Spica Projects & Infrastructures Pvt. Ltd.

Brickwork Ratings reaffirms the ratings for the enhanced aggregate bank loan facilities of Rs.58.72 Crs of Spica Projects & Infrastructures Pvt. Ltd.

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (02 Mar 2021)	Present
Fund Based	4.87	4.87	Long Term	BWR BBB- /Stable Assignment	BWR BBB - /Stable Reaffirmation
Non Fund Based	28.85	53.85	Short Term	BWR A3 Assignment	BWR A3 Reaffirmation
Grand Total	33.72	58.72	(Rupees Fifty Eight Crores and Seventy Two 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

Brickwork Ratings has relied upon the Audited financials of the company for FY 19, FY 20 and FY 21, provisional financials of FY 22 and Projected financials of FY 23 and FY 24, information available in public domain as well as feedback from the company and its bankers, for arriving at the present rating.

Based on a review, Brickwork Ratings has reaffirmed the rating for the long term bank loan facilities of Spica Projects & Infrastructures Pvt. Ltd. for Rs. 4.87 Crs at BWR BBB-, Stable and has reaffirmed the rating for the enhanced short term bank loan facilities of Rs. 53.85 Crs at BWR A3 (enhanced from Rs.28.85 Crs) - aggregate rated amount increased to Rs.58.72 Crs from Rs.33.72 Crs. The rating reaffirmation factors in the experienced management and long track record of operations of the company, comfortable financial risk profile, Reputed & Government Clientele, moderate order book position as well as adequate liquidity. The rating is, however, constrained by the Working Capital intensive nature of business, Continuing Moderate Scale of operations, Project implementation risk as well as Tender based nature of business and intense competition.

BWR believes that the business risk profile of Spica Projects & Infrastructures Pvt. Ltd.. will be maintained over the medium term, and the 'Stable' outlook assigned 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 on a continuous basis.

The lenders/investors may note to exercise due caution while using the above rating which mentions "Issuer Not Cooperating" since the rating lack any projections or forward looking component as it is arrived at based on the best available information without any management/banker's interaction.

KEY RATING DRIVERS

Credit Strengths:

Experienced management & Established track record of operations :
The Directors of the company, Mr. Santosh Singh, Ms. Anima Singh, Mr. Surya Prakash, and Mr. Chandra Singh have more than a decade each of experience in Civil and Road construction works. The company has established its track record of operations since 2012.
Comfortable Financial risk profile :
The financial risk profile of the company is marked by comfortable net worth, low leverage, comfortable profitability and debt coverage indicators. The EBITDA Margin has remained comfortable at .10.07% in FY 21 compared to 11% in FY 20. The debt to equity ratio stood below unity at 0.15 times as on 31st March, 2021 compared to 0.31 times as on 31st March, 2020 and the same has remained at the same level, standing below unity at 0.15 times as on 31st March, 2022. The interest coverage ratio (ISCR) and debt service coverage ratio (DSCR) of the company are also comfortable at 6.00 times and 4.73 times respectively in FY 21 compared to 4.16 times and 2.99 times in FY 20, which are estimated to be at 4.21 times and 4.22 times respectively as per FY22 figures. The company does not have any long term debt.
Reputed & Government Clientele :
The customer profile of the company includes government departments of Jharkhand, Bihar, Assam and Government of India in civil & road Construction. The major clientele also includes PWD, Jharkhand, RWD, Jharkhand apart from other Government departments of Bihar & Assam.
Moderate work order position :
The order book position of the company stood moderate at Rs.166.00 Crs, giving revenue visibility to the company. for the next two years.

Credit Risks:

Continuing Moderate Scale of operations :
The scale of operations of the company has remained at a moderate level marked by total operating income of Rs.69.15 crore with a PAT of Rs.4.48 crore in FY 21, compared to Rs.63.03 Crs and Rs.3.54 Crs respectively in FY20.
Working capital intensive nature of business: :
The operations of SPIPL are working capital intensive as the company is engaged in civil & road construction activity where high debtors are required to be maintained.
Geographical and sectoral concentration risks :
SPIPL’s outstanding order book is exposed to geographic and sectoral concentration risks as ~70% of the order book is from Meghalaya and remaining of the order book is from Bihar and Assam, while most of its projects are in the road and infrastructure segments. Limited diversity in revenue will continue to make it susceptible to intense competition and cyclicality which is inherent in the civil construction business. Going forward, the ability of the company to diversify its order book would be a key rating sensitivity.
Project implementation risk :
Owing to the uncertainties in the implementation, cost and time overruns are a possibility, leading to project execution risks. The ratings are sensitive to timely execution of the pending order book.
Tender based nature of business and intense competition :
Since operations are tender driven, topline depends on successful bidding. Thus, there is fluctuation in revenues and profitability margins booked in each year due to uncertainty associated with new order inflows. Further, the company faces stiff competition from other contractors, the same has been a contributing factor to the company's moderate scale of operations.

RATING SENSITIVITIES

Positive:

Increase in scale of operations & profitability, while maintaining adequate liquidity.
Increase its Net Worth, improvement in the operating efficiency of the company and the profit margins.
Geographic diversification of its order book.

Negative :

Delay in payments of its debt obligations.
Decline in Revenue & deterioration of the financial position of the company
Deterioration in leverage indicator based on Total debt to TNW, as well as weakening of liquidity position of the business.

LIQUIDITY INDICATORS - Adequate

The liquidity of the company stands adequate as reflected by the comfortable cash credit utilization ~at 77% for the last six months ended March 2022. Liquidity is further supported by healthy ISCR & DSCR of 6.00 times and 4.73 times respectively in FY 2021 and 4.21 times and 4.44 times respectively in FY 22 provisional. The current ratio of the company stood comfortable at 2.07 times in FY 21 and 3.83 times in FY 22 provisional. The company presently does not have any major debt-led capex plan and long term repayment obligations. The company has also not availed the Covid 19 Relief moratorium. Further liquidity is supported by comfortable cash & bank balance, which stood at Rs.25.41 Crs as on 31.03.2021 and at Rs.17.73 Crs on 31-03-2022 as per FY22 Provisionals.The company has projected Net Cash accrual Rs.6.05 Crs in FY 23 againest negligible amount of debt obligation.

ABOUT THE ENTITY

Spica Projects & Infrastructures Pvt. Ltd. is a Jharkhand-based private limited company incorporated in 2012 promoted by Mr. Santosh Singh,Ms. Anima Singh, Mr. Surya Prakash, and Mr. Chandra Singh. It undertakes civil construction works, such as the construction of roads and bridges, and buildings. It is registered as a Class-1 contractor with the Public Works Department of Jharkhand.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 20-21 (Audited)	FY 19-20 (Audited)
Operating Revenue	Rs.Crs.	69.15	63.03
EBITDA	Rs.Crs.	6.96	6.93
PAT	Rs.Crs.	4.48	3.54
Tangible Net Worth	Rs.Crs.	30.05	25.13
Total Debt/Tangible Net Worth	Times	0.15	0.31
Current Ratio	Times	2.07	2.16

KEY COVENANTS OF THE FACILITY RATED

Usual Covenants as Bank loan rating.

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	4.87	BWR BBB-/Stable (Reaffirmation)	02Mar2021	BWR BBB- Stable (Assignment)	NA	NA	NA	NA
Non Fund Based	ST	53.85	BWR A3 (Reaffirmation)	02Mar2021	BWR A3 (Assignment)	NA	NA	NA	NA
Grand Total		58.72	(Rupees Fifty Eight Crores and Seventy Two 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

Engineering Procurement and Construction (EPC) Companies

Analytical Contacts
Saroj Kumar Das Ratings Analyst sarojkumar.d@brickworkratings.com	Anuradha Gupta Director - Ratings anuradha.g@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

Spica Projects & Infrastructures 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	Punjab National Bank	Bank Guarantee - Sanctioned	_	13.85	13.85
2	State Bank Of India (SBI)	Cash Credit - Sanctioned	4.87	_	4.87
3	State Bank Of India (SBI)	Bank Guarantee - Sanctioned	_	40.00	40.00
Total			4.87	53.85	58.72
TOTAL (Rupees Fifty Eight Crores and Seventy Two lakhs Only)

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