Tomar Builders and Contractors Pvt. Ltd.

Brickwork Ratings assigns rating for the Bank Loan Facilities of Rs. 60.00 Crs. of Tomar Builders & Contractors Pvt. Ltd. (TBCPL's or "the company")

Particulars

Facilities**	Amount(Rs.Crs.)	Tenure	Rating#
Non Fund Based	60.00	Long Term	BWR BB /Stable Assignment
Grand Total	60.00	(Rupees Sixty 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

Brickwork Ratings (BWR) has assigned TBCPL's non fund based facilities the rating of 'BWR BB/Stable for of Rs. 60.00 crores

The rating factors in the extensive experience of the promoters in the construction industry, counterparty (state PWD) and robust financial risk profile. These strengths are partially offset by low order book position, modest scale of operations and lower profitability margin, geographical concentration risk,exposure to intense competition and susceptibility to risks inherent in the tender-based nature of business.

BWR believes that TBCPL's business risk profile will be maintained over the medium term. The Stable outlook indicates a low likelihood of a rating change over the medium term.

KEY RATING DRIVERS

Credit Strengths:

Promoter’s Experience with established track record of operations :
The company is owned and managed by the Tomar family which has been involved in the business for more than three decades. The company has an established track record in the road and bridges construction projects. The overall operations of TBCPL are looked after by the promoter - Mr Pratap Singh Tomar (Managing Director) along with his other family members, who possesses an experience of over two decades in the construction industry. With the technical expertise gained over the years, the company has been able to establish itself as the preferred player in the region and maintain healthy relations with various government departments, as well as suppliers, which has helped the company in continuously growing its business.
Moderate financial risk profile: :
TBCPL has a moderate networth of Rs 73.30 crore and limited dependence on external debt resulting in TOL/TNW of 0.88 times as on March 31, 2022 (management certified provisional financials). Debt protection metrics are robust as reflected in interest coverage of more than 14.24. times in FY22 Prov. (FY21: 8.06), supported by healthy and sustained profitability, sizeable cash accrual, and improved accretion to reserves.

Credit Risks:

Modest scale of operations and lower profit margin: :

During FY22 Provisional, TBCPL's total operating income declined by 16.42% on a y-o-y basis to Rs.135.88 crore mainly on lower project execution. This was subsequent to a healthy yoy increase of 70.14% to Rs.162.72 Crore in FY21 on account of progress in work execution of existing contracts as well as receipt of new projects. Moreover OPM & NPM were stable at 7.21% and 3.54% in FY22 .
Competitive bidding and Inherent Execution Risks :

The tender-based nature of the industry exposes the project to risks on account of bidding thus and thus exposes Company’s profit margins which has been witnessed in the past. BWR also notes the inherent risks related to timely execution of construction contracts. The risk is offset to a certain extent as the Company is registered with various Government agencies under prime categories which makes it eligible for the bidding and execution of large projects and the promoter experience of working in the government departments.
Lower Order book provides Revenue visibility for short term: :

TBCPL unexecuted order book as on April 01 2022 was low at Rs. 56.29 Crs and L1 of Rs.70.00 crore (below 1x of FY22 Operating Income) with an average execution time of less than one year. The company is expected to participate in fresh tenders in the near future. However, most of the order book remained slow moving in nature and hence, timely execution of the same along with winning new tenders remain critical. Moreover, the current order book position was 100% concentrated in Madhya Pradesh thus exposing the company to geographical concentration risk

ANALYTICAL APPROACH - Standalone

BWR has essentially relied upon the standalone audited financials of the company up to FY21, provisional financials for FY22, projections up to FY25, publicly available information and information/clarifications provided by the management.

For arriving at its ratings, BWR has applied its rating methodology as detailed in the Rating Criteria detailed below (hyperlinks provided at the end of this rationale).

RATING SENSITIVITIES

Positive factors –

Significant increase in the scale of operations & capitalization by maintaining the order book ratio, reduction in geographical concentration while maintaining the profit margins, capital structure & debt coverage indicators.

Negative factors –

Deterioration in scale of operations coupled with deterioration in the profit margins, capital structure & debt coverage indicators, and liquidity position.

LIQUIDITY INDICATORS - Adequate

The company is expected to generate cash accruals in the range of Rs.9.00 to 10.00 crore per year against repayment obligations of 0.55 crore in FY23 and nil repayment in FY24. The current ratio stood comfortable at 1.73 times as on March 31, 2022 (vis-à-vis 1.41 times as on March 31, 2021). Furthermore, the company has free cash & cash equivalents balance of ~Rs.1.45 crore as on March 31, 2022 and conversion cycle also stood negative at 102 days in FY22

ABOUT THE ENTITY

TBCPL, a Class A contractor, was formed in 1994 and registered in the highest class of PWD in Madhya Pradesh. The company is engaged in construction of roads and bridges for state/National Highways Authority of India projects in Madhya Pradesh.The Company is promoted by Pratap Singh Tomar, Amar Sing Tomar and Ranjana Tomar. TBCPL has established three asphalt batch mix plants and six hot mix plants in Chhatarpur, Gwalior, Shivpuri, Sheopur, Sagar & Bhind (M.P). The company also runs a petrol pump (Dealer of BPCL) in Bhind district, MP.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 20-21 (Audited)	FY 19-20 (Audited)
Operating Revenue	Rs.Crs.	Not Available	Not Available
EBITDA	Rs.Crs.	Not Available	Not Available
PAT	Rs.Crs.	6.21	2.69
Tangible Net Worth	Rs.Crs.	61.24	55.21
Total Debt/Tangible Net Worth	Times	0.04	0.14
Current Ratio	Times	1.41	1.34

KEY COVENANTS OF THE FACILITY RATED

Nil

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

TBCPl's has not cooperated with India Ratings which has classified it as non-cooperative vide release dated March 16, 2022.

ANY OTHER INFORMATION

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
Non Fund Based	LT	60.00	BWR BB/Stable (Assignment)	NA	NA	NA	NA	NA	NA
Grand Total		60.00	(Rupees Sixty Crores Only)

COMPLEXITY LEVELS OF THE INSTRUMENTS - NA

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
Roma Gupta Ratings Analyst roma.g@brickworkratings.com	Chintan Dilip Lakhani Director- Ratings chintan.l@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

Tomar Builders and Contractors 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	Indian Bank	Bank Guarantee - Proposed	20.00	_	20.00
2	Indian Bank	Bank Guarantee - Sanctioned	40.00	_	40.00
Total			60.00	0.00	60.00
TOTAL (Rupees Sixty 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 11,541 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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