Nila Infrastructures Ltd.

Brickwork Ratings revises the ratings for the Bank Loan Facilities of Rs. 129.64 Crs. of Nila Infrastructures Ltd.

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
	Previous	Present		Previous (10 Jun 2022)	Present
Fund Based	129.42	90.22	Long Term	BWR BBB+ /Stable Reaffirmation	BWR BBB /Stable Downgrade
	(2.00)	(0.00)
Non Fund Based	59.42	39.42	Short Term	BWR A2 Reaffirmation	BWR A3 + Downgrade
Grand Total	188.84	129.64	(Rupees One Hundred Twenty Nine Crores and Sixty Four lakhs 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

The rating downgrade primarily factors the nonachievement of its projected performance in last few years. The revision in the ratings of the bank facilities of Nila Infrastructures Ltd takes into account the deterioration in its business risk profile in FY22 and lower-than-expected performance for FY23 as reflected in the decline in its total operating income and lower than envisaged cash accruals and profitability. The ratings continue to draw strength from its operational track record, strong regional market presence, diversified revenue stream, experienced management having healthy relationships with customers, and its comfortable financial risk profile. However, the ratings continue to be constrained by the moderate scale of operations, exposure to project execution risks, uncertainty in revenue streams emanating from the tender based nature of business, susceptibility to economic downturns, its exposure to changes in regulatory framework related to PPP models and working capital intensive nature of operations.

 The ‘Stable’ outlook indicates BWR’s opinion that the Company will continue to benefit from its long track record of operations and the experience of its management and promoters. BWR expects that  Nila Infrastructures Ltd's business risk profile will be maintained over the medium term. 

 

KEY RATING DRIVERS

Credit Strengths:

• Experienced management & established track record :

  Nila is one of the reputed Business Groups in Gujarat with Brand Goodwill of 30+ years.  Mr. Manoj Vadodaria is the Chairman & Managing Director , Mr. Deep S. Vadodaria  and Dilip D. Patel  are Directors, Shyamal S. Joshi, Ms. Foram Mehta and Mr. Revant Bhatt are the Independant  Director's of the Company.  Qualified and reputed promoters with extensive industry experience continue to hold the key positions in the business and are supported by a team of technically qualified professionals. Therefore, the company continues to benefit from the management's understanding of the dynamics of the industry. 

• Established track record and healthy order book position indicating medium-term revenue visibility :

  The Company has Healthy and well-diversified order book. The Company’s order-book is strong and quite balanced with a focus on its core competence of “Affordable Housing”  ; while for de-risking they have  orders  from other Civic Urban Infrastructure projects . Other than this, High-margin PPP is the major tributary. The major Government clientele comprise Ahmedabad Municipal Corporation (AMC), Government of Rajasthan. 

Credit Risks:

• Project execution risks :

  The business is cyclic in nature and prices are mainly driven by the demand and supply factors. Timely supply of raw materials like cement, steel, bricks are essential for timely completion of the projects. Shortage of labour (unskilled and skilled/technical personnel), raw material and lack of timely funding may delay the execution of projects of the Company. Further, the approval process and time for projects are generally uncertain which may delay the execution and thereby affect the performance of the Company.

• Tender-based nature of business :

  Most of the projects of the company are tender-based and hence, the Company's ability to bid successfully is crucial. Currently, NILA is executing projects in Gujarat and Rajasthan. The Company is susceptible to any slowdown in tenders floated in these regions or changes in the state government policies. Further, owing to the tender-based nature of the business, the Company is also susceptible to uncertainty in revenue streams. The company’s performance is exposed to economic downturn, input cost fluctuation and supply chain disruption.

ANALYTICAL APPROACH - Standalone

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

RATING SENSITIVITIES

Going forward the company’s ability to improve the scale of operations, improve and maintain profitability, the debt servicing capability & liquidity, and manage its working capital efficiently will be the key rating sensitivities.

Upward:

• The Rating may be upgraded if the company is able to achieve significant growth in revenue and improvement in profit margins to improve its cash accruals and thereby the liquidity, with improvement in other metrics such as gearing, debt coverage ratios, and working capital cycle.

Downward:

• Negative pressure on the ratings could also arise if the execution is lower than expected, or there is an increase in the working capital cycle. Pressure on the ratings could also materialize if the financial risk profile weakens due to a slowdown in the execution pace, moderation in profitability, and elongation of working capital cycle leads to a significant increase in the working capital requirement and impacts the cash flows.

LIQUIDITY INDICATORS - Adequate

NILA has an adequate liquidity profile. Further, it is noted that Company has significantly reduced the overall debt. The Company is expecting robust cash flow from next year and the liquidity will thus see an improvement from next year onwards.

ABOUT THE ENTITY

Incorporated in February 1990 at Ahmedabad, Nila Infrastructures Limited (NIL) is the flagship company of the Ahmedabad-based Sambhaav Group. NILA started operations as a real estate developer in Gujarat and presently the Company is a diversified infrastructure entity operating in Gujarat and Rajasthan. It is listed on BSE and NSE. Mr. Manoj Vadodaria is the Chairman & Managing Director and Mr. Deep S. Vadodaria is the Director of the Company.   In addition, the Company also undertakes construction works for selected reputed corporate developers. With a business vintage of about 25 years, Nila Infrastructures Limited is now one of the leading companies in civic urban infrastructure development. The company concentrated its efforts on Affordable Housing, one of the fastest growing sectors and established itself as an iconic presence in civic urban infrastructure as well.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 21-22 (Audited)	FY 22-23 (Audited)	FY 23-24 (Unaudited - Midterm_Q1)
Operating Revenue	Rs.Crs.	93.35	114.42	24.29
EBITDA	Rs.Crs.	7.53	1.92	-0.43
PAT	Rs.Crs.	2.51	1.77	0.45
Tangible Net Worth	Rs.Crs.	146.47	148.28	Not Available
Total Debt/TNW	Times	0.74	0.44	Not Available
Current Ratio	Times	1.36	1.00	Not Available

KEY COVENANTS OF THE FACILITY RATED

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

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

Not Applicable

ANY OTHER INFORMATION

Not Applicable

RATING HISTORY FOR THE PREVIOUS 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	90.22	BWR BBB/Stable (Downgrade)	10Jun2022	BWR BBB+ Stable (Reaffirmation)	19Mar2021	BWR BBB+Stable (Reaffirmation)	13Jan2020	BWR BBB+ Stable (Reaffirmation)
Non Fund Based	ST	39.42	BWR A3+ (Downgrade)	10Jun2022	BWR A2 (Reaffirmation)	19Mar2021	BWR A2 (Reaffirmation)	13Jan2020	BWR A2 (Reaffirmation)
Grand Total		129.64	(Rupees One Hundred Twenty Nine Crores and Sixty Four lakhs 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

• General Criteria
• Rating Criteria - Rating of Real Estate - Residential Projects
• Approach to Financial Ratios
• Short Term Debt

Analytical Contacts
Deepthi Nair V. Rating Analyst deepthinair.v@brickworkratings.com	RamaKrishna Director - Ratings ramakrishna@brickworkratings.com
1-860-425-2742 | media@brickworkratings.com

SL.No.	Name of the Bank/Lender	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)
1	Bandhan Bank	Emergency Credit Line Guarantee Scheme (ECLGS) - Sanctioned	_	_	0.00
2	Bandhan Bank	Line of Credit - Sanctioned	80.00	_	80.00
3	Punjab National Bank	Bank Guarantee - Sanctioned	_	13.00	13.00
4	Punjab National Bank	Over Draft - Sanctioned	2.00	_	2.00
5	Shinhan Bank	Over Draft - Sanctioned	_	_	0.00
6	State Bank Of India (SBI)	Emergency Credit Line Guarantee Scheme (ECLGS) - Sanctioned	_	_	0.00
7	State Bank Of India (SBI)	Dropdown OD - Sanctioned	_	_	0.00
8	Union Bank of India	Bank Guarantee - Sanctioned	_	19.42	19.42
9	Union Bank of India	Over Draft - Sanctioned	2.00	_	2.00
10	Yes Bank	Bank Guarantee - Sanctioned	_	7.00	7.00
	Sub-Limit (Over Draft) - Sanctioned	(0.00)
11	Yes Bank	Emergency Credit Line Guarantee Scheme (ECLGS) - Sanctioned	_	_	0.00
12	Yes Bank	Term Loan - Sanctioned	6.22	_	6.22
Total			90.22	39.42	129.64
TOTAL (Rupees One Hundred Twenty Nine Crores and Sixty Four lakhs Only)