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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 95.91 | ACUITE BBB- | Negative | Reaffirmed | Stable to Negative | - |
| Bank Loan Ratings | 12.80 | ACUITE BBB- | Reaffirmed & Withdrawn | - |
| Bank Loan Ratings | 91.29 | - | ACUITE A3 | Reaffirmed |
| Total Outstanding | 187.20 | - | - |
| Total Withdrawn | 12.80 | - | - |
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Rating Rationale |
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Acuité has reaffirmed its 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.187.20 crore bank facilities of RMK Infrastructure Pvt. Ltd. (RIPL). The outlook is revised to 'Negative' from 'Stable.'
Acuité has withdrawn and reaffirmed its long-term rating of ‘ACUITE BBB-’ (read as ACUITE triple B minus) to the Rs.12.80 crore bank facilities of RMK Infrastructure Pvt. Ltd. (RIPL). The rating has been withdrawn as applicable for the respected instrument/facility as per Acuité's policy of withdrawal of ratings after receiving the client's withdrawal request.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 rating reaffirmation and revision in outlook The rating reaffirmation and revision in outlook reflects RIPL’s lower than expected operational performance, modest order book position which stood at ~Rs.83 Cr as of January 2024 and slow realisation of receivables. The operating revenues fell short of Acuite’s expected levels and stood at Rs.238.97 Cr in FY2023 against Rs.243.51 Cr in FY2022. The rating is further constrained on account of its inherent risk of susceptibility to tender based nature of operations, geographical concentration, and intensive nature of working capital operations. However, the rating considers the long-standing experience of RIPL’s promoters, its established track record of operations, adequate liquidity along with moderate financial risk profile marked by low gearing levels, moderate debt coverage indicators and net worth. Acuite believes, timely realisation of receivables and execution of existing order book, along with further strengthening of order book position will remain key monitorable over the near to medium term. |
| About the Company |
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Pune-based RMK Infrastructure Private Limited was established in 2011 by Mr. Ranjeet Kakade and is mainly into infrastructure construction and industrial construction. In FY2021, stone crushing business of its group company - Kakade Stone Crusher, was merged into RIPL. The company has 38.25 lakh tons of annual stone crushing capacity. Directors of Rmk Infrastructure Private Limited are Sunanda Ramdas Kakade, Ranjeet Ramdas Kakade.
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| Unsupported Rating |
| Not Applicable |
| Analytical Approach |
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Acuite has considered standalone financial and business risk profiles of RIPL to arrive at the rating.
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| Key Rating Drivers |
| Strengths |
| Experienced management and established presence in infrastructure construction
RIPL is in the business of infrastructural construction since past decade. The company was established in 2011 by Mr. Ranjeet Kakade, who is a civil engineer and has ~10 years of experience in the construction segment. The promoter’s long experience has enabled RIPL to successfully win the tenders and complete the projects. RIPL has done various infrastructure projects of the state government and Municipal Corporations besides industrial constructions. Further, the company is also looking to expand its rental business, where in constructed industrial sheds are given to other companies on a rental basis. The company reported a revenue of Rs.238.97 crore indue to merging of stone crushing business of its group company – Kakade Stone Crusher. Further, the company has achieved a topline of Rs.137.80 crore till November 2023. Also, the company deals in tender based contracts which includes Government entities where the bid winning ratio is ~70% and execute projects for some private contracts and some In-house construction. Acuite believes that RIPL’s established presence supported by strong experience of the management may continue to support the company’s growth in near to medium term. Moderate financial risk profile The financial risk profile of the company stood moderate marked by moderate net worth, improvement in gearing levels, and moderate debt protection metrics. The tangible net worth stood at Rs.96.82 crore as on 31 March 2023 as against Rs.79.41 crore as on 31 March 2022. The total debt of the company stood at Rs.97.32 crore which includes Rs.28.18 crore of long-term debt, Rs.33.67 crore of short-term debt, and Rs.35.47 crore of Unsecured loans as on 31 March, 2023. The gearing (debt-equity) stood at 1.01 times as on 31 March 2023 as compared to 1.28 times as on 31 March, 2022. Interest Coverage Ratio stood at 4.08 times for FY2023 as against 6.06 times for FY2022. Debt Service Coverage Ratio (DSCR) stood at 1.81 times in FY2023 as against 3.36 times in FY2022. Total outside Liabilities/Total Net Worth (TOL/TNW) stood at 1.63 times as on 31 March, 2023 as against 2.12 times as on 31 March, 2022. Net Cash Accruals to Total Debt (NCA/TD) stood at 0.22 times for FY2023 as against 0.36 times for FY2022. Acuité believes that the financial risk profile of RIPL is expected to remain moderate over the medium term due to its moderate debt levels vis-à-vis moderate tangible net worth and moderate debt protection metrics. |
| Weaknesses |
| Intensive Working Capital Operations
The working capital management of the company is intensive marked by GCA days of 258 days in FY2023 as against 260 days in FY2022. The higher GCA days are on account of high debtor days which stood at 140 days in FY2023 which were at similar level compared to FY22. The high debtors for the company are on account of the billing cycle of the company which usually happens at the end of the financial year and the payments for the same happens after a period of 30 to 60 days. However, the creditor days stood at 97 days in FY2023 as against 140 days in FY2022. The average credit period allowed by suppliers is around 60-90 days. Inventory Days stood at 07 days in FY2023 as against 20 days in FY2022. Acuite believes that RIPL’s GCA days may remain at 200-250 level in the medium term, thus maintaining intensive working capital operations considering the nature of business. Geographical concentration and tender-based business RIPL’s entire business is from Maharashtra and Pune. Thus, any negative development in this state/district would have a sharp negative implications on RIPL’s overall operating performance and so on financial risk profile and liquidity. Further to reduce the geographical concentration, the company has started looking at expanding in other states. Further, majority of construction business of RIPL is based on tenders floated by MIDC, PCMC, MLDL, etc. Thus, the company’s revenue is subject to the successful bidding of tenders amidst high competitive intensity, which also impacts the pricing power of players. |
| Rating Sensitivities |
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| Liquidity Position |
| Adequate |
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The company’s liquidity position is adequate marked by sufficient net cash accruals against its maturing debt obligations. The company generated net cash accruals in the range of Rs.21.32-36.27 Crore from FY 2021- 2023 against its maturing debt obligations in the range of Rs.4.34-7.88 crore in the same tenure. In addition, it is expected to generate a sufficient cash accrual in the range of Rs.20.42-23.56 crores against the maturing repayment obligations of around Rs.7.00-7.68 crore over the medium term. However, the working capital management of the company is intensive marked by GCA days of 258 days in FY2023 as against 260 days in FY2022. Further, the reliance on working capital limits is marked moderate, as reflected by moderate utilisations of fund-based limit of around 84% and non-fund-based limit of 67% in the last 11 months ended November 2023.The company maintains unencumbered cash and bank balances of Rs.0.12 crore as on March 31, 2023. The current ratio stands at 1.77 times as on March 31, 2023.
Acuite believes that the company’s liquidity position would remain adequate in the medium term with sufficient net cash accruals to the maturing debt obligations. |
| Outlook: Negative |
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Acuité has revised the outlook on RIPL to ‘Negative’ on account of lower-than-expected operational performance, elongated working capital cycle, modest order book and delays in realization of receivables. The rating may be downgraded if there is higher-than-expected decline in its revenues or profitability, further elongation in working capital cycle and further delays in timely realization of receivables. The outlook may be revised to ‘Stable’ in case of significant improvement in the order book position in near to medium term thereby giving healthy revenue visibility and also timely realization of receivables leading to improvement in working capital cycle.
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 23 (Actual) | FY 22 (Actual) |
| Operating Income | Rs. Cr. | 238.97 | 243.51 |
| PAT | Rs. Cr. | 16.51 | 29.50 |
| PAT Margin | (%) | 6.91 | 12.12 |
| Total Debt/Tangible Net Worth | Times | 1.01 | 1.28 |
| PBDIT/Interest | Times | 4.08 | 6.06 |
| 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 • 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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