Press Release May 22, 2024 R K D CONSTRUCTION PRIVATE LIMITED Rating Reaffirmed

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
Bank Loan Ratings	144.50	ACUITE A | Stable | Reaffirmed	-
Bank Loan Ratings	850.50	-	ACUITE A1 | Reaffirmed
Total Outstanding	995.00	-	-

Rating Rationale

­Acuité has reaffirmed the long-term rating of ‘ACUITÉ A’ (read as ACUITE A) and short-term rating of ‘ACUITÉ A1’ (read as ACUITE A one) on the Rs.995 Cr. bank facilities of R K D Construction Private Limited (RKD). The outlook remains ‘Stable’. Rationale for reaffirmation  The rating continues to reflect RKD’s healthy business profile supported by its strong project execution capabilities and long track record of work execution in the road and highway sector. The rating also factors in the growth recorded in the operating revenues along with stable operating profitability margins. The company recorded revenue of Rs.746.88 Cr. in FY2023 against Rs.627.17 Cr. in FY2022. Further, the revenue is estimated to be at around Rs.810.00 Cr. in FY2024. The rating also takes comfort from the strong outstanding order book position of Rs.2978.48 Cr. as of February 2024, executable in the next 24-30 months, reflecting healthy revenue visibility over the medium term. Furthermore, the financial risk profile continues to remain healthy marked by a conservative capital structure and comfortable coverage ratios. The working capital operations of the company remain moderately intensive with GCA days of 104 days in FY2023 against 100 days in FY2022 with moderate reliance on fund-based working capital limits. These rating strengths are partially offset by RKD’s high exposure to the road sector and the intensity of competition in construction business.

About the Company

­­RKD Construction Private Limited was started as a proprietorship firm in 1980 by Late Rohit Kumar Das and was engaged in civil construction activities for road and national highway projects. The constitution was changed to a closely held company in 1996. Currently, the company is managed by Mr Rohan Das. The company has executed projects primarily in the state of Odisha.

Unsupported Rating

­Not Applicable

Analytical Approach

­Acuité has taken a standalone view of the business and financial risk profile of RKD to arrive at the rating.

Key Rating Drivers

Strengths

Long operational track record RKD was founded by Late Rohit Kumar Das in 1996. Presently the company is managed by second generation promoters. Current management has more than two decades of experience in construction business. Over the years, the company has developed expertise in road and highway construction through successful completion of large projects in Odisha. Healthy scale of operations coupled with strong order book. The revenue of the company grew by ~19% in FY2023 to Rs.746.88 Cr. from Rs.627.17 Cr. in FY2022. Further, the company has achieved a revenue of Rs.573.82 Cr. in 9MFY2024 and is estimated to achieve revenue of ~Rs.810.00 Cr. in FY2024. The growth in revenue is supported by a strong order book position of Rs.2978.48 Cr. as of February 2024, executable in next 24-30 months, reflecting healthy revenue visibility over the medium term. The duration of the contract depends on the size and nature of work to be done. The operating profit margin of the company remained stable at 13.20 % in FY2023 against 13.37 % in FY2022. It is further estimated to remain in the similar range over the medium term. Healthy financial risk profile The financial risk profile of the company is healthy marked by healthy net worth, low gearing and moderately comfortable debt protection metrics. The net worth of the company stood at Rs.286.99 Cr. as on March 31, 2023 as compared to Rs.239.04 Cr. as on March 31, 2022. The total debt of the company increased to Rs.221.39 Cr. as of March 31, 2023 against Rs.160.23 Cr. as of March 31, 2022. The increase in debt is primarily on account of increase in long term borrowings taken for the capex involving, procurement of new equipment’s, adding more vehicles and replacing redundant assets. The gearing of the company stood low at 0.77 times as on March 31, 2023 as compared to 0.67 times as on March 31, 2022. TOL/TNW stood moderate at 1.44 times as on March 31, 2023 as against 1.34 times as on March 31, 2022. The moderately comfortable debt protection metrics of the company is marked by Interest coverage ratio (ICR) of 3.97 times in FY2023 and debt service coverage ratio (DSCR) of 1.81 times in FY2023. The net cash accruals against total debt (NCA/TD) stood low at 0.30 times as on March 31, 2023 against 0.29 in the previous year. Acuité believes that the financial risk profile of the company will remain healthy over the medium term in absence of any large debt led capex plan.

Weaknesses

Tender based nature of operations and competitive industry The company majorly executes government road construction/widening projects. The revenue of the company is highly dependent on the number and value of tenders floated by the Government. Since the nature of operations is tender based, the business depends on the ability to bid for contracts successfully. However, the company has a healthy outstanding order book position on the back of which this risk is reduced upto certain extent. Acuite believes that the ability of the firm to maintain the scale of operations along with profitability would be the key rating sensitivity factor over the medium term.

Rating Sensitivities

Sustained and substantial revenue growth along with maintenance of stable profit margins Diversification in order book through addition fresh orders in new geographical locations

Liquidity Position

Adequate

The company has adequate liquidity profile as reflected from its net cash accrual of Rs. 65.42 Cr. in FY2023 as against current maturity of Rs. 22.66 Cr. Further, the company is expected to generate cash accruals in the range of Rs.71.89 Cr. to 83.83 Cr. during FY2024 & FY2025 against repayment obligation of Rs.29.66-25.00 Cr. during the same period. The fund-based bank limit utilization of 12 months ended January 2024 stood at around 80 per cent. The current ratio stood moderate at 1.38 times in FY2023. However, the moderate working capital management of the company is marked by Gross Current Assets (GCA) of 100 days as on 31st March 2022 as compared to 131 days as on 31st March 2021. Acuite expects the liquidity position of the company to remain adequate over the medium term backed by steady accruals.

Outlook:Stable

Acuité believes the outlook on RKD will remain ‘Stable’ over the medium term backed by its long track record of operations, strong order book position and comfortable financial risk profile. The outlook may be revised to ‘Positive’ if the company is able to ramp up its scale of operation with substantial improvement in financial risk profile. Conversely, the outlook may be revised to ‘Negative’ in case of substantial deterioration in liquidity or financial risk profile due to increase in working capital requirement.

Other Factors affecting Rating

­None

Key Financials

Particulars	Unit	FY 23 (Actual)	FY 22 (Actual)
Operating Income	Rs. Cr.	746.88	627.17
PAT	Rs. Cr.	47.95	32.33
PAT Margin	(%)	6.42	5.15
Total Debt/Tangible Net Worth	Times	0.77	0.67
PBDIT/Interest	Times	3.97	3.60

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 • 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.

Rating History

Date Name of Instruments/Facilities Term Amount (Rs. Cr) Rating/Outlook 30 Apr 2024 Bank Guarantee (BLR) Short Term 78.00 ACUITE A1 (Reaffirmed) Bank Guarantee/Letter of Guarantee Short Term 45.00 ACUITE A1 (Reaffirmed) Bank Guarantee/Letter of Guarantee Short Term 44.00 ACUITE A1 (Reaffirmed) Bank Guarantee/Letter of Guarantee Short Term 36.00 ACUITE A1 (Reaffirmed) Bank Guarantee/Letter of Guarantee Short Term 50.00 ACUITE A1 (Reaffirmed) Bank Guarantee/Letter of Guarantee Short Term 90.00 ACUITE A1 (Reaffirmed) Bank Guarantee/Letter of Guarantee Short Term 177.50 ACUITE A1 (Reaffirmed) Bank Guarantee/Letter of Guarantee Short Term 85.00 ACUITE A1 (Assigned) Bank Guarantee/Letter of Guarantee Short Term 50.00 ACUITE A1 (Reaffirmed) Bank Guarantee/Letter of Guarantee Short Term 40.00 ACUITE A1 (Reaffirmed) Bank Guarantee/Letter of Guarantee Short Term 5.00 ACUITE A1 (Reaffirmed) Cash Credit Long Term 21.00 ACUITE A | Stable (Reaffirmed) Cash Credit Long Term 4.00 ACUITE A | Stable (Reaffirmed) Cash Credit Long Term 47.50 ACUITE A | Stable (Reaffirmed) Cash Credit Long Term 15.00 ACUITE A | Stable (Assigned) Cash Credit Long Term 9.00 ACUITE A | Stable (Reaffirmed) Cash Credit Long Term 4.00 ACUITE A | Stable (Reaffirmed) Cash Credit Long Term 6.00 ACUITE A | Stable (Reaffirmed) Proposed Bank Guarantee Short Term 150.00 ACUITE A1 (Assigned) Proposed Cash Credit Long Term 15.00 ACUITE A | Stable (Assigned) Proposed Long Term Loan Long Term 14.00 ACUITE A | Stable (Reaffirmed) Secured Overdraft Long Term 9.00 ACUITE A | Stable (Reaffirmed) 05 Apr 2023 Bank Guarantee (BLR) Short Term 78.00 ACUITE A1 (Reaffirmed) Bank Guarantee/Letter of Guarantee Short Term 45.00 ACUITE A1 (Reaffirmed) Bank Guarantee/Letter of Guarantee Short Term 44.00 ACUITE A1 (Reaffirmed) Bank Guarantee/Letter of Guarantee Short Term 36.00 ACUITE A1 (Reaffirmed) Bank Guarantee/Letter of Guarantee Short Term 50.00 ACUITE A1 (Reaffirmed) Bank Guarantee/Letter of Guarantee Short Term 90.00 ACUITE A1 (Reaffirmed) Bank Guarantee/Letter of Guarantee Short Term 177.50 ACUITE A1 (Reaffirmed) Bank Guarantee/Letter of Guarantee Short Term 50.00 ACUITE A1 (Reaffirmed) Bank Guarantee/Letter of Guarantee Short Term 40.00 ACUITE A1 (Reaffirmed) Bank Guarantee/Letter of Guarantee Short Term 5.00 ACUITE A1 (Reaffirmed) Cash Credit Long Term 21.00 ACUITE A | Stable (Reaffirmed) Cash Credit Long Term 4.00 ACUITE A | Stable (Reaffirmed) Cash Credit Long Term 47.50 ACUITE A | Stable (Reaffirmed) Cash Credit Long Term 9.00 ACUITE A | Stable (Reaffirmed) Cash Credit Long Term 4.00 ACUITE A | Stable (Reaffirmed) Cash Credit Long Term 6.00 ACUITE A | Stable (Reaffirmed) Proposed Long Term Loan Long Term 14.00 ACUITE A | Stable (Reaffirmed) Secured Overdraft Long Term 9.00 ACUITE A | Stable (Reaffirmed) 07 Mar 2022 Bank Guarantee/Letter of Guarantee Short Term 13.00 ACUITE A1 (Reaffirmed) Bank Guarantee/Letter of Guarantee Short Term 30.00 ACUITE A1 (Reaffirmed) Bank Guarantee/Letter of Guarantee Short Term 50.00 ACUITE A1 (Reaffirmed) Bank Guarantee/Letter of Guarantee Short Term 45.00 ACUITE A1 (Assigned) Bank Guarantee/Letter of Guarantee Short Term 35.00 ACUITE A1 (Reaffirmed) Bank Guarantee/Letter of Guarantee Short Term 19.00 ACUITE A1 (Reaffirmed) Bank Guarantee/Letter of Guarantee Short Term 44.00 ACUITE A1 (Reaffirmed) Bank Guarantee/Letter of Guarantee Short Term 41.00 ACUITE A1 (Assigned) Bank Guarantee/Letter of Guarantee Short Term 10.00 ACUITE A1 (Reaffirmed) Bank Guarantee/Letter of Guarantee Short Term 15.00 ACUITE A1 (Assigned) Bank Guarantee/Letter of Guarantee Short Term 114.50 ACUITE A1 (Reaffirmed) Bank Guarantee/Letter of Guarantee Short Term 50.00 ACUITE A1 (Assigned) Cash Credit Long Term 12.00 ACUITE A | Stable (Reaffirmed) Cash Credit Long Term 35.50 ACUITE A | Stable (Reaffirmed) Cash Credit Long Term 20.00 ACUITE A | Stable (Reaffirmed) Cash Credit Long Term 10.00 ACUITE A | Stable (Reaffirmed) Cash Credit Long Term 5.00 ACUITE A | Stable (Reaffirmed) Cash Credit Long Term 1.00 ACUITE A | Stable (Reaffirmed) Cash Credit Long Term 7.00 ACUITE A | Stable (Reaffirmed) Proposed Bank Guarantee Short Term 10.00 ACUITE A1 (Reaffirmed) Proposed Bank Guarantee Short Term 140.00 ACUITE A1 (Assigned) Proposed Long Term Loan Long Term 13.00 ACUITE A | Stable (Reaffirmed) Secured Overdraft Long Term 10.00 ACUITE A | Stable (Reaffirmed) 05 Feb 2021 Bank Guarantee (BLR) Short Term 30.00 ACUITE A1 (Upgraded from ACUITE A2+) Bank Guarantee (BLR) Short Term 50.00 ACUITE A1 (Upgraded from ACUITE A2+) Bank Guarantee (BLR) Short Term 35.00 ACUITE A1 (Upgraded from ACUITE A2+) Bank Guarantee (BLR) Short Term 19.00 ACUITE A1 (Upgraded from ACUITE A2+) Bank Guarantee (BLR) Short Term 44.00 ACUITE A1 (Upgraded from ACUITE A2+) Bank Guarantee (BLR) Short Term 10.00 ACUITE A1 (Upgraded from ACUITE A2+) Bank Guarantee (BLR) Short Term 127.50 ACUITE A1 (Upgraded from ACUITE A2+) Cash Credit Long Term 47.50 ACUITE A | Stable (Upgraded from ACUITE A- | Stable) Cash Credit Long Term 24.00 ACUITE A | Stable (Upgraded from ACUITE A- | Stable) Cash Credit Long Term 10.00 ACUITE A | Stable (Upgraded from ACUITE A- | Stable) Cash Credit Long Term 5.00 ACUITE A | Stable (Upgraded from ACUITE A- | Stable) Cash Credit Long Term 1.00 ACUITE A | Stable (Upgraded from ACUITE A- | Stable) Cash Credit Long Term 7.00 ACUITE A | Stable (Upgraded from ACUITE A- | Stable) Proposed Bank Guarantee Short Term 10.00 ACUITE A1 (Assigned) Proposed Long Term Loan Long Term 15.00 ACUITE A | Stable (Upgraded from ACUITE A- | Stable) Secured Overdraft Long Term 10.00 ACUITE A | Stable (Upgraded from ACUITE A- | Stable)

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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 Indian Bank Not avl. / Not appl. Bank Guarantee (BLR) Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 112.00 Simple ACUITE A1 | Reaffirmed Bank of Baroda Not avl. / Not appl. Bank Guarantee/Letter of Guarantee Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 45.00 Simple ACUITE A1 | Reaffirmed Punjab National Bank Not avl. / Not appl. Bank Guarantee/Letter of Guarantee Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 82.00 Simple ACUITE A1 | Reaffirmed Punjab National Bank Not avl. / Not appl. Bank Guarantee/Letter of Guarantee Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 36.00 Simple ACUITE A1 | Reaffirmed State Bank of India Not avl. / Not appl. Bank Guarantee/Letter of Guarantee Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 50.00 Simple ACUITE A1 | Reaffirmed 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. 90.00 Simple ACUITE A1 | Reaffirmed State Bank of India Not avl. / Not appl. Bank Guarantee/Letter of Guarantee Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 262.50 Simple ACUITE A1 | Reaffirmed Union Bank of India Not avl. / Not appl. Bank Guarantee/Letter of Guarantee Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 86.00 Simple ACUITE A1 | Reaffirmed Union Bank of India 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 A1 | Reaffirmed Karnataka Bank Ltd Not avl. / Not appl. Bank Guarantee/Letter of Guarantee Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 20.00 Simple ACUITE A1 | Reaffirmed Indian Bank Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 25.00 Simple ACUITE A | Stable | Reaffirmed State Bank of India Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 62.50 Simple ACUITE A | Stable | Reaffirmed Union Bank of India Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 9.00 Simple ACUITE A | Stable | Reaffirmed Punjab and Sind Bank Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 4.00 Simple ACUITE A | Stable | Reaffirmed Punjab National Bank Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 6.00 Simple ACUITE A | Stable | Reaffirmed Bank of Baroda Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 4.00 Simple ACUITE A | Stable | Reaffirmed Not Applicable Not avl. / Not appl. Proposed Bank Guarantee Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 27.00 Simple ACUITE A1 | Reaffirmed Not Applicable Not avl. / Not appl. Proposed Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 6.00 Simple ACUITE A | Stable | Reaffirmed Not Applicable Not avl. / Not appl. Proposed Long Term Loan Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 14.00 Simple ACUITE A | Stable | Reaffirmed Karnataka Bank Ltd Not avl. / Not appl. Secured Overdraft Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 14.00 Simple ACUITE A | Stable | Reaffirmed

Contacts

Analytical Details	Contact Details
Mohit Jain Senior Vice President - Rating Operations Tel: 022–49294017 mohit.jain@acuite.in Pradeep Singh Senior Analyst - Rating Operations Tel: 022-49294065 pradeep.singh@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.