R K Jain Infra Projects Pvt. Ltd.

Brickwork Ratings upgrades the ratings for the Bank Loan Facilities of Rs. 181.65 Crs. of R K Jain Infra Projects Pvt. Ltd.

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (31 Mar 2021)	Present
Fund Based	17.00	20.00	Long Term	BWR BBB- /Stable Reaffirmation	BWR BBB /Stable Upgrade
Non Fund Based	124.00	161.65	Long Term	BWR BBB- /Stable Reaffirmation	BWR BBB /Stable Upgrade
Grand Total	141.00	181.65	(Rupees One Hundred Eighty One Crores and Sixty 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

Upgrade in the rating of RK Jain Infra Projects Pvt. Ltd (RKJIPL or the company) factors in its improved performance in FY22, as evident from the 11MFY22 provisional results, and visibility of sustained performance in the medium term. The company continues to maintain a comfortable financial risk profile indicated by its moderate debt protection metrics and comfortable gearing and overall financial leverage while improving upon its revenues and profitability in 11MFY22. The rating also factors in the benefits of diversified revenue streams of road construction and toll collection projects, although the increasing share of the latter in the company's revenues exposes it to significantly higher operational risks. The company’s unexecuted work order stood at Rs. 704.80 Crores as on 1st April 2022. The rating is, however, constrained by the moderate revenue visibility due to shorter tenure of the toll collection projects and large working capital requirements.

OUTLOOK: STABLE

BWR believes that the business risk profile of RK Jain Infra Projects Pvt. Ltd (RKJIPL or the company) 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. The rating outlook may be revised to 'Negative' if the revenues go down and profit margins show lower than expected figures.

KEY RATING DRIVERS

Credit Strengths:

Comfortable financial risk profile. :
The company's financial risk profile improved in FY21 and 11MFY22 (provisional). The revenues increased to 415.40Crs in 11MFY22 from Rs. 300.74 Crores in FY21. , backed by the increased toll collection orders. The debt protection metrics, as indicated by ISCR and DSCR, stood comfortably at 5.87x and 1.37x respectively in FY21. Gearing and TOL/TNW ratio were comfortable at 0.53x and 0.62x in FY21 on account of lower debt and lower utilization of working capital limits against a satisfactory net worth base. Current ratio was robust at 2.73x in FY21.
Diversified revenue streams :
RKJIP’s unexecuted order book stands at Rs 704.80 Crs as on 1st April 2022 from 50 different projects with a mix of road construction projects from state departments and toll collection projects from NHAI. The company has completed work orders of Rs. 458.03 Crores in FY22. Besides, the company has also completed the two construction projects for which they have formed a JV in the name of PRL RKJIPL with orders worth Rs 318 Crs in M.P and Rajasthan which are being executed solely by R K Jain Infra Ventures Pvt Ltd. The company's toll projects are located pan India while the road projects are concentrated mainly in the state of Haryana.
Experienced management :
The key promoter, Mr Rakesh Kumar Jain, has an experience of over three decades in the civil construction business. The promoter's healthy relationships with the stakeholders is likely to continue to support the company’s business risk profile in the medium to long term.

Credit Risks:

Moderate revenue visibility and volatile margins in toll collection projects :
RKJIPL’s operations are tender based and its topline depends on the successful bidding and timely execution of the projects. Moreover, with the increasing share of the toll collection projects, the revenues have become moderately volatile as the collections depend on the traffic movement. This is evident from the covid induced decline in traffic leading to lower revenues in FY21. The company's revenues from toll projects constitute ~67% of the total revenue in FY21 as against 59.41%in FY20. Further, the company has to make fixed remittances towards each toll project to NHAI which exposes the company to volatility in margins due to uncertainties in the tollable traffic.
Large Working Capital Requirements :
The company has to set aside significant margin money ranging from 10-50% across banks to meet its requirements of non-fund based limits. Further, a significant part of the working capital is blocked by way of security deposits and retention money at various government departments and agencies. This limits the company in participating for large scale tenders.

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 substantially improve and sustain its revenue profile, financial risk parameters as indicated by net profit margins, debt protection metrics and liquidity position would be the key rating sensitivities.

Upward:

The rating may be upgraded if the company substantially improves its revenues, net profits and debt protection metrics in the medium term, while maintaining its gearing ratios and adequate liquidity at all times.

Downward:

The rating may be downgraded if the company's revenues decline in future years, toll collections are impacted significantly or there is any stretch in the company's liquidity profile due to any unforeseen circumstances.

LIQUIDITY INDICATORS - Adequate

Liquidity is adequate as indicated by comfortable debt coverage metrics, judicious utilization of fund based limits at ~25% for the past 6 months on an average and healthy current ratio of 2.73x (FY21) of the company. Debt protection metrics viz. ISCR and DSCR stood at 5.87x and 1.37x respectively in FY21. The Net Cash accruals (PAT+Dep.) for FY22 (Proj) and FY23 (Proj) are Rs. 21.96 Crores and 25.13 Crores respectively, and are adequate to meet the maturing debt obligations of Rs. 10.72 Crores and Rs. 7.50 Crores respectively in FY22 and FY23 . In 11MFY22, the net cash accruals stood Rs. 25.03 Crores. The company had unencumbered cash and cash equivalents of Rs. 2.83Crores in FY21. The company’s working capital management is efficient due to its receivable days being low at only Rs. 3.86 Crores in FY21 and 1.41 Crores in 11MFY22. Gearing ratio stood at 0.53x for FY21 and 0.16x in 11MFY22. The overall liquidity position is considered adequate.

ABOUT THE ENTITY

R K Jain Infra Projects Pvt Ltd. (RKJIPL) was founded by its director, Mr Rakesh Kr. Jain in 2012. The company undertakes a mix of road construction and toll collection contracts. The company participates in various tenders floated by the state governments and its agencies. The geographical presence of the company spans across the states of Haryana, M.P, Rajasthan, U.P & Bihar.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 20-21 (Audited)	FY 19-20 (Audited)
Operating Revenue	Rs.Crs.	300.74	419.73
EBITDA	Rs.Crs.	27.18	39.58
PAT	Rs.Crs.	12.90	18.01
Tangible Net Worth	Rs.Crs.	66.64	52.73
Total Debt/Tangible Net Worth	Times	0.53	0.95
Current Ratio	Times	2.73	1.92

NON-COOPERATION WITH PREVIOUS CREDIT RATING AGENCY

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	20.00	BWR BBB/Stable (Upgrade)	31Mar2021	BWR BBB- Stable (Reaffirmation)	19Mar2020	BWR BBB- Stable (Reaffirmation)	31Oct2019	BWR BBB- Stable (Assignment)
Non Fund Based	LT	161.65	BWR BBB/Stable (Upgrade)	31Mar2021	BWR BBB- Stable (Reaffirmation)	19Mar2020	BWR BBB- Stable (Reaffirmation)	31Oct2019	BWR BBB- Stable (Assignment)
Grand Total		181.65	(Rupees One Hundred Eighty One Crores and Sixty 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
Nisha Nagar Ratings Analyst nisha.n@brickworkratings.com	Ashwini Mital Director - Ratings Board : +91 172 5032 295 / 6 ashwinimital@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

R K Jain Infra Projects 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	HDFC Bank	Cash Credit - Sanctioned	7.00	_	7.00
2	HDFC Bank	Bank Guarantee - Sanctioned	46.00	_	46.00
3	HDFC Bank	Adhoc Facilities NFB (LC/Guarantee) - Sanctioned	5.65	_	5.65
4	ICICI Bank	Bank Guarantee - Sanctioned	8.00	_	8.00
5	IndusInd Bank	Cash Credit - Sanctioned	3.00	_	3.00
6	IndusInd Bank	Bank Guarantee - Sanctioned	17.00	_	17.00
7	Kotak Mahindra Bank	Cash Credit - Sanctioned	5.00	_	5.00
8	Kotak Mahindra Bank	Bank Guarantee - Sanctioned	15.00	_	15.00
9	State Bank Of India (SBI)	Bank Guarantee - Sanctioned	35.00	_	35.00
10	State Bank Of India (SBI)	Cash Credit - Sanctioned	5.00	_	5.00
11	Yes Bank	Bank Guarantee - Sanctioned	35.00	_	35.00
Total			181.65	0.00	181.65
TOTAL (Rupees One Hundred Eighty One Crores and Sixty Five lakhs Only)

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