Univastu India Ltd.

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs. 52.00 Crs. of Univastu India Ltd. (“UIL” or “The Company”)

Particulars

Facilities**	Amount(Rs.Crs.)	Tenure	Rating#
Fund Based	20.00	Long Term	BWR BB - /Stable Assignment
Non Fund Based	32.00	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

BWR has assigned a long term rating of BWR BB- with a Stable outlook and short term rating of BWR A4 to the bank facilities of UIL. The rating assignment factors in the promoters’ industry experience, reputed client base of the company, moderate order book position providing medium term revenue visibility and moderate financial risk position. The strengths are offset by the elongated working capital cycle on account of delayed receivables, modest scale of operations with a steep decline in the past two years, stretched liquidity position and the risks associated with tender based nature of operations and exposure to intense competition.

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

KEY RATING DRIVERS

Credit Strengths:

Experienced Management :
The promoters are qualified and experienced and have demonstrated execution capabilities over the years in this sector. The overall operations of the company are looked after by Mr. Pradeep Khandagle who possesses an overall experience of two decades and is supported by other directors and tier II management possessing relevant industry experience and technical expertise. The promoters, due to the long standing presence, have developed healthy relations with the customers which continue to support the business risk profile.
Reputed clientele and moderate order book position :

The company caters to reputed counterparties like City and Industrial Development Corporation of Maharashtra (CIDCO), Haryana Tourism Corporation, Maharashtra Metro Rail Corporation, Goa State Infrastructure Development Corporation Limited , Sports Authority of Goa, etc to name a few. The company has an outstanding order book of ~Rs. 330 crs as of August 2022, which is 6 times FY22 (A) revenue, to be executed over FY23 and FY24, providing medium term revenue visibility.
Moderate financial risk profile and profitability margins :

The overall financial risk profile of the company is moderate as reflected by the TNW base of Rs. 38.24 crs, and D/E of 0.86x as of 31March2022. The debt service indicators of the company are moderate, viz ISCR of more than 2.50x in FY22, although declined over FY21. The profit margins of the company have also remained comfortable historically, with OPM and NPM in the range of 12%-20% and 5%-9% respectively over the past three years ending FY22. In FY21, however, the profit margins were unusually high (OPM: 39.25% and NPM: 18%) on account of a major invoice booking done during March 2021-end.

Credit Risks:

Elongated capital cycle and risk of timely realizations :

The company faced liquidity issues on account of delayed payments from its counterparties due to delayed certification of the work during COVID pandemic, leading to receivable days of 292 days as of 31Mar2022 and almost full utilization of the working capital limits impacting the overall liquidity of the company. The company had debtors of Rs. 22.82 crs, outstanding for more than one year as of 31Mar2022. The company has however, recovered a major amount during Q1FY23, which is expected to support the liquidity going forward.
Modest scale of operations and profitability vulnerable to fluctuations in raw material prices and labor costs :

The scale of operations of the company were severely impacted on account of the COVID 19 pandemic and the company registered a decline in the TOI during FY21 to Rs. 51.12 crs (FY20: Rs. 90.33 crs) with only a marginal improvement in FY22 to Rs. 58.63 crs. Having said that, the company expects the scale to improve going forward given the operations have normalized post the pandemic as reflected in marginal improvement during FY22 and has already registered revenue of ~Rs. 13 crs in Q1FY23 with EBITDA and PAT of Rs. 2.59 crs and Rs. 1 cr respectively.
Risk associated with tender based nature of operations :
The operations remain exposed to intense competition and to the risks inherent in tender-driven business which may impact profitability. The operations are susceptible to many external factors such as timely handover of the sites, clearances from various regulatory bodies, cost escalation due to departmental delays, any change in government policies, and labor unrest, etc. Additionally, all the orders are from government agencies, resulting in high dependence on timely clearances for tenders and payments, which is seen in the delayed realizations of the company.

ANALYTICAL APPROACH - Standalone

BWR has essentially relied upon the standalone audited financials of the company up to FY22, projections up to FY24, publicly available information and information/clarifications provided by the management. BWR has also taken the consolidated financials on record. For arriving at its ratings, BWR has applied its rating methodology as detailed in the Rating Criteria.

RATING SENSITIVITIES

Positive: Sustained and substantial improvement in the revenue, profitability and adequate profile with timely debtor realization and project execution.

Negative: Significant deterioration in the business revenue, profitability or financial risk profile of the company or any significant delays in executing the work orders, impacting the revenues and liquidity.

LIQUIDITY INDICATORS - Stretched

The liquidity profile of the company is stretched. The fund-based working capital limits of the company are utilized in the range of 97-98% on average for the past eight months ending August 2022. The overall conversion cycle is stretched on account of delayed realization from the debtors leading to high receivable days of 292 days as of 31Mar2022. The company has, however, recovered a major amount during Q1FY23. The unencumbered cash and bank balance stood at Rs. 0.73 crs as of 31Jul2022. The net cash accruals are expected to remain above Rs 10 crs which is sufficient to service the maturing debt obligations of ~Rs. 2.66 crs each in FY23 and FY24.

ABOUT THE ENTITY

UIL was incorporated as Unique Vastushilp and Projects Private Limited in 2009. The name was later on changed to 'Univastu India Private Limited' in 2016 and the company was converted into a public limited company in 2017 and consequently, the name of the company was changed to 'Univastu India Limited'. The company is listed on the National Stock Exchange. UIL is an ISO 9001, 14001 & OHSAS 18001 certified company and is PWD 1A, and CIDCO registered company and promoted by Mr. Pradeep Khandagale and family. The company undertakes government civil infrastructure projects and has executed various projects such as construction of metro station, hospitals, indoor sports complexes, water supply & drainage projects, road projects, minor irrigation projects and more. The company is based in Pune, Maharashtra.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 21-22 (Audited)	FY 20-21 (Audited)
Operating Revenue	Rs.Crs.	58.63	51.12
EBITDA	Rs.Crs.	12.41	20.06
PAT	Rs.Crs.	5.22	9.49
Tangible Net Worth	Rs.Crs.	38.24	33.01
Total Debt/TNW	Times	0.86	1.19
Current Ratio	Times	1.76	1.62

KEY FINANCIAL INDICATORS (Consolidated)

Key Parameters	Units	FY 21-22 (Audited)	FY 20-21 (Audited)
Operating Revenue	Rs.Crs.	58.74	51.24
EBITDA	Rs.Crs.	12.50	21.46
PAT	Rs.Crs.	5.24	9.61
Tangible Net Worth	Rs.Crs.	38.69	33.44
Total Debt/TNW	Times	0.86	1.19
Current Ratio	Times	1.77	1.63

KEY COVENANTS OF THE FACILITY RATED

The terms of sanction include standard covenants normally stipulated for such facilities.

NON-COOPERATION WITH PREVIOUS CREDIT RATING AGENCY

Nil

ANY OTHER INFORMATION

Nil

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	20.00	BWR BB-/Stable (Assignment)	NA	NA	NA	NA	NA	NA
Non Fund Based	ST	32.00	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.

Hyperlink/Reference to applicable Criteria

Analytical Contacts
Srishti Kaushik Rating Analyst srishti.k@brickworkratings.com	Chintan Dilip Lakhani Director- Ratings chintan.l@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

Univastu India 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	Canara Bank	Term Loan - Out-standing	1.00	_	1.00
2	Canara Bank	Cash Credit - Sanctioned	19.00	_	19.00
3	Canara Bank	Bank Guarantee - Sanctioned	_	9.00	9.00
4	Canara Bank	Bank Guarantee - Proposed	_	11.00	11.00
5	Canara Bank	Letter of Credit - Proposed	_	12.00	12.00
Total			20.00	32.00	52.00
TOTAL (Rupees Fifty Two Crores Only)

ANNEXURE-III

List of entities consolidated

Name of Entity	% Ownership	Extent of consolidation	Rationale for consolidation
M/s. Univastu HVAC India Private Limited	76	100%	The parent company (UIL) holds 76% in the entity and it is classified as a subsidiary company of UIL.

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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 12,000 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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