RATING RATIONALE
26 Aug 2019
Ankit Tandon Enterprises & Tollways Pvt Ltd
Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.5.25 Crs. of Ankit Tandon Enterprises & Tollways Pvt Ltd
Particulars| Facility** | Amount (Rs.Crs) | Tenure | Rating* |
|---|---|---|---|
| Fund Based | |||
| Cash Credit | 03.00 | Long Term | BWR B (Stable) |
| Sub Total | 03.00 | ||
| Non-Fund Based | |||
| Bank Guarantee | 02.25 | Short Term | BWR A4 |
| Sub Total | 02.25 | ||
| Grand Total | 05.25 | (Rupees Five Crores and Twenty Five lakhs Only) | |
**Details of Bank facilities are provided in Annexure-I RATING ACTION / OUTLOOK : Stable
BWR believes the Ankit Tandon Enterprises & Tollways Pvt Ltd business risk profile 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 revisd to 'Negative' if the revenues go down and profit margins show lower than expected figures.
KEY RATING DRIVERS
BWR has essentially relied upon the audited financials of FY18, provisional financials of FY19, projected financials upto FY21 and publicly available information/clarifications provided by the company’s management.
The rating is constrained by the tender based model of business wherein the revenue of the entity depends upon the tenders won by the main contractor. The rating is further constrained by volatility in the share of its profit from toll operations of Joint Venture wherein the revenue from toll operations remain highly susceptible to various risks like change in traffic volume, lack of timely toll rate hikes, etc. The rating also takes into account weak capital structure having low net worth and stretched liquidity position. However, the rating is partially offset by the experience of the promoters in the road construction industry and moderate debt coverage metrics.
Going forward, the ability of the Entity to accelerate its scale of operations, increase its profit margins, achieve its financial projections, efficiently manage its working capital and cash flows for timely servicing of interest/debt obligations and strengthening of overall financial risk profile shall be the key rating sensitivities.
Strengths
- The promoter Mr. Ankit Tandon is well qualified and have sufficient experience in the road construction industry. Mr. Ankit Tandon is qualified as Bachelors in Engineering and he has also pursued MSc in Real Estate Investments and Finance. Mr. Ankit Tandon prior to starting his own company has been Director in Infraashine Pvt Ltd since 2013 which is engaged in Govt Road Construction Projects, road maintenance work etc.
- Moderate Debt protection metrics indicated by ISCR and DSCR which stood at 2.65x and 2.45x respectively as at Prov FY19.
Weakness
- The company usually sub-Contracts in road construction projects. So the revenue of the company remains highly dependent on the tenders won by the main Contractor for govt road projects which further constrains the scale of operations. The revenue of the company stood modest at Rs.10.23 Crs in Prov FY19.
- The company earns a partial share of profit from separately formed Joint Venture which is engaged in toll operations. The revenue from toll collection remains susceptible to various risks like change in traffic volume, lack of timely toll rate hikes which could have a negative impact on revenue and thereby its share of profitability.
- The company has weak capital structure characterized by low tangible net worth of Rs.0.48 crs as at Prov FY19.
- The company has stretched liquidity position indicated by Current Ratio which stood at 0.78x as at Prov FY19.
For ariving 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).
LIQUIDITY POSITION
Liquidity Profile is stretched indicated by Current Ratio which stood at 0.78x as at Prov FY19. Cash & Cash equivalents stood negligible at Rs. 0.02 crs as at Prov FY19. The working capital remain almost fully utilized in the range of 95%-100% for the period Jan 2019 to June 2019.
PROFILEAnkit Tandon Enterprises & Tollways Pvt Ltd was incorporated on 7 July 2017. The directors of the company are Mr. Ankit Tandon and Mrs Shriya Kapoor . The company undertakes govt road construction projects and toll operating contracts. Ankit Tandon Enterprises & Tollways Pvt Ltd is the sub-contractor in the tender awarded for Construction of six different Rural Roads having the total length of 23.94 Kms The Tender is awarded by MP Rural Road Development Authority on 02 Jan 2018 to the Main Contractor Highway Infrastructure Ltd which has been sub contracted to Ankit Tandon Enterprises & Tollways Pvt Ltd . Total Project cost is Rs.32.27 crs. The company so far has built the road of the length of 21.64 Kms out of 23.94 Kms as on July 2019. Project deadline is Sept 2019.
The company has also entered into a Joint Venture Agreement with M/s Highway Infrastructure Ltd and have formed separate entity M/s Highway & Tandon Tollways (AOP). The main object of the AOP is to operate 3 Toll Plazas. The Company- Ankit Tandon Enterprises & Tollways Pvt Ltd is having profit sharing of 49% in the said AOP business.
KEY FINANCIAL INDICATORS| Key Parameters | Units |
FY 17-18 |
FY 16-17 |
|---|---|---|---|
| Operating Revenue | Rs.Crs | 0.00 | 0.00 |
| EBITDA | Rs.Crs | -0.02 | 0.00 |
| PAT | Rs.Crs | -0.07 | 0.00 |
| Tangible Net Worth | Rs.Crs | 0.03 | 0.00 |
| Total Debt/Tangible Net Worth | Times | 16.26 | 0.00 |
| Current Ratio | Times | 1.18 | 0.00 |
RATING HISTORY (INCLUDING WITHDRAWAL AND SUSPENSION)
| S.No | Current Rating (2019) | Rating History | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Facilities | Tenure | Amount (Rs.Crs) | Rating | 2018 | 2017 | 2016 | ||||
| Fund Based | ||||||||||
| 1 | Cash Credit | Long Term | 3.00 | BWR B(Pronounced as BWR Single B )(Outlook: Stable) | NA | NA | NA | |||
| Non-Fund Based | ||||||||||
| 2 | Bank Guarantee | Short Term | 2.25 | BWR A4(Pronounced as BWR A Four ) | NA | NA | NA | |||
| Total | 05.25 | (Rupees Five Crores and Twenty Five 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 : For More Information Contact:| Analytical Contacts | Investor Contacts |
|---|---|
|
Nirav A Shah Ratings Analyst D : +91 22 6745 6676 B : +91 22 2831 1426, +91 22 2831 1439 nirav.shah@brickworkratings.com |
Liena Thakur Assistant Vice President - Corporate Communications M : +91 84339 94686 liena.t@brickworkratings.com |
|
Sushil Kumar Chitkara Associate Director - Ratings B : +91 22 2831 1426, +91 22 2831 1439 sushilkumar.c@brickworkratings.com |
|
| 1-860-425-2742 | |
| SL.No. | Type Of Facilities | Long Term(Rs.Crs.) | Short Term(Rs.Crs.) | Total(Rs.Crs.) |
|---|---|---|---|---|
| 1 | Cash Credit | 3.00 | _ | 3.00 |
| 2 | Bank Guarantee | _ | 2.25 | 2.25 |
| Total | 5.25 | |||
| TOTAL (Rupees Five Crores and Twenty Five lakhs Only) | ||||
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