RATING RATIONALE
24Mar2022

Hindusthan Urban Infrastructure Limited.

Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 180.00 Crs. of Hindusthan Urban Infrastructure Limited.

Particulars
Facilities** Amount (Rs.Crs.) Tenure Rating#
Previous Present Previous
(05 Mar 2021)
Present
Fund Based 100.13 91.00 Long Term BWR BBB-/Stable
Reaffirmation
BWR BBB - /Stable
Reaffirmation
Non Fund Based 254.25 89.00 Short Term BWR A3
Reaffirmation
BWR A3
Reaffirmation
Grand Total 354.38 180.00 (Rupees One Hundred Eighty 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 (BWR) has reaffirmed its BWR BBB-/Stable/BWR A3 rating on the bank loan facilities of Hindusthan Urban Infrastructure Ltd ('HUIL' or 'the company').

The rating action reflects HUIL's revival in business risk profile. Revenues have sustained at Rs 540.9 crore in FY21 and  further improved to Rs 553.4 crore in 9MFY22 on the back of ramp up in sales from the chemical segment through its subsidiary Hindusthan Speciality Chemicals Limited. Profitability has improved substantially with operating margins at 10.92% in FY21 (FY20:  5.07%) and is sustained at 10.55% in 9MFY 22, supported by reducing operating expenses and focusing on high contribution orders in the conductor segment in HUIL. The financial risk profile remains average with a healthy networth and capital structure, and moderate debt protection metrics; however it is expected to improve over the medium term supported by the improved business performance.

The rating continues to reflect the promoter’s extensive experience, a diversified product profile, a reputed client profile and an average financial risk profile. These rating strengths are however partially off-set by the working capital intensity in operations and susceptibility to volatility in aluminium and alumina prices.

Outlook: Stable

BWR believes HUIL will continue to benefit from the extensive experience of the promoters in the industry. The Stable outlook indicates a low likelihood of a rating change over the medium term.

KEY RATING DRIVERS

Credit Strengths:


Credit Risks:

ANALYTICAL APPROACH - Consolidated

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

RATING SENSITIVITIES

Positive

Negative:

LIQUIDITY INDICATORS - Adequate

The liquidity is adequate, the company is expected to generate cash accruals of over Rs 30 crore in FY22 and Rs 50 crore in FY23 against repayment obligations of Rs 21.51 crore in FY22 and Rs 34.68 crore in FY23. The bank limit utilisation was moderate averaging 81% over the past 12 month through December 2021. Current ratio was adequate at 1.26 times as on March 31, 2021. Liquidity is further supported by need based funding from promoters through unsecured loans (outstanding at Rs 39.07 crore as on March 31, 201), and will be able to provide further support in case of any exigencies.

ABOUT THE ENTITY

HUIL was established in 1959 and is currently headed by chairman, Mr.Raghavendra Anant Mody. The Company is a leading manufacturer of overhead conductors and electro-porcelain high tension insulators such as Disc, solidcore, hollow and railway. Its operations can be classified into two divisions,viz, conductors and insulators.The conductor manufacturing units are located in Khurda,Orissa and Guwahati, Assam with a combined installed capacity of 66,000 metric ton per annum (MTPA) and insulator manufacturing unit is located in Bhopal, Madhya Pradesh with installed capacity of 15,380 MTPA. It is listed on the Bombay stock exchange.

KEY FINANCIAL INDICATORS (Standalone)
Key Parameters Units FY 20-21
(Audited)
FY 19-20
(Audited)
Operating Revenue Rs.Crs. 352.55 462.94
EBITDA Rs.Crs. 31.19 42.23
PAT Rs.Crs. 2.59 5.56
Tangible Net Worth Rs.Crs. 458.22 455.32
Total Debt/Tangible Net Worth Times 0.30 0.32
Current Ratio Times 1.47 1.50
KEY FINANCIAL INDICATORS (Consolidated)
Key Parameters Units FY 20-21
(Audited)
FY 19-20
(Audited)
Operating Revenue Rs.Crs. 540.96 550.33
EBITDA Rs.Crs. 59.05 27.89
PAT Rs.Crs. -3.29 -30.96
Tangible Net Worth Rs.Crs. 449.99 452.90
Total Debt/Tangible Net Worth Times 0.67 0.65
Current Ratio Times 1.26 1.24

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 91.00
BWR BBB-/Stable
(Reaffirmation)
05Mar2021
BWR BBB-Stable
(Reaffirmation)
14Feb2020
BWR BBB-Stable
(Reaffirmation)
17Jan2019
BWR BBB-Stable
(Assignment)
Non Fund Based ST 89.00
BWR A3
(Reaffirmation)
05Mar2021
BWR A3
(Reaffirmation)
14Feb2020
BWR A3
(Reaffirmation)
17Jan2019
BWR A3
(Assignment)
Grand Total 180.00 (Rupees One Hundred Eighty 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

Arbez Noshir Karbhari

Ratings Analyst arbez.k@brickworkratings.com

Chintan Dilip Lakhani

Director- Ratings chintan.l@brickworkratings.com
1-860-425-2742 | media@brickworkratings.com
Hindusthan Urban Infrastructure Limited.
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 Canara Bank Term LoanSanctioned 10.92 _ 10.92
2 Canara Bank Cash CreditSanctioned 5.00 _ 5.00
3 Canara Bank GECLSanctioned 8.00 _ 8.00
4 Canara Bank ILC/FLCSanctioned _ 25.00 25.00
5 Canara Bank BG/LC/ILCSanctioned _ 35.00 35.00
6 IDBI Bank GECLSanctioned 4.00 _ 4.00
7 IDBI Bank BG/LC/ILCSanctioned _ 15.00 15.00
8 IDBI Bank Cash CreditSanctioned 10.00 _ 10.00
9 State Bank Of India (SBI) Funded Interest Term LoanSanctioned 0.56 _ 0.56
10 State Bank Of India (SBI) GECLSanctioned 12.52 _ 12.52
11 State Bank Of India (SBI) Cash CreditSanctioned 40.00 _ 40.00
12 State Bank Of India (SBI) Term LoanSanctioned _ _ 0.00
13 State Bank Of India (SBI) BG/LC/ILCSanctioned _ 14.00 14.00
Total 91.00 89.00 180.00
TOTAL (Rupees One Hundred Eighty Crores Only)
ANNEXURE-III
List of entities consolidated

Name of Entity% OwnershipExtent of consolidationRationale for consolidation
Hindusthan Speciality Chemicals Limited 58.5 Full Subsidiary - Operational & financial linkages and common management

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.