|
|
| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 20.00 | ACUITE BBB | Stable | Assigned | - |
| Bank Loan Ratings | 20.00 | ACUITE BBB | Stable | Reaffirmed | - |
| Bank Loan Ratings | 7.50 | - | ACUITE A3+ | Assigned |
| Total Outstanding Quantum (Rs. Cr) | 47.50 | - | - |
| Total Withdrawn Quantum (Rs. Cr) | 0.00 | - | - |
| Rating Rationale |
|
Acuité has assigned and reaffirmed the long term rating of ‘ACUITE BBB ‘(read as ACUITE triple B) on the Rs.40.00 Crore bank facilities and assigned 'ACUITE A3+' (read as ACUITE A three plus) on the Rs.7.50 crore short term bank facilities of Kram Infracon Private Limited. The outlook is ‘Stable’. Rationale behind Rating The rating assignment takes into consideration an improvement in the top-line of the business. The rating further continues to derive strength from the experience of management and healthy order book of business along with improved margins. |
| About the Company |
|
Kram Infracon Private Limited (KIPL) was incorporated in February 2016, by Mr.Suresh Kumar. 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.
|
| 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 |
| Revenue and Healthy order book
The company has achieved a turnover of around Rs.209.43 Crore in FY22 against Rs.201.62 Crore in FY21. Total operating income in FY21 has declined on an account of lower work execution due to COVID 19. Now the company has initiated working on road projects and water projects in Mizoram, UP and Jharkhand. The total unexecuted order book is around Rs.1356 Crore and Rs.320 Crore have been fulfilled as of August 2022 out of the total contract value of Rs.1676.50 Crore. Although the company has a sizable order book, PAT and EBITDA margins have been looked in a downward trend since margin availability varies from project to project. On the back of healthy order book, company anticipates revenue of around Rs.330 Crore in FY23 and Rs.470 Crore in FY24. Though the completion of projects in the order book is mentioned by FY24 the billing of the same will be spilled over to the next financial year as after the completion of project it goes for inspection and final approval, which generally takes 2 to 3 months after which the billing will be done. Moderate financial Risk Profile The financial risk profile of the company is moderate with debt equity ratio below unity. Further, the tangible net-worth of the company has improved over the years, backed by accretion of profits to reserves. In FY22, the total debt of the company is Rs.25.22 crore out of which Long term debt is Rs.5.26 Crore, unsecured loans are Rs.7.46 Crore, short term debt of Rs.4.79 Crore and CPLTD of Rs. 7.71 Cr. The interest coverage ratio of the company remains around 6.62 times in FY22 against 14.04 times in FY21. The company does routine maintenance capex which is around Rs. 5 crores. Acuite believes that going ahead, financial risk profile of the company is expected to remain at moderate level, backed by execution of orders. |
| Weaknesses |
| 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% 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. Geographic and Client concentration risk The company has concentrated order book, as major portion of outstanding orders belongs from UP. However, if there would be any change in policy, it might impact the revenue steams of the company. |
| Rating Sensitivities |
|
| Liquidity Position |
| Adequate |
|
The net cash accrual of the company remained at Rs.17.79 Crore in FY22 against debt obligation of Rs.6.61 Crore. The NCA of the company is expected to be at Rs.20 Crore to Rs.25 Crore. The liquidity profile of the company is comfortable, as it provides adequate cushion against debt repayments of Rs. 7 Crore to Rs.8.5 Crore (including repayment of unsecured loans) during following years. Further, the current ratio of the company is at 1.75 times in FY22 against 1.57 times in FY21. Additionally, the company has unencumbered cash balance of Rs.1.29 Crore in FY22.
|
| 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-thanexpected working capital requirements.
|
| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 22 (Actual) | FY 21 (Actual) |
| Operating Income | Rs. Cr. | 209.43 | 201.62 |
| PAT | Rs. Cr. | 15.49 | 12.90 |
| PAT Margin | (%) | 7.39 | 6.40 |
| Total Debt/Tangible Net Worth | Times | 0.31 | 0.29 |
| PBDIT/Interest | Times | 6.62 | 14.04 |
| Status of non-cooperation with previous CRA (if applicable) |
| The company has downgraded and issuer non cooperating from Brickwork at the quantum of Rs.20 Crore dated August 19,2022. |
| Any other information |
| None |
| Applicable Criteria |
|
• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm • Service Sector: https://www.acuite.in/view-rating-criteria-50.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 |
|
| |
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| |
|
Contacts |
| Analytical | Rating Desk |
| About Acuité Ratings & Research |
