Amhara Construction Pvt. Ltd.

Brickwork Ratings assigns the ratings for the Long Term Bank Loan Facilities for Rs 2.00 crores and Short Term Facility for Rs 38.00 crores aggregating for Rs. 40.00 Crs. of Amhara Construction Pvt. Ltd., based on best available information.

Particulars

Facilities**	Amount(Rs.Crs.)	Tenure	Rating#
Fund Based	2.00	Long Term	BWR BBB - /Stable Assignment
Non Fund Based	38.00	Short Term	BWR A3 Assignment
Grand Total	40.00	(Rupees Forty 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
Note: This rating pertains to an existing assignment received prior to 6 October 2022. RATING ACTION / OUTLOOK

Brickwork Ratings has relied on the audited financials of Amhara Construction Pvt. Ltd. (ACPL) for FY20, FY21 and FY22 and projected figures for FY23, information furnished by the client and its bankers, as well as information available in the public domain, to arrive at the present ratings.

Brickwork Ratings has assigned a rating of BWR BBB- (Stable) to the long-term bank loan facilities of the Company for Rs.2.00 Crs. and a rating of BWR A3 to their short-term bank loan facilities of Rs.38.00 Crs. (aggregate rated amount of Rs.40.00 Crs). The rating draws strength from the vast business experience of the promoters, an established track of operations, a relatively moderate financial risk profile, and adequate liquidity. However, the ratings are constrained by the risk associated with Exposure to intense competition, customer and geographical concentration risks and Risks associated with tender based business.

BWR believes that the business risk profile of Amhara Construction Pvt. Ltd. will be maintained over the medium term. The 'Stable' outlook 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, with improvement in debt protection metrics. The rating outlook may be revised to 'Negative' if the revenues go down, profit margins show lower than expected figures or if there is a delay in debt servicing.

KEY RATING DRIVERS

Credit Strengths:

Extensive experience of the promoter :
Amhara Construction Pvt. Ltd. was incorporated on 16th April 2008. The directors of the Company have more than two decades of business experience in Construction business.
Relatively Moderate Financial Risk Profile :
The company has a relatively moderate financial risk profile, as reflected by a moderate gearing of 1.10 times in FY22. In FY22, the DSCR and ISCR are 2.01 times and 9.17 times, respectively. This indicates that the internal accruals are adequate to service the debt obligation. Operating profit margin is also moderate at 13.03% in FY22.
Moderate order book position :
The company had an order book of Rs. 234.21 crore (2.44 times of the OI in FY2022) as on March 31, 2022 providing medium-term revenue visibility. The orders are mainly from Executive Engineer New Capital Road Division R.C.D Patna, which is a part of the Bihar Road Construction Department and hence have low counterparty risk.

Credit Risks:

Exposure to intense competition :
The civil construction industry is highly fragmented owing to low entry barriers and minimal technical expertise; the consequent intense competitive pressure may continue to constrain scalability, pricing power and profitability. This risk is partially offset by a long standing relation maintained with the principals.
Risks associated with tender based business :
The Company executes government projects which gives rise to the inherent risks associated with the successful capturing of tenders, timely completion of the project and timely receipt of the payments from government departments.
Highly geographical and customer concentration risks :
The company faces high revenue concentration risks in terms of geography, with its entire revenues being derived from the state of Bihar. The Company also faces high client concentration risk, with a major portion of its revenues being derived from the state and central highways bodies. Nonetheless, as the Group’s clientele comprises entirely of government entities, the counterparty risk is mitigated to an extent.

ANALYTICAL APPROACH - Standalone

To arrive at ratings, BWR has relied upon the standalone audited financials up to FY22 and projected financials.

RATING SENSITIVITIES

Going forward, the ability of the company to improve the scale of operations and profitability, maintain a strong liquidity position, effectively manage working capital, and strengthen the overall credit profile would be the key rating sensitivities.

Upward :

Steady increase in turnover or profitability, leading to increased cash accruals.
Significant improvement in leverage and debt protection metrics.
Increase its net worth on a consistent basis.

Downward:

Decline in revenue and deterioration of the financial position of the Company, including deterioration in liquidity, leverage, and TNW on a continuous basis.
Delayed payments of its debt obligations.
Increase in trade receivables . The same is affecting the Current Ratio adversely .

LIQUIDITY INDICATORS - Adequate

The average utilization of the OD facility is 72.20% during the periods of 04-Oct-21 to 22-Dec-22. DSCR has increased to 2.01 times in FY22 compared to 1.24 times in FY21. The Company expects the ratio 4.20 times and 3.16 times in FY 23 and FY 24 respectively. ISCR has been recording satisfactory figures for the last three fiscals, the DSCR and ISCR were 2.01 times and 9.17 times, respectively, which indicates that the internal accruals are adequate to service the debt obligation. Cash and bank balances have increased to Rs. 81.36 Crs in FY22 compared to Rs. 60.94 Crs in FY21. The reason for high cash and bank balance, the company maintaining FDR in Banks amounting to Rs. 66.72 Crs and current account balance is Rs. 14.48 Crs as per ABS FY 22. The current ratio is above the benchmark level even though it decreased to 1.81 times in FY 22 as compared to 4.52 times in FY21, according to ACPL projection it is expected to improve to 8.01 times in FY23. Net Cash Accruals to Total Debt has decreased to 0.19 times in FY22 as compared to 0.25 times in FY21. But is likely to improve 0.41 times in FY23.

ABOUT THE ENTITY

Amhara Construction Pvt. Ltd. (ACPL) was incorporated on 16th April 2008. Main branch in Patna, Bihar. Mr. Rakesh kumar, Mr. Suraj kumar Sharma, Mr. Raunak kumar and Mr. Rajat Anand are the directors of the Company. The company is engaged in the business of construction and maintenance of the roads for the Government as well as private sector on tender basis.
Besides Govt Department, the top major clients of the company:

AFCON Infrastructure Ltd
Gammon Engineers & Contractors Pvt Ltd
Executive Engineers Pvt Ltd

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 21-22 (Audited)	FY 20-21 (Audited)	FY 22-23 (Provisional)
Operating Revenue	Rs.Crs.	95.96	120.59	132.00
EBITDA	Rs.Crs.	12.51	8.78	16.28
PAT	Rs.Crs.	8.53	7.18	10.64
Tangible Net Worth	Rs.Crs.	47.94	34.54	60.50
Total Debt/TNW	Times	1.10	0.92	0.47
Current Ratio	Times	1.81	4.52	8.01

KEY COVENANTS OF THE FACILITY RATED

The terms of sanction include standard covenants normally stipulated for such facilities and placed in hyperlink / Reference to applicable criteria.

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

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

Facilities	Current Rating (2023)			2022		2021		2020
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	2.00	BWR BBB-/Stable (Assignment)	NA	NA	NA	NA	NA	NA
Non Fund Based	ST	38.00	BWR A3 (Assignment)	NA	NA	NA	NA	NA	NA
Grand Total		40.00	(Rupees Forty 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
Chinmaya R Ratings Analyst chinmaya.r@brickworkratings.com	Dipak Kumar Das dipakkumar.d@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

Amhara Construction 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	Bank of India	Term Loan - Sanctioned	1.50	_	1.50
2	Bank of India	Bank Guarantee - Sanctioned	_	13.00	13.00
3	Bank of India	Bank Guarantee - Proposed	_	25.00	25.00
4	Bank of India	Overdraft - Sanctioned	0.50	_	0.50
Total			2.00	38.00	40.00
TOTAL (Rupees Forty Crores Only)

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About Brickwork Ratings

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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