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
ParticularsFacilities** | 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) |
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 DRIVERSCredit Strengths:
The promoters have presence of more than two decades which have enabled them to achieve steady orders from govt authorities.
The company has a moderate capital structure with moderate Tangible Net worth level of Rs19.42 crs and comfortable Gearing level of 0.19X as at FY20.
Moderate debt protection metrics indicated by ISCR and DSCR which stood at 6.17X and 3.62X respectively as at FY20.
The company has moderate liquidity indicated by Current Ratio which stood at 1.59X as at FY20.
The company has an order book position in tune of Rs 274.53cr out of which works in tune of Rs 143.80cr are completed and works in tune of Rs 155.44cr are under progress indicating medium to long term revenue visibility.
The company has modest scale of operations indicated by Total Operating Income (TOI) of Rs 51.95 crs as at FY20. The scale of the operations remains modest on account of the intense competition faced in the bidding process in the tender based model which carries inherent risk as the revenues of the entity are dependent on the tenders won by the company. On provisional basis, the company has achieved revenues in tune of Rs 62.16cr in FY21
The company is exposed to delays in execution of various contracts on account of Covid19.
The company remains exposed to geographical concentration risks with most of its revenues derived from MP from Public Work Department of Indore. In absence of cost escalation clause in most contracts, the company is also exposed to raw material price fluctuation risk. Apart from that completion of projects on time with a timely realization of proceeds from govt. organization remains the major concern.
Working capital Intensive as the company has to make various deposits with govt agencies as retention money and margin money and the deposits are currently at a high level.
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 ENTITYK.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 |
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) |
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 CriteriaAnalytical 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 |
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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