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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 181.09 | ACUITE A | Stable | Upgraded | - |
| Bank Loan Ratings | 318.91 | - | ACUITE A1 | Upgraded |
| Total Outstanding | 500.00 | - | - |
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Rating Rationale |
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Acuité has upgraded the long-term rating to ‘ACUITE A’ (read as ACUITE A) from ‘ACUITE A-’ (read as ACUITE A minus) and the short-term rating to ‘ACUITE A1’ (read as ACUITE A one) from ‘ACUITE A2+’ (read as ACUITE A two plus) on the Rs.500.00 crore bank facilities of Sahakar Global Limited (SGL). The outlook is ‘Stable’.
Rationale for rating upgrade The rating upgrade takes into account the continuous improvement in scale of operations of SGL since the last three years, range bound profitability margins and moderate financial risk profile. The company recorded an operating income of Rs. 3669.57 Cr. in FY2024 (Prov.) as against Rs. 2775.72 Cr. in FY2023 and Rs. 2108 Cr. in FY2022. Further, the operating margins ranged between 2.60% - 3.30% percent during this period. The financial risk profile of the company is moderate marked by low gearing, moderate net-worth and comfortable debt protection metrics. The overall gearing of the company stood at 0.78 times as on March 31, 2024 (Prov) as against 0.87 times as on March 31, 2023 and 1.05 times as on March 31, 2022. The debt to EBITDA ranged between 2.30 times – 3.30 times for the three years ended FY2024(Prov.). The rating is however constrained on account of susceptibility of toll collection towards traffic volumes along with contract renewal risk. |
| About the Company |
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Mumbai-based Sahakar Global Limited (SGL) incorporated in 1996 undertakes toll collection projects through e-tendering for National Highway Authority of India (NHAI),Maharashtra State Road Development Corporation (MSRDC), Airports Authority of India(AAI) and Other Government Agencies/PWDs. SGL was promoted by Mr. Kishore Agarwal and others.
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| Unsupported Rating |
| Not Applicable |
| Analytical Approach |
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Acuité has considered the standalone business and financial risk profiles of SGL to arrive at this rating.
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| Key Rating Drivers |
| Strengths |
| Established track record in toll collection
Incorporated in 1994, SGL bids for toll collection projects with government authorities such as NHAI, MSRDC, AAI and other Government Agencies/PWDs. The company benefits from its established track record and extensive experience of the promoters in the industry. SGL is promoted by Mr. Kishore Agarwal (B.E. Electronics) and the family is into the industry for over two decades. The company has been dealing with NHAI since 2011. As on March 2024 the company operates at 38 tolls in 10 states. Acuité believes that SGL will benefit from its established position in toll collection and its strategy of scaling up through successful bids. Moderate financial risk profile The financial risk profile of SGL is moderate marked by moderate net worth, low gearing and moderate debt protection metrics. The tangible net worth stood at Rs.304.20 Cr. as on March 31 2024 (Prov), against Rs. 252.08 Cr. as on March 31, 2023 and Rs.252.08 crore as on March 31, 2022. The improvement is largely driven by accretion of profits to reserves. The overall gearing of the company stood at 0.78 times as on March 31, 2024 (Prov) against 0.87 times as on March 31 2023 and 1.05 times as on March 31, 2022. The total debt of Rs.236.40 crore as on 31 March, 2024 (Prov) comprises of term loan from banks & financial institutions amount to Rs.65.4 Cr. and short-term borrowings from banks of Rs. 171 Cr. The term loans are availed mainly to fund security deposits to be placed with government authorities and partly towards additions to the building premises. The coverage indicators improved however remained moderate with an interest coverage ratio (ICR) of 2.72 times for FY2024 (Prov) as against 2.50 times for FY2023 and the DSCR deteriorated marginally and stood at 0.88 times for FY2024 against 1.04 times in FY2023. However, the company largely avails term loans to fund security deposits given towards specific contracts. On closure of these contracts, the security deposits is returned and corresponding loan is closed. The total outside liabilities to tangible networth (TOL/TNW) stood at 0.98 times as on March 31, 2024 (Prov). Acuité expects the DSCR to improve in near to medium term in absence of any major debt funded capex plan. Healthy revenue and order book position Since FY2022, with resumption in traffic volumes and operations being back to normalcy toll collections have consistently recorded an improvement. This is reflected through SGL’s significant increase in the total toll collection during FY2024 (Prov) which stood at Rs. 3669.57 Cr. against Rs. 2775.72 Cr. in FY2023 and Rs. 2108 Cr. in FY22 marking a growth of almost 30% year on year. The company had around 38 tolls operational during FY2024. Further, SGL has healthy revenue visibility over the medium term backed by a healthy order book of ~Rs.3,093.47 crore as on May 2024. Coupled to this, the company bids for tenders continuously throughout the year and also gets repeat/extension on existing contracts. |
| Weaknesses |
| Susceptibility of toll collection towards traffic volumes along with contract renewal risk
SGL is engaged in short term toll collection on a contractual basis and mainly bids for NHAI and PWD projects. The contacts are bid only for a period of 12 months, and post 12 months, company again has to bid afresh for the project. Thus SGL faces renewal risk. Further, the company has 100 per cent tender based business and is exposed to intense competition among other players bidding for contracts. The cash flows are entirely toll based, thus operations are susceptible to fluctuations in traffic volume. Traffic movement is linked to the level of economic activity in and around the operational area. Any event or regulatory interventions are likely to affect traffic movement which may create pressure on toll revenues, thereby affecting the cash flows of the company. In such situations, the company is dependent on the sponsor for funding support. The company mitigates this risk to a certain extent its has its pre-survey team that carries out the entire traffic survey before the bidding. |
| Rating Sensitivities |
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| Liquidity Position |
| Adequate |
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SGL has adequate liquidity marked by adequate net cash accruals to its maturing debt obligations. The company generated cash accruals of Rs. 51.22 Cr. in FY2024(Prov.) and Rs. 42.56 Cr. in FY2023 as against repayment obligation of Rs. 56.81 Cr and Rs. 36 Cr respectively for the period. The major repayment pertained towards repayment of NCD debt which was also partly made from realisation of security deposits. The SD outstanding as on March 31, 2024 (Prov.) stood at Rs. 267.35 Cr. The cash accruals of the company are estimated to remain around Rs.50.00 to 550.00 crore during 2024-25 against repayment obligations Rs.12.75 Cr. for the same period. The average bank limit utilisation for the fund based and non fund based limits of the company stood average at 73% and 68% for twelve months ended March, 2024. Further, as per the revised clause, SGL will now have to keep SD equivalent to 15 days of the contract while earlier it was mandatory to keep a SD equivalent to 1 month. This will provide an additional cushion to the liquidity.
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| Outlook: Stable |
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Acuité believes that SGL will maintain a 'stable' credit profile on the back of its established track record of operations, improving operating performance and moderate financial risk profile. The outlook may be revised to 'Positive' in case of a significant improvement in toll revenue and cash flows while improving is capital structure. Conversely, the outlook may be revised to 'Negative' in case of a sharp decline in toll revenues, cash flow and/or higher than expected debt intake.
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 24 (Provisional) | FY 23 (Actual) |
| Operating Income | Rs. Cr. | 3669.57 | 2775.72 |
| PAT | Rs. Cr. | 46.41 | 39.47 |
| PAT Margin | (%) | 1.26 | 1.42 |
| Total Debt/Tangible Net Worth | Times | 0.78 | 0.87 |
| PBDIT/Interest | Times | 2.72 | 2.50 |
| 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 • 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 |
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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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