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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 1.67 | ACUITE BBB- | Reaffirmed & Withdrawn | - |
| Bank Loan Ratings | 5.00 | ACUITE BBB- | Stable | Assigned | - |
| Bank Loan Ratings | 14.25 | ACUITE BBB- | Stable | Reaffirmed | - |
| Bank Loan Ratings | 7.00 | - | ACUITE A3 | Assigned |
| Bank Loan Ratings | 49.00 | - | ACUITE A3 | Reaffirmed |
| Total Outstanding | 75.25 | - | - |
| Total Withdrawn | 1.67 | - | - |
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Rating Rationale |
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Acuité has reaffirmed the long term rating to ‘ACUITE BBB-’ (read as ACUITE triple B minus) and short term rating to ‘ACUITE A3’ (read as ACUITE A three) to the Rs. 63.25 Cr. bank facilities of Orient Constructions Private Limited (OCPL). The outlook is ‘Stable’.
Acuité has also assigned the long term rating of ‘ACUITE BBB-’ (read as ACUITE triple B minus) and short term rating of ‘ACUITE A3’ (read as ACUITE A three) to the Rs. 12.00 Cr. bank facilities of Orient Constructions Private Limited (OCPL). The outlook is ‘Stable’. Further, Acuité has withdrawn the long term rating of 'ACUITE BBB-' (read as ACUITE Triple B Minus) to the Rs.1.67 Cr. bank facilities of Orient Constructions Private Limited (OCPL). The rating has been withdrawn as applicable for the respected instrument/facility as per Acuité's policy of withdrawal of ratings after receiving the client's withdrawal request. Rationale for the rating The rating reaffirmation takes into consideration OCPL’s established track record of operations, along with the extensive experience of its management in the civil construction industry. The rating also reflects OCPL’s strong order book position which stood at Rs.168.31 Cr as of November 2023, providing revenue visibility over the medium term. The operating income grew to Rs.97.67 Cr in FY2023 from Rs.92.48 Cr in FY2022. Further, the rating considers OCPL’s moderate financial risk profile marked by moderate net worth, low gearing levels of 0.44 as of 31st March 2023 and average debt protection metrics. The rating, however, is constrained on account of its exposure to intense competition, industrial cyclicality, and working capital intensive nature of operations. |
| About the Company |
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Incorporated in 1993, Odisha based Orient Constructions Private Limited (OCPL) is engaged in construction of roads and bridges mainly for the state government of Orissa. Currently, the company is headed by Mr. Ashok Jalan, Mr. Saurav Singh, Mr. Yogesh Jalan, Mr. Manish Chaudhary and Mr Haresh Chandra Mishra. The promoters had started their construction activities in the form of a partnership firm under the name of Orient Constructions in 1981 and the constitution was changed in 1993 under its current name.
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| Unsupported Rating |
| None |
| Analytical Approach |
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Acuité has taken a standalone view of the business and financial risk profile of OCPL to arrive at the rating.
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| Key Rating Drivers |
| Strengths |
| Long operational track record and experienced management
Established in 1993, Orient Constructions Private Limited (OCPL) has a long operational track record of around four decades in the civil construction industry, through their erstwhile partnership concern, Orient Constructions. Moreover, the key promoter of OCPL, Mr. Ashok Kumar Jalan has more than four decades of experience in the construction industry. Acuité believes that the long standing experience of the promoter and the long track record of operations will benefit the company going forward resulting in steady growth in the scale of operations. Moderate financial risk profile The company’s financial risk profile is moderate marked by moderate net worth, low gearing levels and average debt protection metrics. The tangible net worth of the company stood at Rs.38.26 Cr as on 31st March, 2023 as compared to Rs.36.58 Cr as on 31st March, 2022. Gearing of the company stood low at 0.44 times as on March 31, 2023 as against 0.34 times as on March 31, 2022. The Total Outside Liability/Tangible Net Worth (TOL/TNW) stood at 0.67 times as on March 31, 2023 as compared to 0.62 times in the previous year. The Interest Coverage Ratio stood at 3.40 times as on March 31,2023 as against 3.22 times as on March 31, 2022. However, Debt Service Coverage Ratio at 1.08 times as on March 31, 2023 as against 0.77 times as on March 31, 2022. Net Cash Accruals/Total Debt (NCA/TD) stood at 0.24 times as on March 31, 2023 as against 0.28 times as on March 31, 2022. Acuité believes that going forward the company will maintain moderate financial risk profile over the medium term, in the absence of any major debt funded capex plans. Steady growth in revenue and strong order book position Orient Constructions Private Limited has achieved revenues of Rs.97.67 Cr in FY2023 as compared to revenue of Rs.92.48 Cr in FY2022. The growth in top line is on account of better order flow and execution apart from boost in infrastructure sector. The company has achieved revenues of around Rs.101 Cr in 9MFY2024.. The unexecuted order book of around Rs.168.31 Cr as of November 2023 is expected to be executed in the coming 12-18 months thus providing comfortable revenue visibility over the medium term. Also, the company has L1 projects worth Rs. 53.78 Cr in hand as of November 2023. Acuité believes that the company will maintain steady growth in operating revenues backed by healthy order book position providing revenue visibility over the medium term. |
| Weaknesses |
| Working capital intensive nature of operations
The working capital intensive nature of operations is marked by GCA days of 158 days as on March 31, 2023 as compared to 146 days as on March 31, 2022. The high GCA days are high primarily on account of a high other current assets due to retention money & security deposits and also high inventory days. The inventory period stood at 79 days as on March 31, 2023 as compared to 58 days in previous year. Generally, the inventory holding period is around 60 days. Further, the debtor holding period stood comfortable at 44 days as on March 31, 2023 and 2022 as compared to 59 days as on March 31, 2021. The average credit period allowed to customers is around 30-45 days. The creditor days stood at 85 days in FY2023 as against 87 days in FY2022. The average credit period is 30-45 days. Acuité believes that the working capital operations of the firm will remain at the same levels as evident from efficient collection mechanism and moderate inventory levels over the medium term. Competitive and fragmented nature of industry coupled with tender based business The firm is engaged as a civil contractor and the sector is marked by the presence of several mid to big size players. The company faces intense competition from the other players in the sectors. Risk becomes more pronounced as tendering is based on a minimum amount of bidding of contracts and hence the company must make bid for such tenders on competitive prices, which may affect the profitability of the company. However, this risk is mitigated to an extent as the company is operating in this environment for around a decade. |
| Rating Sensitivities |
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| Liquidity Position |
| Adequate |
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The company has adequate liquidity position, supported by comfortable current ratio which stood at 1.82 times as on March 31, 2023 as against 1.85 times as on March 31, 2022.The company generated net cash accruals in the range of Rs.3.47-3.92 Crore against the maturity debt obligations of Rs.2.08-3.51 crore from FY2022 & FY2023. The cash and bank balances stood at Rs 4.76 Cr as on March 31, 2023. In addition, it is expected to generate sufficient cash accrual in the range of Rs.4.76-6.03 crores against the maturity debt obligations ranging from Rs.0.75-2.88 crore over the medium term. The working capital intensive nature of operations is marked by high GCA days of 158 days as on March 31, 2023 as compared to 146 days as on March 31, 2022. Additionally, the fund-based limit utilized at 77.58 per cent and the non-fund-based limit utilized at 78.28 per cent for the ten-months ended October 2023.
Acuité believes that going forward the liquidity position of the company will improve owing to gradually improving cash accruals. |
| Outlook: Stable |
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Acuité believes that OCPL’s outlook will remain 'Stable' over the medium term on account of the long track record of operations, experienced management and moderate financial risk profile and strong order book position. The outlook may be revised to 'Positive' in case of significant growth in revenue or operating margins from the current levels. Conversely, the outlook may be revised to 'Negative' in case of decline in revenue or operating margins, deterioration in financial risk profile or further elongation in its working capital cycle.
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 23 (Actual) | FY 22 (Actual) |
| Operating Income | Rs. Cr. | 97.67 | 92.48 |
| PAT | Rs. Cr. | 1.68 | 1.29 |
| PAT Margin | (%) | 1.72 | 1.40 |
| Total Debt/Tangible Net Worth | Times | 0.44 | 0.34 |
| PBDIT/Interest | Times | 3.40 | 3.22 |
| Status of non-cooperation with previous CRA (if applicable) |
| Not Applicable |
| Any other information |
| None |
| Applicable Criteria |
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• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm • Rating Process and Timeline: https://www.acuite.in/view-rating-criteria-67.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 |
| 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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