Atal Realtech Ltd. (erstwhile Atal Realtech Pvt. Ltd.)

Brickwork Ratings upgrades the long term ratings and reaffirms the short term ratings for the Bank Loan Facilities of Rs. 28.96 Crs. of Atal Realtech Ltd. (erstwhile Atal Realtech Pvt. Ltd.)

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (28 Mar 2020)	Present
Fund Based	11.00	16.16	Long Term	BWR BB- Issuer Not Cooperating Downgrade	BWR BB + /Stable Upgrade
Non Fund Based	0.00	1.50	Long Term		BWR BB + /Stable Upgrade
Non Fund Based	8.90	11.30	Short Term	BWR A4 Issuer Not Cooperating Reaffirmation	BWR A4 Reaffirmation
Grand Total	19.90	28.96	(Rupees Twenty Eight Crores and Ninety Six 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

BWR has upgraded the long term rating and reaffirmed the short term rating of the bank facilities sanctioned to Atal Realtech Ltd at BWR BB+(Stable) Upgrade/A4 Reaffirmed. The rating upgradation, inter-alia, factors like experienced management, financial risk profile, moderate profitability, net worth and orders in hand. However, the rating is constrained by the risk of tender based business, scale of operations, along with the impact of the COVID 19 pandemic on the industry.

BWR has essentially relied upon the audited financial statements of Atal Realtech Ltd up to FY20, FY21, and projected financial statements of FY22, publicly available information and information/clarifications provided by the entity’s management.

BWR believes that the Atal Realtech Ltd business risk profile 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. The rating outlook may be revised to 'Negative' if the revenues go down and profit margins show lower than expected figures

Going forward the ability of the company to improve its risk of tender based business, scale of operations, along with the impact of the COVID 19 pandemic would be its key rating sensitivity.

KEY RATING DRIVERS

Credit Strengths:

Experienced Management :
Atal Realtech Ltd is primarily managed by Mr. Vijaygopal Atal and Mr Nishit Atal, who are in company positioned as Directors having a combined experience of 3 decade . Company has an experienced pool of technical staff which have diversified know how of industry along with relevant experience
Financial Risk Profile :
The company has moderate financial risk profile marked by low debt. Its Gearing in FY21 stood at 0.33x and coverage as reflected through DSCR and ISCR were at 1.93x and 2.74x levels. Liquidity stood at 2.34x levels which are above par levels. The current ratio is in an increasing trend and has increased to 2.34x in FY 21. It continues to increase as per projections of FY 22 and FY 23
Moderate Profitability :
Operating profit in FY21 improved to 12.14% and NPM improved to 4.82%, which are at par level. As compared to Operating profit in FY 20 at 9.43% and NPM at 4.13%. The EBITDA and PAT of the company is also at moderate levels at Rs 5.28 Cr and Rs 2.10 Cr in FY 21. It is expected to increase to Rs 5.38 Cr and Rs 2.39 Cr respectively in FY 23 as per projections.
Net worth :
The company has a moderate Net Worth. Also the tangible net worth of the company is in increasing trend and has increased to Rs 31.25 Cr in FY 21 as compared to Rs 27.35 Cr in FY 20 by 14.26%. This is due to addition of capital in FY21 which has contributed to the increasing TNW
Orders In Hand :
The company has substantial orders in hand which they have been receiving over the past. Also the company has got fresh orders worth 33.52 in hand which have been received in between March 2021 to April 2021. The company has also participated in bids for the new contracts of substantial amount and are hopeful of bagging contracts.

Credit Risks:

Tender Based Business :
There is always uncertainty regarding outcome of tender due to unavailability of information from rival bidders. Technical errors and different interpretation of legal documents also affect outcome.
Scale of Operations :
The Operating income has declined to Rs 43.52 Cr in FY 21 as compared to Rs 58.15 Cr in FY 20 by 25.15%. Due to the impact of COVID 19 faced by the company. However it is expected to increase to Rs 47 Cr and Rs 51 Cr in FY 22 & FY 23 respectively as per projections. Also orders in hand of Rs 189.60 Cr would also help the company in achieving the projected figures
Impact of COVID 19 :
COVID 19 has had an impact on the sales turnover of the company which have reduced due to restrictions imposed by the government. Also the company has faced less impact on supply chain of major raw material items namely steel, cement, metals etc. However as the restriction on the movement have been removed sufficient inventory levels are obtained and the work has resumed.

ANALYTICAL APPROACH - Standalone

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

BWR believes the Atal Realtech Ltd business risk profile 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. The rating outlook may be revised to 'Negative' if the revenues go down and profit margins show lower than expected figures.

LIQUIDITY INDICATORS - Adequate

The cash and cash equivalents of Atal Realtech Ltd. stood at Rs 2.16 Cr in FY 21. The current ratio of the company stood 2.34x in FY 21. The average utilization of the working capital limit is 68.91 % from January 2021 to September 2021.

ABOUT THE ENTITY

Atal Realtech Limited provides integrated contracting and sub-contracting services for civil and industrial construction, engineering and complete infrastructure project management.

Incorporated in the year 2012 by Mr. Vijaygopal Atal at Nashik, the company has seen momentous growth and has become one of the top builders in the industry. The company has undertaken and delivered significant various governmental & private projects for notable organisations.

They provide integrated services for governmental projects such as Water-Supply and Drainage Projects, Road and Bridges Projects, Major and Minor Irrigation Projects and civil construction projects like Sport Stadiums (Indoor and Outdoor), Multi-purpose Hall, Commercial structures, Industrial structures, Hospitals, Cold Storages, Educational Institutions, Mass-Housing projects.

They are a registered contractor with the Government of Maharashtra Public Works Department in Class I-A.

They have been revered with “ISO 9001:2015 – Quality Management System” certification. Though registered and operated basically from Nashik, Maharashtra, they have also built projects in many other cities and states.

Expansion Plans

Company has got orders in hand/orders expected in the near future

Construction of balance Taluka Level Office in Nanded City at Central Administrative Bldg Premises at Nanded PWD, Nanded Tender Opening is expected in 8-10 days Amt Rs. 38.37 Crores
Construction of MCH Wing Bldg with electrical work at Akola National Health Mission Tender Opening is expected by October – November Amt Rs. 24.64 Crores
Construction of 100 Bed Hospital at Akola National Health Mission Tender Opening is expected by October – November Amt Rs 51.66 Crore

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 20-21 (Audited)	FY 19-20 (Audited)
Operating Revenue	Rs.Crs.	43.52	58.15
EBITDA	Rs.Crs.	5.28	5.48
PAT	Rs.Crs.	2.10	2.40
Tangible Net Worth	Rs.Crs.	31.25	27.35
Total Debt/Tangible Net Worth	Times	0.33	0.57
Current Ratio	Times	2.34	1.52

RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)

Facilities	Current Rating (2021)			2020		2019		2018
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	16.16	BWR BB+/Stable (Upgrade)	28Mar2020	BWR BB- Issuer Not Cooperating Downgrade ()	02Jan2019	BWR BB (Stable) ()	NA	NA
Non Fund Based	LT	1.50	BWR BB+/Stable (Upgrade)	NA	NA	NA	NA	NA	NA
Non Fund Based	ST	11.30	BWR A4 (Reaffirmation)	28Mar2020	BWR A4 Issuer Not Cooperating Reaffirmation ()	02Jan2019	BWR A4 ()	NA	NA
Grand Total		28.96	(Rupees Twenty Eight Crores and Ninety Six 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

Analytical Contacts
Mrigank Tripathi Ratings Analyst mrigank.t@brickworkratings.com	Sushil Kumar Chitkara Director - Ratings Board : +91 22 2831 1426, +91 22 2831 1439 sushilkumar.c@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

Atal Realtech Ltd. (erstwhile Atal Realtech 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	AU Small Finance Bank	Overdraft - Sanctioned	2.50	_	2.50
2	AU Small Finance Bank	Bank Guarantee - Sanctioned	1.50	_	1.50
3	State Bank Of India (SBI)	Cash Credit - Sanctioned	11.00	_	11.00
4	State Bank Of India (SBI)	GECL - Sanctioned	2.11	_	2.11
5	State Bank Of India (SBI)	Funded Interest Term Loan - Sanctioned	0.55	_	0.55
6	State Bank Of India (SBI)	Bank Guarantee - Sanctioned	_	11.30	11.30
Total			17.66	11.30	28.96
TOTAL (Rupees Twenty Eight Crores and Ninety Six lakhs Only)

Print and Digital Media

The Rating Rationale is sent to you for the sole purpose of dissemination through your print, digital or electronic media. While it may be used by you acknowledging credit to BWR, please do not change the wordings in the rationale to avoid conveying a meaning different from what was intended by BWR. BWR alone has the sole right of sharing (both direct and indirect) its rationales for consideration or otherwise through any print or electronic or digital media.

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 11,400 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.

Disclaimer

Brickwork Ratings India Pvt. Ltd. (BWR), a Securities and Exchange Board of India [SEBI] registered Credit Rating Agency and accredited by the Reserve Bank of India [RBI], offers credit ratings of Bank Loan facilities, 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. [ hereafter referred to as "Instruments"]. BWR also rates NGOs, Educational Institutions, Hospitals, Real Estate Developers, Urban Local Bodies and Municipal Corporations.

BWR wishes to inform all persons who may come across Rating Rationales and Rating Reports provided by BWR that the ratings assigned by BWR are based on information obtained from the issuer of the instrument and other reliable sources, which in BWR's best judgment are considered reliable. The Rating Rationale / Rating Report & other rating communications are intended for the jurisdiction of India only. The reports should not be the sole or primary basis for any investment decision within the meaning of any law or regulation (including the laws and regulations applicable in Europe and also the USA).

BWR also wishes to inform that access or use of the said documents does not create a client relationship between the user and BWR.

The ratings assigned by BWR are only an expression of BWR's opinion on the entity / instrument and should not in any manner be construed as being a recommendation to either, purchase, hold or sell the instrument.

BWR also wishes to abundantly clarify that these ratings are not to be considered as an investment advice in any jurisdiction nor are they to be used as a basis for or as an alternative to independent financial advice and judgment obtained from the user's financial advisors. BWR shall not be liable to any losses incurred by the users of these Rating Rationales, Rating Reports or its contents. BWR reserves the right to vary, modify, suspend or withdraw the ratings at any time without assigning reasons for the same.

BWR's ratings reflect BWR's opinion on the day the ratings are published and are not reflective of factual circumstances that may have arisen on a later date. BWR is not obliged to update its opinion based on any public notification, in any form or format although BWR may disseminate its opinion and analysis when deemed fit.

Neither BWR nor its affiliates, third party providers, as well as the directors, officers, shareholders, employees or agents (collectively, "BWR Party") guarantee the accuracy, completeness or adequacy of the Ratings, and no BWR Party shall have any liability for any errors, omissions, or interruptions therein, regardless of the cause, or for the results obtained from the use of any part of the Rating Rationales or Rating Reports. Each BWR Party disclaims all express or implied warranties, including, but not limited to, any warranties of merchantability, suitability or fitness for a particular purpose or use. In no event shall any BWR Party be liable to any one for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of any part of the Rating Rationales and/or Rating Reports even if advised of the possibility of such damages. However, BWR or its associates may have other commercial transactions with the company/entity. BWR and its affiliates do not act as a fiduciary.

BWR keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of the respective activity. As a result, certain business units of BWR may have information that is not available to other BWR business units. BWR has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with each analytical process.

BWR clarifies that it may have been paid a fee by the issuers or underwriters of the instruments, facilities, securities etc., or from obligors. BWR's public ratings and analysis are made available on its web site, www.brickworkratings.com. More detailed information may be provided for a fee. BWR's rating criteria are also generally made available without charge on BWR's website.

This disclaimer forms an integral part of the Ratings Rationales / Rating Reports or other press releases, advisories, communications issued by BWR and circulation of the ratings without this disclaimer is prohibited.

BWR is bound by the Code of Conduct for Credit Rating Agencies issued by the Securities and Exchange Board of India and is governed by the applicable regulations issued by the Securities and Exchange Board of India as amended from time to time.