses

­Deterioration in Profitability  The operating profit margin of the company deteriorated by 382 bps in FY 23. Operating Profit Margin of company stood at 8.84% in FY2023 as against 12.66% in FY2022 likewise the net profit margin of the company declined by 303 bps and stood at 4.36 percent in FY2023 as against 7.39 percent in FY 22.  Working capital operations- Improved yet Intensive Company has improved yet intensive working capital requirements as evident from gross current assets (GCA) of  188 days in FY2023 as compared to 277 days in FY2022. Intensiveness of Working capital is on account of High Receivable Days. Debtor days stood at 107 days in FY2023 as against 174 days in FY 22. Inventory days stood at 12 days in FY 23 (7 days in FY22). ­Short Track Record of Operations The company was incorporated in 2016, hence has relatively short track record of operations. Due to this, the company has received major portion of orders around 80 to 90% through subcontracting and remaining through direct tender. Highly competitive industry marked by tender based nature of business The company’s performance is susceptible to the tender based nature of business, where the business depends on the ability to bid for contracts successfully. Risk become more pronounced as tendering is based on minimum amount of biding of contracts.

Rating Sensitivities

­­Improving scale of operations along with the diversification of its order book  Improvement in Operating Margin resulting better financial risk profile  Improvement in Working Capital Operation.

Liquidity Position

Adequate

­Company has adequate liquidity marked by net cash accruals to its maturing debt obligations, current ratio, cash and bank balance. Company generated cash accruals of Rs. 17.14 crore for FY2023 as against obligations of Rs. 7.71 crore for the same period. Current Ratio stood at 1.73 times as on 31 March 2023 as against 1.75 times in the previous year. Fund based working capital limits are utilized at ~68 per cent during the last twelve months ended Dec 23 while non fund based limit utilization is 78 percent leaving additional cushion in working capital limits to meet contingencies. Cash and Bank Balances of company stood at Rs 22.89 crore.

Outlook: Stable

­Acuité believes that the company will continue to maintain a ‘Stable’ outlook over near to medium term owing to its experienced promoters and established position in market. The outlook may be revised to ‘Positive’ in case the company achieves higher than expected growth in revenues consummating increase in order book size, working capital management and debt protection metrics. Conversely, the outlook may be revised to ‘Negative’ in case of a significant decline in revenues and operating profit margins, or deterioration in the capital structure and liquidity position on account of higher-than expected working capital requirements.

Other Factors affecting Rating

­None

Key Financials

Particulars	Unit	FY 23 (Actual)	FY 22 (Actual)
Operating Income	Rs. Cr.	340.29	209.43
PAT	Rs. Cr.	14.82	15.49
PAT Margin	(%)	4.36	7.39
Total Debt/Tangible Net Worth	Times	0.18	0.31
PBDIT/Interest	Times	5.51	6.62

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

­Not Applicable

Any other information

­None

Applicable Criteria

• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm • Infrastructure Sector: https://www.acuite.in/view-rating-criteria-51.htm • Default Recognition: https://www.acuite.in/view-rating-criteria-52.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 28 Sep 2023 Letter of Credit Short Term 7.50 ACUITE A3+ (Reaffirmed) Letter of Credit Short Term 10.00 ACUITE A3+ (Assigned) Bank Guarantee (BLR) Long Term 20.00 ACUITE BBB | Stable (Reaffirmed) Cash Credit Long Term 5.00 ACUITE BBB | Stable (Reaffirmed) Bank Guarantee (BLR) Long Term 10.00 ACUITE BBB | Stable (Reaffirmed) Cash Credit Long Term 5.00 ACUITE BBB | Stable (Reaffirmed) Cash Credit Long Term 4.50 ACUITE BBB | Stable (Assigned) Cash Credit Long Term 5.00 ACUITE BBB | Stable (Assigned) Bank Guarantee (BLR) Long Term 10.00 ACUITE BBB | Stable (Assigned) 07 Nov 2022 Bank Guarantee (BLR) Long Term 20.00 ACUITE BBB | Stable (Reaffirmed) Cash Credit Long Term 5.00 ACUITE BBB | Stable (Assigned) Letter of Credit Short Term 7.50 ACUITE A3+ (Assigned) Cash Credit Long Term 5.00 ACUITE BBB | Stable (Assigned) Bank Guarantee (BLR) Long Term 10.00 ACUITE BBB | Stable (Assigned) 21 Sep 2021 Proposed Bank Guarantee Long Term 20.00 ACUITE BBB | Stable (Assigned)

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Annexure - Details of instruments rated

Lender’s Name ISIN Facilities Date Of Issuance Coupon Rate Maturity Date Quantum (Rs. Cr.) Complexity Level Rating State Bank of India Not avl. / Not appl. Bank Guarantee (BLR) Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 20.00 Simple ACUITE BBB | Stable | Reaffirmed Bank of Maharashtra Not avl. / Not appl. Bank Guarantee (BLR) Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 10.00 Simple ACUITE BBB | Stable | Reaffirmed UCO Bank Not avl. / Not appl. Bank Guarantee (BLR) Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 10.00 Simple ACUITE BBB | Stable | Reaffirmed State Bank of India Not avl. / Not appl. Bank Guarantee (BLR) Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 12.00 Simple ACUITE BBB | Stable | Assigned State Bank of India Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 5.00 Simple ACUITE BBB | Stable | Reaffirmed Bank of Maharashtra Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 5.00 Simple ACUITE BBB | Stable | Reaffirmed Punjab and Sind Bank Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 4.50 Simple ACUITE BBB | Stable | Reaffirmed UCO Bank Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 5.00 Simple ACUITE BBB | Stable | Reaffirmed State Bank of India Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 5.00 Simple ACUITE BBB | Stable | Assigned State Bank of India Not avl. / Not appl. Letter of Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 7.50 Simple ACUITE A3+ | Reaffirmed Punjab and Sind Bank Not avl. / Not appl. Letter of Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 10.00 Simple ACUITE A3+ | Reaffirmed Not Applicable Not avl. / Not appl. Proposed Long Term Bank Facility Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 5.50 Simple ACUITE BBB | Stable | Assigned Not Applicable Not avl. / Not appl. Proposed Short Term Bank Facility Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 50.50 Simple ACUITE A3+ | Assigned

Contacts

Analytical Details	Contact Details
Mohit Jain Senior Vice President - Rating Operations Tel: 022–49294017 mohit.jain@acuite.in Himanshu Mehta Senior Analyst - Rating Operations Tel: 022-49294065 himanshu.mehta@acuite.in	Contact details exclusively for investors and lenders Mob: +91 8591310146 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. Please visit https://www.acuite.in/faqs.htm to refer FAQs on Credit Rating.