RATING RATIONALE
26Oct2021

KG Gupta Infrastructure Pvt Ltd

Brickwork Ratings revises the ratings for the Bank Loan Facilities of Rs. 28.05 Crs. of KG Gupta Infrastructure Pvt Ltd and simultaneously removes it from Issuer Not Cooperating category

Particulars
Facilities** Amount (Rs.Crs.) Tenure Rating#
Previous Present Previous
(30 Apr 2021)
Present
Fund Based 4.95 4.95 Long Term BWR BB (Stable)
ISSUER NOT COOPERATING*
BWR BB + /Stable
Upgrade
Non Fund Based 19.10 23.10 Short Term BWR A4
ISSUER NOT COOPERATING*
BWR A4 +
Upgrade
Grand Total 24.05 28.05 (Rupees Twenty Eight Crores and Five 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

RATING ACTION : Long Term Ratings & Short Term Ratings upgraded to BWR BB+(Stable)/A4+ and Removed from Issuer Not Cooperating
RATING OUTLOOK : Stable

BWR has essentially relied upon the audited financials upto FY20 and provisional financials for FY21, projections for FY22, publicly available information and information/clarifications as by the management.

The rating continues to draw strength from the extensive experience of the promoters in the road construction and infrastructure industry. The rating further draws strength from the moderate capital structure with moderate tangible net worth level and comfortable level of Gearing, moderate debt protection metrics and moderate liquidity.

The rating is however constrained by modest scale of operations on account of the intense competition  faced in the bidding process. The rating also takes into account tender based model of business which carries inherent risk, exposure of the company to geographical concentration risk with most of its revenue derived from PWD of Indore, exposure to raw material price fluctuation risk and stretched working capital cycle due to high level of deposits with the government departments The rating also  factors in the risk of timely realization of proceeds from govt organization.

In the construction industry, there is intense competition in the tender - based contract awarding system, resulting in volatility in revenue and pressure on margins.

BWR believes that business risk profile of ?K G Gupta Infrastructure Pvt Limited 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:


Credit Risks:

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

Going forward, the ability of the company to improve revenue & profitability margins, manage liquidity, infuse capital, achieve projected financials and timely repay of debt obligations would be key rating sensitivities.

Positive: The ratings may be upgraded if the firm execute & complete its unexecuted work orders in a timely manner and  revenue, profitability and financial risk profile, especially Tangible Net Worth show substantial improvement.

Negative: The rating may be downgraded in case there is a significant deterioration in the business and financial risk profile of the firm from its current level

LIQUIDITY INDICATORS - Adequate

The company did not have any term debt on its books as on March 31, 2020; hence,there are no scheduled repayments. Further, the company has adequate fund based and non-fund based working capital limits, a sizeable part of which is unutilised. ?Average utilization of the credit facilities have been 10-15% in the past one year. The company has reported a moderate liquidity position with a current ratio of 1.59 X in FY20. The cash and cash equivalents stands at Rs. 0.72 Crs. in FY20 and net cash accruals for FY20 are Rs. 4.14 Crs?.

ABOUT THE ENTITY

K.G.Gupta Infrastructure Private Limited is a private limited company incorporated on 30th March, 2009. The Company executes road, dams, bridges and building contracts awarded by central, state and semi-government agencies in Madhya Pradesh and the Company is an approved Class 1A contractor, which enables it to apply for tenders of all sizes.The company is managed by Krishna Goyal Gupta and his family.

KEY FINANCIAL INDICATORS (Standalone)
Key Parameters Units FY 19-20
(Audited)
FY 18-19
(Audited)
Operating Revenue Rs.Crs. 51.95 59.89
EBITDA Rs.Crs. 4.32 4.23
PAT Rs.Crs. 2.73 2.73
Tangible Net Worth Rs.Crs. 19.42 16.69
Total Debt/Tangible Net Worth Times 0.19 0.33
Current Ratio Times 1.59 1.54

RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)
Facilities Current Rating (2021) 2021 (History) 2020 2019 2018
Type Tenure Amount
(Rs.Crs.)
Rating Date Rating Date Rating Date Rating Date Rating
Fund Based LT 4.95
BWR BB+/Stable
(Upgrade)
30Apr2021
BWR BB (Stable)
(ISSUER NOT COOPERATING*)
NA
NA
29Nov2019
BWR BB+ (Stable)
(Reaffirmation)
05Jun2018
BWR BB+ (Stable)
(Assignment)
NA
NA
NA
NA
NA
NA
29Jul2019
BWR BB+ (Stable)
(Reaffirmation)
NA
NA
Non Fund Based ST 23.10
BWR A4+
(Upgrade)
30Apr2021
BWR A4
(ISSUER NOT COOPERATING*)
NA
NA
29Nov2019
BWR A4+
(Reaffirmation)
05Jun2018
BWR A4+
(Assignment)
NA
NA
NA
NA
NA
NA
29Jul2019
BWR A4+
(Reaffirmation)
NA
NA
Grand Total 28.05 (Rupees Twenty Eight Crores and Five 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

Siddhi Kadakia

Ratings Analyst Board : +91 22 2831 1426, +91 22 2831 1439 siddhi.k@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
KG Gupta Infrastructure 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 Kotak Mahindra Bank Bank GuaranteeSanctioned _ 8.10 8.10
2 Kotak Mahindra Bank OverdraftSanctioned 0.15 _ 0.15
3 State Bank Of India (SBI) Cash CreditSanctioned 4.80 _ 4.80
4 State Bank Of India (SBI) Bank GuaranteeSanctioned _ 15.00 15.00
Total 4.95 23.10 28.05
TOTAL (Rupees Twenty Eight Crores and Five lakhs Only)
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