Press Release February 19, 2024 SIDDHARAJ PROJECTS PRIVATE LIMITED Rating Assigned

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
Bank Loan Ratings	15.00	ACUITE B+ | Stable | Assigned	-
Bank Loan Ratings	5.00	-	ACUITE A4 | Assigned
Total Outstanding	20.00	-	-

Rating Rationale

Acuité has assigned its long-term rating of ‘ACUITÉ B+' (read as ACUITE B plus) and short term rating of ‘ACUITÉ A4’ (read as ACUITE A four) on the Rs. 20.00 Cr. bank facilities of Siddharaj Projects Private Limited (SPPL). The outlook is ‘Stable’. Rationale for rating The rating assigned reflects the established track record and industry experience of the promoters of the company in the civil construction works. However, this strength is partially offset by the below average financial risk profile marked by high gearing levels. Further, it also factors in the intensive working capital cycle of company with high GCA days of 613 days in FY23. The rating is also constrained by the stretched liquidity position of the company as reflected by high utilizations in its the short-term bank financing.

About the Company

­Gujarat Based, Siddharaj Projects Private Limited was incorporated in 2009. The company is engaged in the business of construction and repairing works of canals, roads etc. It is promoted by Mr. Gambhirsinh Balujibhai Barad, Mrs. Shivani Siddhrajsinh Barad, Mrs. Vaishaliba Prashantsinh Barad and Mr. Krishna Anirudhhasinh Barad.

Unsupported Rating

­Not Applicable

Analytical Approach

­Acuité has considered the standalone business and financial risk profiles of  Siddharaj Projects Private Limited to arrive at the rating.

Key Rating Drivers

Strengths

Established track record The company was incorporated in 2009 and the promoters have a good experience in the civil construction industry. The company has recorded an operating income of Rs.12.37 crores in FY2023 as against Rs.1.24 crores in FY2022. The revenue of the company has increased by 184.78 percent but still are modest. The company majorly is into sub-contracting. Further, the company has a healthy order book position of Rs.187.18 crores as on October 2023 which provides a revenue visibility over the medium term. The operating margins have declined marginally to 16.76 percent in FY2023 as against  26.36  percent  in  FY2022,  margins   varies  with  the  different  projects execution. Acuite believes that the company shall have a moderate business risk profile in the  medium term on account of healthy order book position providing revenue visibility.

Weaknesses

Below Average Financial Risk Profile The financial risk profile of the company stood below average marked by average net worth, high gearing and below average debt protection metrics. The tangible net worth stood at Rs.3.43 crore as on FY2023 as against Rs.2.08 crore as on FY2022, increase in net worth is majorly due to accretion of profits to the reserves. The gearing (debt-equity) stood high at 4.17 times as on 31st March, 2023 as compared to 2.89 times as on 31st March, 2022. Total outside Liabilities/Total Net Worth (TOL/TNW) stood at 5.51 times as on 31st March, 2023 as against 3.55 times as on 31st March, 2022. The debt protection metrics of Interest Coverage Ratio stood at 1.26 times for FY2023 as against 2.75 times for FY2022. Debt Service Coverage Ratio (DSCR) stood at 1.26 times in FY2023 as against 2.75 times in FY2022. Acuite believes that the financial risk profile may improve in medium term with steady cash accrual and no debt funded capex plan. Working Capital Intensive Operations The working capital management of the company is intensive marked by GCA days of 613 days in FY23 as against 2463 days in FY 2022.The debtor days stood at 339 days in FY2023. However, the inventory days stood at 165 days for FY2023. The creditors days stood at 260 days in FY2023. The company's reliance on working capital borrowings is on a higher side marked by average utilization of working capital limits of 97 percent during the last ten months period ended November 2023. Acuite believes that working capital operations of the company may continue to remain intensive considering the nature of operations.

Rating Sensitivities

Significant improvement in scale of operations while maintaining profitability. Further elongations in the working capital operations leading to further stretch in  liquidity position.

Liquidity Position

Stretched

The company’s liquidity position is stretched marked by the high reliance on short term bank borrowings with an average. utilization of 97 percent for last 10 months ended November 2023. The current ratio stands at 0.87 times in FY 2023. Further, the working capital management of the company is intensive marked by GCA days of 613 days in FY2023. ??????

Outlook: Stable

Acuité believes the outlook on SPPL will remain ‘Stable’ over the medium term backed by long track record of operations and experienced management. The outlook may be revised to ‘Positive’ if the company is able to significantly improve the scale of operations, while also improving its working capital operations efficiently and being less reliance on short term debt. Conversely, the outlook may be revised to ‘Negative’ in case of deterioration in the financial risk profile of the company by not able to scale up the business and further deterioration in working capital management and liquidity position.

Other Factors affecting Rating

­None

Key Financials

Particulars	Unit	FY 23 (Actual)	FY 22 (Actual)
Operating Income	Rs. Cr.	12.37	1.24
PAT	Rs. Cr.	0.30	0.09
PAT Margin	(%)	2.42	7.64
Total Debt/Tangible Net Worth	Times	4.17	2.89
PBDIT/Interest	Times	1.26	2.75

Status of non-cooperation with previous CRA (if applicable)

­None

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 • Service Sector: https://www.acuite.in/view-rating-criteria-50.htm • Infrastructure Sector: https://www.acuite.in/view-rating-criteria-51.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 :

Not Applicable

Annexure - Details of instruments rated

Lender’s Name ISIN Facilities Date Of Issuance Coupon Rate Maturity Date Quantum (Rs. Cr.) Complexity Level Rating UCO Bank Not avl. / Not appl. Bank Guarantee (BLR) Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 5.00 Simple ACUITE A4 | Assigned UCO Bank Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 15.00 Simple ACUITE B+ | Stable | Assigned

Contacts

Analytical Details	Contact Details
Mohit Jain Senior Vice President - Rating Operations Tel: 022–49294017 mohit.jain@acuite.in Anush Shetty Associate - Rating Operations Tel: 022-49294065 anush.shetty@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.