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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 17.50 | ACUITE BBB+ | Stable | Reaffirmed | - |
| Bank Loan Ratings | 107.50 | - | ACUITE A2 | Reaffirmed |
| Total Outstanding Quantum (Rs. Cr) | 125.00 | - | - |
| Rating Rationale |
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Acuité has reaffirmed its long term rating at ‘ACUITE BBB+’ (read as ACUITE triple B plus) and short term rating at ‘ACUITE A2’ (read as ACUITE A two) on the Rs.125.00 crore bank facilities of ‘Vaaan Infra Private Limited (VIPL)’. The outlook is ‘Stable’. Rationale for reaffirmation Rating has been reaffirmed on account of stable operating metrics in terms of operating income of Rs. 156.49 Cr in FY 2022 marking moderate growth of 3% over FY 2021 along with healthy net profit margins, healthy financial risk profile with moderate net worth base, low gearing and strong debt protection metrics along with strong liquidity position. However, rating is constrained by working capital intensive nature of operations marked by GCA days of 273 in FY 2022 as a result of elongated debtor realization period. |
| About the Company |
| Vaaan Infra Private Limited (VIPL) was incorporated in 2011 being promoted by Mr Arnav Kishore and Mrs Neetu Kishore. VIPL is a Faridabad based company, which is engaged in the development of infrastructure and highway traffic management solution. The company’s operational segment involves Toll Management system (TMS), Advance Traffic Management System (ATMS) and Smart city solution. Under TMS & ATMS, it provides equipment for toll maintenance such as IT systems to collect tolls, servers, sensors, security cameras, ticket dispenser, weather monitoring etc. Under smart city solutions, the company provides smart parking solutions, city security and surveillance system, system integration and client support centre. |
| Analytical Approach |
| Acuite has considered the standalone financial and business risk profile of the company to arrive at the rating |
Key Rating Drivers
| Strengths |
| Experienced management VIPL has been promoted by Mr. Arnav Kishore and Mrs. Neetu Kishore. The promoters has over two decades of experience among themselves in the toll management industry and thus, such experience had enabled the company to maintain long standing relationship with customer and supplier for more than a decade. The company has been able to achieve healthy scale of operations, on account of back to back execution of orders. The company is currently being managed by Mrs. Neetu Kishore and qualified management team down the line. The company has outstanding order book of Rs.176.89 crore as on November 30, 2022 from reputed client such as PNC Infratech Limited, Larsen & Turbo Ltd, Gawar Construction Limited etc. Acuite believes that the company would continue to benefit from experience of the Directors and long track record of the company. Financial risk profile Company’s financial risk profile is healthy marked by moderate net worth base, low gearing and strong debt protection metrics. Company’s tangible net worth stood at Rs. 57.79 Cr in FY 2022 as against Rs. 43.39 Cr in FY 2021. Total debt of Rs. 17.82 Cr in FY 2022 consists of Rs. 0.28 Cr of long term debt, Rs. 1.96 Cr of unsecured loans, Rs. 15.26 Cr of working capital borrowings and Rs. 0.32 Cr of CPLTD. Gearing (Debt to Equity) moderated to 0.31 times in FY 2022 as against 0.28 times in FY 2021. Interest coverage ratio improved and stood strong at 12.49 times in FY 2022 as against 7.08 times in FY 2021. DSCR improved to 7.78 times in FY 2022 as against 4.99 times in FY 2021. NCA/TD moderated to 0.86 times in FY 2022 from 1.04 times in FY 2021. TOL/TNW improved to 1.68 times in FY 2022 as against 2.42 times in FY 2021. Debt-EBITDA (excluding other income) moderated to 4.6 times in FY 2022 from 0.75 times in FY 2021. Going forward financial risk profile is expected to remain healthy in the absence of any debt funded capex plan. |
| Weaknesses |
| Elongated working capital days Company’s operations are working capital intensive marked by GCA days of 273 in FY 2022 as against 271 days in FY 2021. Elongated GCA days is a result of increased debtors. Debtors have increased year on year from Rs. 48.63 Cr in FY 2020 to Rs. 83.52 Cr in FY 2021 and further increased to Rs. 92.79 Cr in FY 2022. Debtor realization period has increased from 202 days in FY 2021 to 216 days in FY 2022. One reason behind increased debtors is the higher work orders executed in last quarter of the fiscals. Looking at monthly sales trend, company did revenue of Rs. 77.17 Cr in last quarter of FY 2021 and Rs. 53.73 Cr in FY 2022 which leads to build up of debtors. March 2022 debtors were subsequently realized in April and May 2022 wherein outstanding debtors declined to Rs. 66.82 Cr in May 2022. Also, the company realizes receivables with the mile stones of completion of work (for example:10%-Advance, supply of equipment-~30%, Installation-40% and remaining on installation and handover). The percentage of realization of receivables as per milestone varies as per contract. The entire process of supply to handover is usually takes 6-8 months, depending on the work order size. Company does 100% billing at the time of supply of equipment’s. Inventory holding period has declined to 20 days in FY 2022 as against 27 days in FY 2021. Creditor days have declined to 189 days in FY 2022 to 203 days in FY 2021. However, average bank limit utilization remained moderate at 48.88% on a consolidated level for the 6 months’ period between July 2022 to December 2022. |
| Rating Sensitivities |
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| Material covenants |
| None. |
| Liquidity Position |
| Strong |
| Company has strong liquidity position. Company generated net cash accruals of Rs. 15.40 Cr in FY 2022 against maturing debt obligation of Rs. 0.41 Cr. Going forward company is expected to generate net cash accrual of Rs. 15.87 Cr and Rs. 16.54 Cr in FY 2023 and 2024 respectively against maturing debt obligation of Rs. 0.32 Cr and Rs. 0.76 Cr in each respective year. Company’s unencumbered cash and bank position stood at Rs. 1.63 Cr in FY 2022 while current ratio stood at 1.50 times. |
| Outlook: Stable |
| The outlook of the company continues to remain stable. The outlook may be revised to positive, if the company achieves more than expected growth in revenue and profitability, commensurating with increase in order book size. The outlook would be revised to negative, if there is decline in financial performance of the company led by reduced order book execution. |
| Other Factors affecting Rating |
| None. |
| Particulars | Unit | FY 22 (Actual) | FY 21 (Actual) |
| Operating Income | Rs. Cr. | 156.49 | 151.21 |
| PAT | Rs. Cr. | 14.38 | 11.72 |
| PAT Margin | (%) | 9.19 | 7.75 |
| Total Debt/Tangible Net Worth | Times | 0.31 | 0.28 |
| PBDIT/Interest | Times | 12.49 | 7.08 |
| 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 |
| 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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