A. K. Das Associates Ltd.

Brickwork Ratings assigns ratings for the Bank Loan Facilities of Rs. 52.00 Crs. of A. K. Das Associates Ltd. (AKDAL or The Company)

Particulars

Facilities**	Amount(Rs.Crs.)	Tenure	Rating#
Fund Based	9.00	Long Term	BWR BB /Stable Assignment
Non Fund Based	43.00	Short Term	BWR A4 + Assignment
Grand Total	52.00	(Rupees Fifty Two Crores Only)

#Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank Loan facilities,consolidation or instruments are provided in Annexure RATING ACTION / OUTLOOK

In arriving at the ratings, Brickwork ratings has essentially relied upon the Audited Financial statements of the company for FY21, projected financial statements for FY22 and FY23, information furnished by the company and their bankers, as well as information available in the public domain.

Brickwork Ratings has assigned ratings of BWR BB for the long term bank loan facilities of Rs. 9.00 Crs of A.K.Das and Associates Ltd, and BWR A4+ for their short term bank loan facilities of Rs.43,00 Crs (aggregate rated amount Rs.52.00 Crs). The ratings factor in the Long track record of operations and extensive experience of the promoters, healthy order book, comfortable financial risk profile, and adequate liquidity. However the rating is constrained by modest scale of operations, high customer concentration and geographical risks, exposure to Intense competition and to risks inherent in tender-based business and likely deterioration in debt coverage, as well as project execution and stabilization risks.

The outlook has been retained at Stable as BWR believes that the business risk profile of the Company will be maintained over the medium term. The Stable outlook indicates a low likelihood of a rating change over the medium term. The rating outlook may be revised to Positive in case of significant improvement in revenues, sustenance of order book growth, and profitability, or to Negative if there is any deterioration in order book, profitability, financial risk profile and Liquidity, or delays in debt servicing.

KEY RATING DRIVERS

Credit Strengths:

Long track record of Operations and extensive experience of the promoters :
The Company has an established track record in the construction sector since 1996 and has an established track record in building power transmission lines and substations. Moreover the promoters have extensive experience in running the business. Further, the Company is also supported by a professional team to look after its day to day operations.
Healthy Order Book :
The Company has an order book position of Rs.424.99 Crs in which work orders amounting to Rs.173.34 Crs are already completed. Remaining order book positions of Rs.251.66 Crs are expected to be achieved by the end of FY23. Order book to revenue ratio as on 31.03.2021 stood at 2.92 times which is at a comfortable level providing revenue visibility over the medium term.
Comfortable financial risk profile :
The Company has a comfortable networth of Rs 69.45 in FY21 as against networth of Rs.62.98 Crs in FY20. Debt protection metrics are comfortable as indicated by interest coverage of 2.87 times in FY21 (FY20: 2.11 times), total debt/ TNW of 0.41 times in FY21 (FY20: 0.44 times). Profitability margins were also comfortable marked by operating margins of 14.58% and PAT margin of 7.52% in FY21.

Credit Risks:

Modest scale of operations :
The firm’s scale of operations has remained modest, marked by total operating income (TOI) of Rs. Rs.85.92 crore in FY21 as against TOI of Rs.59.52 Crs in FY20. However, the total operating income in FY21 of the Company has improved by 44% over TOI in FY20, on account of higher number of contracts executed.
High customer concentration and geographical risks :
The ratings are constrained by high customer concentration and geographical risk as the Company derives more than 50% of its revenue from Odisha Power Transmission Corporation Ltd.(OPTCL) in the state of Odisha.
Exposure to Intense competition and to risks inherent in tender-based business :
The construction business is highly fragmented in nature and is characterised by intense competition among a large number of players. Furthermore, the firm remains exposed to intense competition and to risks inherent in tender-driven business which may impact profitability.
likely deterioration in debt coverage, project execution and stabilisation risk :
The company is in the process of setting up a four-star hotel at Bhubaneswar (Odisha), which is scheduled to be operational in April 2023. Total estimated project cost for the unit is Rs.74.72 Crs and the same will be funded by means of Equity of Rs.32.72 Crs and Term loan of Rs. 42.00 Crs. which will impact the gearing and debt coverage metrics. The Company is also exposed to project execution risk in time within the budgeted cost and stabilising risk post commencement of operations.

ANALYTICAL APPROACH - Standalone

Standalone

RATING SENSITIVITIES

Positive: Sustained and substantial improvement in revenues, sustenance of order book growth and profitability.

Negative: Deterioration in order book, profitability, financial risk profile, Liquidity and delay in debt servicing.

LIQUIDITY INDICATORS - Adequate

The liquidity of the company can be termed as adequate. EBITDA of Rs.12.83 Crs.in FY21 (Rs.11.75 Crs for FY20) was sufficient to cover the interest and finance charges of Rs.4.35 Crs in FY21 (Rs.5.57 Crs for FY20). Net cash accruals was Rs.7.16 Crs for FY21 as against Net cash accruals of Rs.6.07 Crs in FY20. Current ratio improved to 1.88 times in FY21 as against 1.52 times in FY20. ISCR was comfortable at 2.43 times in FY21 as compared to ISCR of 1.92 times in FY20. The average utilization of WC limits in the past 6 months is more than 90% as confirmed by the bankers. Future cash accruals are expected to be sufficient to cover the long term and short term debt obligations.

ABOUT THE ENTITY

A K Das Associates Limited was initially incorporated by Mr. Amiyakanta Das as a private limited company in 1996. The Company was later reconstituted as a public limited company in the year 1999. The Company is engaged in the construction of EHT Transmission line and Substation in Government and Public Sector undertaking. The Company also undertakes Design, Engineering, Supply, Civil, Erection, Testing & Commissioning of Overhead Transmission Line & Substation, Repairing and Restoration of line works.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 20-21 (Audited)	FY 19-20 (Audited)
Operating Revenue	Rs.Crs.	85.92	59.52
EBITDA	Rs.Crs.	12.53	11.75
PAT	Rs.Crs.	6.47	5.28
Tangible Net Worth	Rs.Crs.	69.45	62.98
Total Debt/Tangible Net Worth	Times	0.41	0.44
Current Ratio	Times	1.86	1.52

RATING HISTORY FOR LAST THREE YEARS (including withdrawal and suspended)

Facilities	Current Rating (2021)			2020		2019		2018
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	9.00	BWR BB/Stable (Assignment)	NA	NA	NA	NA	NA	NA
Non Fund Based	ST	43.00	BWR A4+ (Assignment)	NA	NA	NA	NA	NA	NA
Grand Total		52.00	(Rupees Fifty Two Crores Only)

COMPLEXITY LEVELS OF THE INSTRUMENTS - Simple

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
Ambar Kumar Chauhan Ratings Analyst ambarkumar.c@brickworkratings.com	Anuradha Gupta Director - Ratings anuradha.g@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

A. K. Das Associates Ltd.

ANNEXURE-I

Details of Bank Facilities rated by BWR

SL.No.	Name of the Bank/Lender	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)
1	Federal Bank	Cash Credit - Sanctioned	5.00	_	5.00
2	Federal Bank	Bank Guarantee - Sanctioned	_	26.00	26.00
3	State Bank Of India (SBI)	Letter of Credit - Sanctioned	_	5.00	5.00
4	State Bank Of India (SBI)	Bank Guarantee - Sanctioned	_	12.00	12.00
5	State Bank Of India (SBI)	Cash Credit - Sanctioned	4.00	_	4.00
Total			9.00	43.00	52.00
TOTAL (Rupees Fifty Two Crores Only)

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Brickwork Ratings (BWR), a Securities and Exchange Board of India [SEBI] registered Credit Rating Agency and accredited by Reserve Bank of India [RBI], offers credit ratings of Bank Loan, Non- convertible / convertible / partially convertible debentures and other capital market instruments and bonds, Commercial Paper, perpetual bonds, asset-backed and mortgage-backed securities, partial guarantees and other structured / credit enhanced debt instruments, Security Receipts, Securitization Products, Municipal Bonds, etc. BWR has rated over 11,400 medium and large corporates and financial institutions’ instruments. BWR has also rated NGOs, Educational Institutions, Hospitals, Real Estate Developers, Urban Local Bodies and Municipal Corporations. BWR has Canara Bank, a leading public sector bank, as one of the promoters and strategic partner. BWR has its corporate office in Bengaluru and a country-wide presence with its offices in Ahmedabad, Chandigarh, Chennai, Hyderabad, Kolkata, Mumbai and New Delhi along with representatives in 150+ locations.

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