Press Release September 02, 2024 RAIPUR CONSTRUCTION PRIVATE LIMITED Rating Reaffirmed

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
Bank Loan Ratings	1.00	ACUITE BBB | Stable | Reaffirmed	-
Bank Loan Ratings	49.00	-	ACUITE A3+ | Reaffirmed
Total Outstanding	50.00	-	-

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. 50.00 Cr. bank facilities of Raipur Construction Private Limited. The outlook is 'Stable'. Rationale for Rating The rating reaffirmation reflects stable business risk profile with improvement in operations and profitability, healthy financial risk profile and moderate order book with adequate liquidity. However, the rating is constrained due to delay in project execution due to departmental issues.

About the Company

­Incorporated in 1998, Raipur Construction Private Limited (RCPL) is engaged in the business of civil construction and primarily undertakes road construction works in the state of Chhattisgarh. The company is promoted by Mr. Mohammad Asgar and Mr. Mohammad Aamir. RCPL undertakes civil construction projects for Nagar Nigam Raipur, the Water Resource Department (WRD), the Chhattisgarh State Industrial Development Corporation (CSIDC), the Public Works Department (PWD), the Chhattisgarh Road Development Corporation (CGRDC), the Indian Railway Construction Company Limited (IRCON), and the Pradhan Mantri Gramme Sadak Yojana (PMGSY), among others.

Unsupported Rating

­­Not applicable

Analytical Approach

­Acuité has considered the standalone business and financial risk profile of RCPL to arrive at the rating.

Key Rating Drivers

Strengths

­Long track record of operation and experienced management The company was established in 1998 by Mr. Mohammad Asgar and Mr. Mohammad Aamir, who have a healthy experience of more than two decades in civil construction work. During this tenure, they have completed a lot of major projects for Nagar Nigam Raipur, the Water Resource Department (WRD), the Chhattisgarh State Industrial Development Corporation (CSIDC), the Public Works Department (PWD), the Chhattisgarh Road Development Corporation (CGRDC), the Indian Railway Construction Company Limited (IRCON), and the Pradhan Mantri Gramme Sadak Yojana (PMGSY), among others. The company's track record in construction and its healthy relationship with its key clients are reflected in the repeat orders received from the latter. Acuité believes that the company will continue to benefit from the vast experience of its  management as well as long track record of operations over the medium term. Revenue and Profitability The company witnessed an improvement in its scale of operations marked by an operating income of Rs. 278.99 Cr. in FY2024 (Prov.) as against Rs. 216.49 Cr. in FY2023. Further, Raipur Construction Private Limited has a moderate unexecuted order book position to the tune of Rs. 793 Crore approximately as on 30th June 2024 in which Rs. 413 Cr. is expected to be executed in FY25 and Rs. 380 Cr. is expected be executed in FY26. As on Q1FY2025, the company achieved a top line of Rs. 106.53 Cr. The EBITDA margin of the company stood at 11.29 per cent in FY2024 (Prov.) as against 10.65 per cent in FY2023 and the PAT margin of the company stood at 7.51 per cent in FY2024 (Prov.) against 6.57 per cent in FY2023. Though the company’s profitability is exposed to volatility in raw material, it has an in-built price escalation clause for major raw materials in most of its contracts. Acuité believes that the company is expected to have better top-line in near to medium term supported by better margins as compared to previous years on account of better order book with higher margins. Financial Risk Profile The financial risk profile of the company is healthy marked by net-worth of Rs. 79.78 Crore as on 31st March 2024 (Prov.) against Rs. 58.84 Crore as on 31st March 2023. Further, the total debt of the company stood at Rs. 1.48 Crore as on 31st March 2024 (Prov.) against Rs. 3.70 Crore as on 31st March 2023. The capital structure of the company is comfortable marked by gearing ratio of the company which stood at 0.02 times as on 31st March 2024 (Prov.) against 0.06 times as on 31st March 2023. Further, the coverage indicators of the company improved reflected by interest coverage ratio and debt service coverage ratio of the company which stood at 17.24 times and 8.65 times respectively as on 31st March 2024 (Prov.) against 14.19 times and 3.94 times respectively as on 31st March 2023. The TOL/TNW ratio of the company stood at 0.78 times as on 31st March 2024 (Prov.) against 1.13 times as on 31st March 2023 and DEBT-EBITDA of the company stood at 0.04 times as on 31st March 2024 (Prov.) against 0.15 times as on 31st March 2023. Acuité believes that going forward the financial risk profile of the company will remain healthy with no major debt funded capex plans. Efficient working capital management The working capital operations of the company is moderately marked by GCA days which stood constant at 59 days as on 31st March 2024 (Prov.) against 60 days as on 31st March 2023. There is an improvement in the GCA days due to the debtors days of the company which stood at 15 days in FY24 (prov.) against 16 days in FY23 and creditor days of the company stood at 20 days in FY24 (prov.) against 55 days in FY23. However, inventory days of the company stood at 30 days in FY24 (prov.) against 27 days in FY23. Acuité believes that the working capital cycle of the Company would remain at similar lean levels over the medium term due to efficient collection mechanism and low inventory holdings.

Weaknesses

­Presence of Competition in the industry The civil construction sector is marked by the presence of several mid- to large-sized players. The company faces intense competition from other players in the sector. The group specialises in civil works related to the construction of roads and buildings, mainly for the government of Chhattisgarh and various municipal corporations in the state of Chhattisgarh. The company faces competition from large players as well as many local and small, unorganised players. However, this risk is mitigated to an extent on account of the experience of the management and the group’s well-established presence in its territory.

Rating Sensitivities

­Scaling up of operations while maintaining the profitability margin Elongation in working capital cycle Timely execution of order book

Liquidity Position

Adequate

­The liquidity profile of the company is adequate. The net cash accruals of company stood at Rs. 23.79 Cr. in FY 24 (prov.) against the minimal debt repayment. The company has cash & bank position of Rs. 1.91 Cr. and current ratio stood at 1.71 times for FY 24 (prov.). The average fund based bank limit utilization is at 60% and non-fund based bank limit utilization is at 99.79% for the 13 months’ period ending June 2024. Acuite believes that the Company will continue to enjoy adequate liquidity at the back of heathy cash accruals, nil debt repayments, absence of debt funded capex plans and moderate  current ratio over the medium term.

Outlook: Stable

­Acuité believes that RCPL will continue to benefit over the medium term from the management’s experience and its track record in the civil construction business. The outlook may be revised to 'Positive' if RCPL achieves more than the envisaged sales and profitability. Conversely, the outlook may be revised to 'Negative' if the company fails to achieve adequate growth in revenue or there is any deterioration in its financial risk profile due to a higher than expected working capital requirement.

Other Factors affecting Rating

­None

Key Financials

Particulars	Unit	FY 24 (Provisional)	FY 23 (Actual)
Operating Income	Rs. Cr.	278.99	216.49
PAT	Rs. Cr.	20.94	14.22
PAT Margin	(%)	7.51	6.57
Total Debt/Tangible Net Worth	Times	0.02	0.06
PBDIT/Interest	Times	17.24	14.19

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 • 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 05 Jun 2023 Secured Overdraft Long Term 0.15 ACUITE BBB | Stable (Upgraded from ACUITE BBB- | Stable) Proposed Long Term Bank Facility Long Term 0.85 ACUITE BBB | Stable (Upgraded from ACUITE BBB- | Stable) Bank Guarantee/Letter of Guarantee Short Term 40.00 ACUITE A3+ (Upgraded from ACUITE A3) Proposed Bank Guarantee Short Term 9.00 ACUITE A3+ (Upgraded from ACUITE A3) 23 Mar 2022 Secured Overdraft Long Term 0.15 ACUITE BBB- | Stable (Reaffirmed) Proposed Long Term Bank Facility Long Term 0.85 ACUITE BBB- | Stable (Reaffirmed) Bank Guarantee/Letter of Guarantee Short Term 40.00 ACUITE A3 (Reaffirmed) Proposed Bank Guarantee Short Term 9.00 ACUITE A3 (Reaffirmed)

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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 Punjab and Sind Bank Not avl. / Not appl. Bank Guarantee/Letter of Guarantee Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 40.00 Simple ACUITE A3+ | Reaffirmed Not Applicable Not avl. / Not appl. Proposed Bank Guarantee Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 9.00 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. 0.85 Simple ACUITE BBB | Stable | Reaffirmed Punjab and Sind Bank Not avl. / Not appl. Secured Overdraft Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 0.15 Simple ACUITE BBB | Stable | Reaffirmed

Contacts

Analytical Details	Contact Details
Mohit Jain Senior Vice President - Rating Operations Tel: 022–49294017 mohit.jain@acuite.in Siddharth Garg Associate Analyst - Rating Operations Tel: 022-49294065 siddharth.garg@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.