Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs. 88.00 Crs. of GVV Constructions Pvt. Ltd.
ParticularsFacilities** | Amount(Rs.Crs.) | Tenure | Rating# | |
---|---|---|---|---|
Fund Based | 15.00 | Long Term |
BWR BBB -
/Stable Assignment |
|
Non Fund Based | 73.00 | Short Term |
BWR A3
Assignment |
|
Grand Total | 88.00 | (Rupees Eighty Eight Crores Only) |
Brickwork Ratings has relied upon Audited financials of the company for FY 18, FY 19 and FY 20 along with its Provisional financials of FY 21 and Projected financials of FY 22 and FY 23, information available in public domain as well as feedback from the company and its bankers for arriving at the present rating.
Brickwork Ratings has assigned a rating of BWR BBB- with a Stable Outlook to the long term bank loan facilities of Rs. 15,00 Crores of GVV Constructions, Pvt. Ltd, and a rating of BWR A3 to their short term bank loan facilities of Rs. 73.00 Crores. The assignment of the ratings factors in experienced management, healthy financial risk profile, healthy order book position, reputed client and supplier base, as well as adequate liquidity. The rating is however, constrained by moderate scale of operations, delay in realization of sales, Working Capital intensive nature of operations, tender based nature of business, Project Execution Risk and Stiff Competition in the Industry.
BWR believes that the business risk profile of GVV Constructions Pvt. Ltd. (GCPL) will be maintained over the medium term, and the 'Stable' outlook assigned, indicates a low likelihood of rating change over the medium term. The rating outlook may be revised to 'Positive' in case the revenues and profit show sustained improvement. The rating outlook may be revised to 'Negative' if the revenues go down and profit margins show lower than expected figures on a continuous basis.
KEY RATING DRIVERSCredit Strengths:
The Promoters of the company, Mr. G V V Rao and Mr. N Suresh Reddy are running the business and have over three decades of experience in the EPC industry in Civil and Road construction works. The company has established its track record of operations since 1991.
The financial profile of the company is marked by a Healthy networth, comfortable profitability, low leverage and comfortable debt coverage indicators. The networth of the company stood healthy at Rs.43.12 Crs in FY 20 and the same has improved to Rs.44.65 Crs in FY 21 Provisionals. The company's revenues stood at Rs.64.28 Crs in FY19 and the same has increased to Rs.80.20 Crs as per FY 21 Provisionals. The EBITDA has remained comfortable at Rs.6.80 Crs in FY 20 compared to Rs.4.93 Crs in FY 19 and the same has improved to Rs.9.21 Crs in FY 21 Provisionals. The debt to equity ratio stood below unity at 0.53 times as on 31st March, 2021 compared to 0.40 times as on 31st March, 2020. The interest coverage ratio (ISCR) and debt service coverage ratio (DSCR) of the company are also comfortable at 2.35 times and 1.93 times respectively in FY 21 Provisionals as compared to 1.88 times and 1.59 times respectively in FY20.
The order book position of the company remained healthy at Rs.501.26 Crs as on 31st July, 2021;Giving revenue visibility for the next three years.
The customer profile of the company includes government departments of Odisha and other government of India for Irrigation and civil construction activity. The major clientele includes the Water Resource Department, Odisha, Indian Railway etc. The suppliers include JK Lakshmi Cements Ltd., Steel Authority India Limited., Ultratech Cements Ltd. etc.
Though the company has been in existence since 1991, the scale of operations remained moderate as the revenue of the company stood at Rs.80.20 Crs in FY 20.
The operations of GCPL are working capital intensive as the company is engaged in civil & road construction activity where high debtors are required to be maintained.
As the bulk of the orders of the Company are related to government projects, there is a risk of delay in receipt of funds, which might adversely impact their liquidity and their financials.
The Company is exposed to risk of delay in project execution, and consequent delay in realization of proceeds. The Company also faces high competition in the industry, with a number of small and medium sized players operating in the same space.
Standalone
RATING SENSITIVITIES
Positive Triggers :
Negative Triggers:
The liquidity of the company stands adequate as reflected by the comfortable cash credit utilisation ~at 82% for the last six months ended July 2021. The company presently does not have any major debt-led capex plans and long term repayment obligations. Liquidity is further supported by a comfortable ISCR & DSCR of 1.88 times and 1.59 times respectively in FY 20 and 2.35 times and 1.93 times respectively in FY 21 Provisional. Further the current ratio stood comfortable at 2.64 times in FY 20 (FY19: 2.63 times) and the same has remained at the same level as per FY 21 Provisional; standing at 2.31 times. The Net Cash accruals stood at Rs.5.12 Crs in FY 20 and Rs.6.26 Crs in FY 21 Provisional, which is adequate to take care of repayment obligations.
ABOUT THE ENTITYGVV Construction Pvt. Ltd. is an Odisha based Pvt. Ltd. company promoted by Mr. G V V Rao and his friend Mr. N Suresh Reddy in 2004. The company commenced execution of projects in February 2008. Prior to that the business was carried under a partnership firm since 1991. The company undertakes civil construction and road construction activities such as irrigation, road and railway projects. The company is a Super class contractor registered under NHAI and Water Resource department of various State Governments.
KEY FINANCIAL INDICATORS (Standalone)Key Parameters | Units |
FY 19-20 (Audited) |
FY 18-19 (Audited) |
---|---|---|---|
Operating Revenue | Rs.Crs. | 80.20 | 64.28 |
EBITDA | Rs.Crs. | 6.80 | 4.93 |
PAT | Rs.Crs. | 1.09 | 1.96 |
Tangible Net Worth | Rs.Crs. | 43.12 | 41.99 |
Total Debt/Tangible Net Worth | Times | 0.40 | 0.41 |
Current Ratio | Times | 2.64 | 2.63 |
Facilities | Current Rating (2021) | 2020 | 2019 | 2018 | |||||
---|---|---|---|---|---|---|---|---|---|
Type | Tenure | Amount (Rs.Crs.) |
Rating | Date | Rating | Date | Rating | Date | Rating |
Fund Based | LT | 15.00 |
BWR BBB-/Stable
(Assignment) |
NA |
NA
|
NA |
NA
|
NA |
NA
|
Non Fund Based | ST | 73.00 |
BWR A3
(Assignment) |
NA |
NA
|
NA |
NA
|
NA |
NA
|
Grand Total | 88.00 | (Rupees Eighty Eight Crores Only) |
BWR complexity levels are meant for educating investors. The BWR complexity levels are available at www.brickworkratings.com / download / ComplexityLevels.pdf. Investors queries can be sent to info@brickworkratings.com.
Analytical Contacts | |
---|---|
Saroj Kumar Das Ratings Analyst sarojkumar.d@brickworkratings.com |
Anuradha Gupta Director - Ratings anuradha.g@brickworkratings.com |
1-860-425-2742 | media@brickworkratings.com |
SL.No. | Name of the Bank/Lender | Type Of Facilities | Long Term(Rs.Crs.) | Short Term(Rs.Crs.) | Total(Rs.Crs.) |
---|---|---|---|---|---|
1 | Indian Overseas Bank | Cash CreditSanctioned | 15.00 | _ | 15.00 |
2 | Indian Overseas Bank | Bank GuaranteeSanctioned | _ | 73.00 | 73.00 |
Total | 15.00 | 73.00 | 88.00 | ||
TOTAL (Rupees Eighty Eight Crores Only) |
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