Shiv Build India Pvt. Ltd.

Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 88.89 Crs. of Shiv Build India Pvt. Ltd.

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
	Previous	Present		Previous (30 Jun 2021)	Present
Fund Based	14.00	23.89	Long Term	BWR BBB+/Stable Upgrade	BWR BBB + /Stable Reaffirmation
	(0.00)	(5.00)
Non Fund Based	55.00	65.00	Short Term	BWR A2 Upgrade	BWR A2 Reaffirmation
	(0.00)	(3.00)
	(0.00)	(3.00)
	(0.00)	(5.14)
	(0.00)	(24.15)
	(0.00)	(2.00)
Grand Total	69.00	88.89	(Rupees Eighty Eight Crores and Eighty Nine 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 (BWR) has considered the standalone financials of  Shiv Build India Pvt. Ltd.   (hereinafter referred as 'Company') and essentially relied on audited financial statements upto FY21, Management certified provisional financials for FY22, projected financials upto for FY23 & FY24 and publicly available information and clarifications provided by the entity’s management.

The rating reaffirmation draws strength from the increasing trend of operating income, healthy work orders on hand in multiple states, adequate liquidity position and comfortable financial risk profile. The company also benefits from promoters’ vast business experience of  in the line of  infrastructure sector. These rating strengths are partially offset by project implementation and inherent risk related to tender driven operations.

BWR believes the business risk profile will be maintained over the medium term. The Stable outlook indicates a low likelihood of a rating change over the medium term.

Going forward, the entity’s ability of executing projects in a timely manner, repaying debt, improving sales and efficiently managing liquidity would be key rating sensitivities.

KEY RATING DRIVERS

Credit Strengths:

• Experienced management: :

  The promoters have experience in road construction since the last two decades and an established track record withstanding industry cycles. Over the years of operations, they have developed long-standing relations with clients in the government departments of Gujarat, Uttar Pradesh, Punjab and Haryana. The company benefits from the promoters’ significant experience in the tender bidding process, which helps in the continuous receipt of orders.

• Healthy Order Book and geographically spread operation: :

  The company had an unexecuted order book of ~Rs  1478.63 Crs (Rs. 241.21 Crs of Joint work) as of 5th September 2022, which is to be executed in the next 9-24 months. The majority of the orders are of the National Highways Authority of India (NHAI), to be executed in Punjab, Haryana, Tripura, Daman and Uttar Pradesh, Assam. Apart from the NHAI, the company has work orders of Executive Engineer R&B Panchayat, Nadiyad, Bhavnagar , Vapi Green Enviro Limited in Gujarat. The company has majority geographically spread  in Asam, Uttarpradesh and Punjab. A healthy order book provides revenue visibility in the near term.

• Healthy improvement in Scale of Operation and comfortable financial risk profile: :

  The company has witnessed healthy improvement in scale  of operations, YOY basis from ~ Rs 361.64 Crs in FY21 to Rs 466.46 Crs as per management certified provisional financials of FY22. As informed by management , the company has generated Total operating income of Rs. 170 rs as on 16.9.2022. Considering the healthy work order on hand; however, the achievability of this projection is a function of a range of extraneous factors such as timely land and environmental clearances and the site handover by the government. The tangible net worth stood at a modest level of Rs.  62.38 Crs as on 31 March 2021 on account of accumulated profits from previous years. The company’s gearing stood low at 1.05x and TOL/TNW of 2.61 in FY21,  due to moderate use of cash credit limits and timely repayment of term loans . Profit margins remained stable, with the operating margin at 8.01%  and the net margin at 3.09% to 3.70% in FY21. These stable margins resulted in the interest and debt service coverage at 2.43x and 1.37x, respectively, as on 31st March, 2021.

Credit Risks:

• Project implementation risk of ongoing projects: :

  Project implementation risk of ongoing projects: The ratings are sensitive to project execution risk of the pending order book, owing to the uncertainties in the construction industry. BWR notes that the company is primarily focusing on the short tenured projects of around 2 years , nonetheless, the operations are exposed to the associated risks.

• Susceptibility to risks inherent in tender based business: :

  Since operations are entirely tender-based, business depends on the ability to bid for tenders successfully. Additionally, the majority of orders are from government agencies, resulting in high dependence on timely clearances for tenders and payments. Revenue and profitability are expected to remain susceptible to risks inherent in tender-based operations.

ANALYTICAL APPROACH - Standalone

For arriving at its ratings, BWR has considered a standalone financials of the company and applied its rating methodology as detailed in the Rating Criteria: 

RATING SENSITIVITIES

Positive :

• The company's ability to bag new projects, timely execution of existing projects and thereby, realization of revenues. 

• Efficient working capital management and improvement in margins. 

Negative :

• Delays in the execution of ongoing orders, a reduction in fresh order inflows or a stretch in the receivables cycle of the company.

• Deterioration in financial risk profile on account of stretch in working capital cycle and increase in debt. 

 

LIQUIDITY INDICATORS - Adequate

The company's liquidity is adequate with  Rs. 8.95 crs in FY20 to Rs. 15.13 Crs in FY21, further expecting to achieve around Rs. 19 Crs in FY22. Cash accruals are sufficient to meet the debt repayment obligations. Working capital utilization remained  52% in the past  4 months ending on 31 July, 2022 and Non fund based limits utilization is 78.03%.The receivable cycle is short FY21, at  32 days, and later improved to 16 days in FY22 (Prov). However, payables are high due to the stressed working capital cycle. The company has availed GECL of Rs. 3.88 Crs and receives mobilization advance, which will support the liquidity in the near term. The entity is operating to working-capital-intensive business, hence timely collection from respective departments remain crucial for maintaining a comfortable liquidity position.

ABOUT THE ENTITY

Shiv Build India Pvt. Ltd. (SBIPL) was incorporated in 1992. The company is involved in infrastructure construction activities such as road works, building works, etc. The company has AA class registration certificate, special category- I in road works and building works issued by Government of Gujarat.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 20-21 (Audited)	FY 19-20 (Audited)
Operating Revenue	Rs.Crs.	361.64	170.75
EBITDA	Rs.Crs.	28.98	15.56
PAT	Rs.Crs.	11.16	6.32
Tangible Net Worth	Rs.Crs.	62.38	51.22
Total Debt/TNW	Times	1.05	1.06
Current Ratio	Times	1.45	1.31

NON-COOPERATION WITH PREVIOUS CREDIT RATING AGENCY

Not applicable

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	23.89	BWR BBB+/Stable (Reaffirmation)	11May2021	BWR BBB Stable (Downgrade/ISSUER NOT COOPERATING*)	04Feb2020	BWR BBB+ Stable (Reaffirmation)	NA	NA
		0.00	NA	30Jun2021	BWR BBB+Stable (Upgrade)	NA	NA	NA	NA
FB SubLimit	LT	(5.00)	BWR BBB+/Stable (Reaffirmation)	NA	NA	NA	NA	NA	NA
Non Fund Based	ST	65.00	BWR A2 (Reaffirmation)	11May2021	BWR A3+ (Downgrade/ISSUER NOT COOPERATING*)	04Feb2020	BWR A2 (Reaffirmation)	NA	NA
		0.00	NA	30Jun2021	BWR A2 (Upgrade)	NA	NA	NA	NA
NFB SubLimit	ST	(3.00)	BWR A2 (Reaffirmation)	NA	NA	NA	NA	NA	NA
		(3.00)	BWR A2 (Reaffirmation)	NA	NA	NA	NA	NA	NA
		(5.14)	BWR A2 (Reaffirmation)	NA	NA	NA	NA	NA	NA
		(24.15)	BWR A2 (Reaffirmation)	NA	NA	NA	NA	NA	NA
		(2.00)	BWR A2 (Reaffirmation)	NA	NA	NA	NA	NA	NA
Grand Total		88.89	(Rupees Eighty Eight Crores and Eighty Nine lakhs Only)

Rating Advisory, as on 27Jun2022
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

• General Criteria
• Approach to Financial Ratios
• Infrastructure Sector
• Short Term Debt

Analytical Contacts
Kunjal Dabhi Rating Analyst Board : +91 79 66174046 / 47 kunjal.r@brickworkratings.com	Dileep Narayan Singh Director dileep.s@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	Axis Bank Ltd.	Cash Credit - Sanctioned	1.00	_	1.00
2	Axis Bank Ltd.	Bank Guarantee - Sanctioned	_	14.00	14.00
3	Bank of Maharashtra	Cash Credit - Sanctioned	1.00	_	1.00
4	Bank of Maharashtra	Bank Guarantee - Sanctioned	_	11.00	11.00
5	Catholic Syrian Bank	Over Draft - Sanctioned	5.00	_	5.00
6	Catholic Syrian Bank	Bank Guarantee - Sanctioned	_	10.00	10.00
7	HDFC Bank	GECL - Sanctioned	3.88	_	3.88
8	HDFC Bank	GECL - Out-standing	1.01	_	1.01
9	HDFC Bank	Bank Guarantee - Sanctioned	_	21.00	21.00
	Sub-Limit (Bank Guarantee) - Sanctioned		(3.00)
	Sub-Limit (Financial Bank Guarantee) - Sanctioned		(5.14)
	Sub-Limit (Letter of Credit) - Sanctioned		(3.00)
	Sub-Limit (Performance Bank Guarantee) - Sanctioned		(24.15)
10	HDFC Bank	Term Loan - Sanctioned	6.00	_	6.00
11	HDFC Bank	Cash Credit - Sanctioned	5.00	_	5.00
	Sub-Limit (WCDL) - Sanctioned	(5.00)
12	IDBI Bank	Cash Credit - Sanctioned	1.00	_	1.00
13	IDBI Bank	Bank Guarantee - Sanctioned	_	9.00	9.00
	Sub-Limit (Letter of Credit ) - Sanctioned		(2.00)
Total			23.89	65.00	88.89
TOTAL (Rupees Eighty Eight Crores and Eighty Nine lakhs Only)