Brickwork Ratings reaffirms the Long- term rating at BWR BBB-/Stable & reaffirms the short- term rating at BWR A3, for the Bank Loan Facilities of Rs. 41.80 Crs. of Aquatech Solutions Private Limited
Particulars| Facilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||
|---|---|---|---|---|---|
| Previous | Present | Previous (10 May 2021) |
Present | ||
| Fund Based | 32.90 | 33.80 | Long Term |
BWR BBB- /Stable
Reaffirmation |
BWR BBB -
/Stable Reaffirmation |
| Non Fund Based | 8.00 | 8.00 | Short Term |
BWR A3
Reaffirmation |
BWR A3
Reaffirmation |
| Grand Total | 40.90 | 41.80 | (Rupees Forty One Crores and Eighty lakhs Only) | ||
Rating Action : Long Term & Short Term Ratings reaffirmed at BWR BBB-(Stable)/A3
Brickwork Ratings (BWR) has essentially relied on the audited financial statements of Aquatech Solutions Private Limited (ASPL or the company) up to FY21, provisional FY22, projections upto FY24 publicly available information, and information/clarifications provided by the company’s management and its bankers to arrive at the present ratings BWR believes that the business risk profile of Aquatech Solutions Private Limited will be maintained over the medium term. The 'Stable' outlook indicates a low likelihood of rating change over the medium term. The ratings have been reaffirmed on account of extensive experience of the promoters, moderate order book position, scale of operations, moderate gearing, adequate debt protection metrics, healthy profitability margins, average liquidity profile. The rating is however constrained due to the inherent risk in the tender based business, presence in a highly competitive industry, working capital intensive nature of operations.
KEY RATING DRIVERSCredit Strengths:
The promoters have an experience of over a decade in the same field.
The company has a relatively moderate scale of operations as indicated by a total operating income of Rs 58.21 Cr in FY22 improving from Rs 42.25 Cr in FY21 which declined when compared to Rs 76.87 Crs in FY20. They have projected sales of Rs 90 Crs in FY23 which appear to be available in next substantial order in hand worth Rs 200 Crs. They have already achieved sale of Rs 30.56 Crs in 3 month period i.e. Apr - June 2022 & projected Rs 110 Crs in FY24 and monthwise sale is in the range of Rs 9.00 Crs - 12.00 Crs during the latest 6 months period Jan22 - June 22. Trade payable period is elongated.The company has been operating in this industry since 2006 and over the years has developed a strong business relationship with its suppliers. Thus the company is able to elongate its creditor's payment cycle in line with the debtors collection period. Due to clients being from Semi Govt department/ Municipal corporation /PWD etc, part of the receivables get stretched but are realized.
The company's financial profile is moderate, where Tangible Networth stands at Rs 44.73 Crs in FY22 v/s Rs 41.33 Crs in FY21. The company has a moderate gearing ratio as indicated by Total Debt/TNW of 0.67X in FY22 v/s 0.93X in FY21 & TOL/TNW of 1.56X in FY22 v/s 2.08X in FY21. The current ratio of the company stands at 1.41X in FY22 & is expected to be 1.49X in FY23.
Profit margins of the company are moderate with OPM and NPM standing at 14% and 5.84% in FY22 as compared to 13.88% and 2.57% in FY21 respectively. The company has expected OPM & NPM 14.38% & 6.72% in FY23 & 14.63% & 7.41% in FY24 respectively.
Debt protection metrics are moderate with ISCR standing at 2.22X in FY22 v/s 1.28X in FY21, whereas DSCR is at 1.20X in FY22 v/s 1.25X in FY21. The company expects ISCR at 3.55x & DSCR at 1.73x in FY23 & ISCR at 4.51x & DSCR at 2.30x in FY24.
The company has a highly stretched working capital cycle. The GCA accounts to 160% in FY22 vis-a-vis 253.01% in FY21.
The civil construction industry is highly fragmented in nature with the presence of a large number of unorganised players and a few large organised players, which, coupled with the tender-driven nature of construction contracts, poses huge competition. ASPL, like any other civil construction company, is exposed to risks inherent in the civil construction sector, such as a slowdown in new order inflows and the risks of delays in execution. Operations are vulnerable to price variations in key raw materials; however, the risk is largely mitigated in the case of contracts that include an escalation clause.
Since the company’s business model is tender-based, revenue depends on the company’s ability to win tenders successfully. Additionally, the majority orders are from government entities, resulting in high dependence on timely clearances for tenders and payment.
Going forward the company’s ability to improve the scale of operations, improve and maintain profitability, the debt servicing capability & liquidity will be the key rating sensitivities.
Positive: Significant ramp-up in operating revenues on the back of timely project completion, maintaining new order flows and efficient debtor's collections
Negative: Lower-than-expected cash flow from operations due to a significant delay in completion, weakening of the liquidity position, deterioration in the gearing and debt coverage metrics
LIQUIDITY INDICATORS - Adequate
The company has an adequate liquidity position.
The company has a moderate current ratio of 1.3X in FY21 which stands improved at 1.41X as per provisional FY22.
The net cash accurals stand at Rs 4.59 with cash & cash equivalents at Rs 13.61 Cr as per FY22 as against a debt repayment obligation of Rs 1.98 Crs in FY22.
The average cash credit utilization for the past 6 months i.e. from Dec 2021 to May 2022 stands at 86.83% & 86.42%.
ABOUT THE ENTITYM/s. Aquatech Solutions Private Limited (ASPL) incorporated in Feb 2006, has its activity carried out from Pune. It is a Pune based closely held company. ASPL is a registered Class I Civil Contractor with Govt Of Maharashtra. ASPL is mainly engaged in the design and construction of Sewerage Treatment Plants and underground sewerage network systems. It mainly utilises a Cyclic Activated Sludge Treatment technology (C-Tech).
KEY FINANCIAL INDICATORS (Standalone)| Key Parameters | Units |
FY 21-22 (Provisional) |
FY 20-21 (Audited) |
|---|---|---|---|
| Operating Revenue | Rs.Crs. | 58.21 | 42.25 |
| EBITDA | Rs.Crs. | 8.15 | 5.86 |
| PAT | Rs.Crs. | 3.40 | 1.08 |
| Tangible Net Worth | Rs.Crs. | 44.73 | 41.33 |
| Total Debt/TNW | Times | 0.67 | 0.93 |
| Current Ratio | Times | 1.41 | 1.30 |
NA
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 | 33.80 |
BWR BBB-/Stable
(Reaffirmation) |
10May2021 |
BWR BBB- Stable
(Reaffirmation) |
28Jan2020 |
BWR BBB- Stable
(Reaffirmation) |
24Jan2019 |
BWR BBB- Stable
(Upgrade) |
| Non Fund Based | ST | 8.00 |
BWR A3
(Reaffirmation) |
10May2021 |
BWR A3
(Reaffirmation) |
28Jan2020 |
BWR A3
(Reaffirmation) |
24Jan2019 |
BWR A3
(Upgrade) |
| Grand Total | 41.80 | (Rupees Forty One Crores and Eighty 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 Criteria| Analytical Contacts | |
|---|---|
|
Suman Prabitra Paul Ratings Analyst suman.p@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 | Bank of Maharashtra | Working Capital Term LoanSanctioned | 3.35 | _ | 3.35 | |
| 2 | Bank of Maharashtra | Cash CreditSanctioned | 17.00 | _ | 17.00 | |
| 3 | Bank of Maharashtra | Bank GuaranteeSanctioned | _ | 8.00 | 8.00 | |
| 4 | Bank of Maharashtra | GECLSanctioned | 3.10 | _ | 3.10 | |
| 5 | Bank of Maharashtra | Covid Term LoanSanctioned | 0.35 | _ | 0.35 | |
| 6 | Jana Seva Sahakari Bank | Cash CreditSanctioned | 10.00 | _ | 10.00 | |
| Total | 33.80 | 8.00 | 41.80 | |||
| TOTAL (Rupees Forty One Crores and Eighty lakhs Only) | ||||||
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 RatingsBrickwork 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 13,200 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.