ACC India Pvt. Ltd

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs. 225.00 Crs. of ACC India Pvt. Ltd (ACC or "the company")

Particulars

Facilities**	Amount(Rs.Crs.)	Tenure	Rating#
Fund Based	113.10	Long Term	BWR BBB - /Stable Assignment
Non Fund Based	111.90	Short Term	BWR A3 Assignment
Grand Total	225.00	(Rupees Two Hundred Twenty Five 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 FY19, FY20, FY21, auditor certified 9MFY22 financials, projected financial statements for FY22 -FY24, information furnished by the company and their bankers, as well as information available in the public domain.

Brickwork Ratings has assigned ratings of BWR BBB-, with a "Stable" outlook to the sanctioned long term Bank loan facilities of Rs. 52 crs and proposed long term Bank loan facilities of Rs. 61.10 crs along with "BWR A3" for the proposed short term Bank loan facilities of Rs.111.90 crs (aggregate rated amount Rs.225 crores) of ACC India Pvt Ltd.

The ratings factor in the extensive experience of the promoter Mr. Aniruddha Ray in executing high-rise luxury projects, and support from the parent company Arabian Construction Company SAL (ACCS) (who hold a 66.65% stake in ACC India) in executing similar projects in the Middle East. The ratings also consider the significant growth in revenues in 9MFY22 as per the available provisional financials, over FY21 audited financials, backed by the healthy order book and above average credit metrics as reflected by the ISCR and DSCR levels. The ratings also derive strength from the reputed clients with whom ACC is working, together with the comfortable liquidity position in the absence of long term debt and sufficient cash accruals to pay off the cash credit interest obligations.

However, the ratings are constrained by the working capital intensive nature of operations, marked by high cash credit utilisation levels of above 90% in the past 6 months ending 31 March 2022, stretched payable days at the end of the financial year due to the delayed realisation from debtors, and exposure to cyclicality inherent in the real estate sector where its clients are major players.

The outlook has been assigned as Stable since 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, improvement in payables and receivables days and profitability, or to Negative if there is any deterioration in scale of operations together with deterioration in financial risk profile, or adverse developments in the real estate sector.

KEY RATING DRIVERS

Credit Strengths:

Experience of the promoters in executing high-rise and luxury projects :
Mr. Aniruddha Ray, an engineer by profession (promoter holding around 33% of the shares of ACC), have decades of experience in constructing iconic high rise buildings in the Gulf and has been able to utilise his expertise in India. He has partnered with ACC SAL of Middle East, which has been into the contract construction business of premium/sub-premium real estate projects for more than five decades and holds 66.65 % stake in ACC. The company has established itself as a premium construction company for high rise buildings across India. ACC has built World One in Mumbai which is the tallest building in India, The 42 in Kolkata- the tallest building in Eastern India- and also Supernova & Versace towers in New Delhi & NCR.
Significant Growth in 9MFY22 revenues :
As per the auditor certified provisional 9MFY22 financials, the company has already reported sales of Rs. 214 crs in December, 2021, surpassing FY21 sales of Rs. 191.39 crs. Further, as per the estimates of the management revenue is likely to be in the region of Rs.315 crs for the full year FY22 due to the healthy order book position.
Healthy Order book :
The company has gradually increased its order book size over the years. As on 31 March 2022, the company has an outstanding order book of Rs.1084 crs, majority of which is expected to be completed by FY24, providing healthy revenue visibility at least for the next 2 to 3 years.
Above-average financial risk profile :
ACC’s financial profile is above-average with healthy networth level at Rs 30.22 crores and comfortable Total Debt/ TNW at around 2.15 time as on March 31, 2021. The credit metrics showed further improvement in 9MFY22 as per the auditor certified provisional financials, and the trend is expected to continue going forward.
Comfortable coverage ratios :
The coverage ratios of the company are comfortable with ISCR of 4.34x and DSCR of 3.19x in FY21 which is expected to improve going forward as reflected in the 9MFY22 financials.
Reputed client base :
The clientele of the company comprises names like Mani group, Lodha group, Tata Housing, Prasad group, Unity group, M3M, Emami group etc all of whom are well known players in the real estate sector. This provides a reasonable degree of certainty to the cash flows of the company.

Credit Risks:

Working capital intensive nature of operations :
The company is having cash credit limits which have shown average utilisation of above 90% in the past 6 months. The company operates as a construction company for developers and requires intensive working capital to fulfill its orders. Also, with the huge order book, the existing bank facilities will not suffice and the company is expecting disbursal of additional fund and non fund facilities.
Stretched payable days :
The payable days were stretched as on 31 March 2021 due to the delayed realisation from debtors. The company bills its customers on a monthly basis, however, payments are received with delays. The company follows dedicated accounts for each of the projects. Thus all payments to the creditors for a particular project is made as soon as the payment is received in the same account. Hence, each project is managed as a separate profit center and financial discipline is maintained.
Exposed to risks and cyclicality inherent in the real estate sector :
Since ACC caters to the real estate companies, it is exposed to risks and cyclicality inherent in the real estate sector.

ANALYTICAL APPROACH - Standalone

Standalone

RATING SENSITIVITIES

Positive- (1) Increased scale of operations and profitability on a sustained basis (2) Improvement in liquidity profile with sanction of proposed facilities to support the scale of operations and reduction in Payables days

Negative- (1) Delays in debt servicing, Deterioration in scale of operations and profitability together with deterioration in liquidity profile

LIQUIDITY INDICATORS - Adequate

The Liquidity position of the company has remained comfortable in the past three years due to the absence of long term debt and adequate Net cash accruals (above Rs. 10 crs) to pay off the interest costs ( between Rs. 3 and 4 crs). The company currently has cash credit limits of Rs. 17 crs from one bank and has availed only Rs. 6.9 crs (sanctioned limit of Rs. 35 crs) from another Bank with maximum utilisation of 97% in the past 3 months ending 31 March 2022. ACC has applied for additional cash credit limits of Rs. 61 crs and Rs. 111 crs of Non fund based limits, which is expected to support the increasing scale of operations to cater to the huge order book. Although, the payable days is stretched at 200 days in FY21 (FY20: 172 days) and the high payables has also resulted in the current ratio remaining at 1x in the past three years, the company is expected to reduce the trade payables in due course of time through faster realisation from debtors.

ABOUT THE ENTITY

Incorporated in the year 2011, ACC India Pvt. Ltd. (ACC) is a subsidiary of the Lebanon based Arabian Construction Company SAL. The company is primarily engaged in construction of buildings (primarily premium and sub-premium) both in residential and commercial segment and are working as contractors for real estate developers. ACC started with the project World One -117 Floors/ 442 m , which is the tallest residential building in India.ACC has bagged some very prestigious projects and has been involved in construction of tallest buildings across East, West and North India. It has worked with Mani group, Lodha group, Tata Housing, Prasad group, Unity group, M3M, Emami group etc.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 20-21 (Audited)	FY 19-20 (Audited)
Operating Revenue	Rs.Crs.	191.39	197.04
EBITDA	Rs.Crs.	15.49	19.17
PAT	Rs.Crs.	2.17	4.61
Tangible Net Worth	Rs.Crs.	30.22	27.78
Total Debt/Tangible Net Worth	Times	2.15	2.28
Current Ratio	Times	1.00	1.02

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

Facilities	Current Rating (2022)			2021		2020		2019
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	113.10	BWR BBB-/Stable (Assignment)	NA	NA	NA	NA	NA	NA
Non Fund Based	ST	111.90	BWR A3 (Assignment)	NA	NA	NA	NA	NA	NA
Grand Total		225.00	(Rupees Two Hundred Twenty Five 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.

Hyperlink/Reference to applicable Criteria

Analytical Contacts
Richa Sonthalia Ratings Analyst richa.s@brickworkratings.com	Anuradha Gupta Director - Ratings anuradha.g@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

ACC India Pvt. 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	DCB Bank	Cash Credit - Sanctioned	17.00	_	17.00
2	ICICI Bank	Cash Credit - Sanctioned	35.00	_	35.00
3	Others	Cash Credit - Proposed	61.10	_	61.10
4	Others	Bank Guarantee - Proposed	_	111.90	111.90
Total			113.10	111.90	225.00
TOTAL (Rupees Two Hundred Twenty Five Crores Only)

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