Armstrong India Constructions

Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 37.00 Crs. of Armstrong India Constructions

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (03 Dec 2020)	Present
Fund Based	7.00	7.00	Long Term	BWR BB/Stable Assignment	BWR BB /Stable Reaffirmation
Non Fund Based	30.00	30.00	Short Term	BWR A4 Assignment	BWR A4 /Stable Reaffirmation
Grand Total	37.00	37.00	(Rupees Thirty Seven 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

RATING ACTION / OUTLOOK

Brickwork Ratings reaffirmed the rating to BWR BB (Stable)/BWR A4 for the bank loan facilities amounting to Rs. 37.00 Crs. of Armstrong India Constructions because the client is regular in servicing the debts. BWR believes that Armstrong India Constructions 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 backed by a favorable industry scenario. The rating outlook may be revised to 'Negative' if the revenues and profit margins show lower than expected figures.
BWR has essentially relied upon the audited financial statements of Armstrong India Constructions for FY20 and FY21, projections for FY22 and FY23, and publicly available information and information/clarifications provided by the entity’s management. The rating draws strength from the experienced management, moderate scale of operations, Adequate Coverage Ratios and Profit Margins, Order Book position. The rating is however constrained by exposure to intense competition in the industry, high gearing, tender based operation, concentration risk
Going forward the ability of the company to improve its margins, scale of operations, working capital cycle, gearing, along with strengthening its overall financial risk profile would be its key rating sensitivity.

KEY RATING DRIVERS

Credit Strengths:

Promoters Experience :
Incorporated in the year 1998 , AIC is managed by Mr. Raju Solanki having experience of 3 decades in civil construction works.Over the years of existence in the market, the promoter has established long term relationships with its customers, suppliers.
Scale of Operations :
The scale of operations has decreased from Rs 41.11 Cr in FY20 Vs Rs 34.69 Cr in FY21. Though the sales is decline in FY21 but the same is picked up in FY22 and FY23. and substantial orders on hand indicate achievability of sales projection of Rs. 49.03 cr in FY22
Adequate Coverage Ratios and profit margins :
DSCR and ISCR at 2.46 x and 2.54x respectively in FY21. The profit margins in FY21 are fair compared to FY20 with OPM at 13.15% and NPM at 7.28%. The current ratio reported at 6.75x, in FY21 is adequate.
Order Book Position :
AIC has an order book of Rs 142.29 Cr as of 12 Jan 2022 . client has completed Rs.63.69 Cr order as on 12th Jan 2022. Pending work is Rs 78.50 where the most of the work will completed by 2022 only

Credit Risks:

Tender Based Operations :
The operations are tender based which exhibits an inherent risk & also carries potential risk in the timely implementation of various contracts.
Concentration Risk :
Company is into civil construction of Municiple Corporation hence there is concentrated risk. All suppliers from Mumbai only which shows geographical concentration

RATING SENSITIVITIES

Going forward the ability of the company to improve its scale of operations, overall financial risk profile, and maintain its liquidity position will be the key sensitivities.

Positive: The ratings may be upgraded with improvement in scale of operations, capital structure, profit margins, and tangible net worth.

Negative: The ratings may be downgraded in case revenues of the company and profit substantially plunge from the current levels and gearing and debt service metrics deteriorate.

LIQUIDITY INDICATORS - Adequate

The liquidity profile of the company is adequate driven by current ratio of 6.75x during FY21. The liquidity is projected to decrease at 1.69x in FY22 and 1.75x in FY23 The cash and cash equivalents stood low at Rs 1.42 Crs. as on March 2021. Average utilization of limits is 25% as per banker feedback

ABOUT THE ENTITY

Armstrong (India) Constructions was set up as a proprietorship concern by Mr.Raju Surajmal Solanki.In Oct 2020 the firm was converted into partnership concern with 75% holding with Mr Raju Solanki and 25% by Mr Prithvi Solanki In the year 1998, the company got registered with Mumbai Municipal Corporation & also registered Maharashtra State Public Works Department (PWD) in 1(A) Category. In 2012 company has expanded its wings by registering with other Municipal Corporations and succeeded in getting various contracts in the Surat Municipal Corporation. The company is carrying out various work projects which includes improvement of roads/footpaths, reinstatement of Trenches, desilting of Dallas, construction of Nallas & S.W.D. and also repairs to building etc. in Mumbai as well as Surat region. The company have its own Ready Mix Concrete Plant in the Property owned by the Proprietor at Vasai . This Plant and its laboratory is fully automatic and equipped with latest technology. The tender bidding ratio is approximately 20%

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 20-21 (Unaudited)	FY 19-20 (Audited)
Operating Revenue	Rs.Crs.	34.69	41.11
EBITDA	Rs.Crs.	4.56	5.40
PAT	Rs.Crs.	2.52	3.04
Tangible Net Worth	Rs.Crs.	5.86	8.66
Total Debt/Tangible Net Worth	Times	3.00	2.33
Current Ratio	Times	6.75	3.10

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

Facilities	Current Rating (2022)			2021		2020		2019
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	7.00	BWR BB/Stable (Reaffirmation)	NA	NA	03Dec2020	BWR BBStable (Assignment)	NA	NA
Non Fund Based	ST	30.00	BWR A4/Stable (Reaffirmation)	NA	NA	03Dec2020	BWR A4 (Assignment)	NA	NA
Grand Total		37.00	(Rupees Thirty Seven 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
Rujuta Sadanand Zajam Ratings Analyst rujuta.sz@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

Armstrong India Constructions

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 Maharashtra	Cash Credit - Sanctioned	7.00	_	7.00
2	Bank of Maharashtra	Bank Guarantee - Sanctioned	_	30.00	30.00
Total			7.00	30.00	37.00
TOTAL (Rupees Thirty Seven Crores Only)

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