Arora Construction Co. Pvt. Ltd.

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.19.90 Crs. of Arora Construction Co. Pvt. Ltd.

Particulars

Facility**	Amount (Rs.Crs)	Tenure	Rating*
Fund Based
Cash Credit	04.90	Long Term	BWR BB (Stable)
Sub Total	04.90
Non-Fund Based
Bank Guarantee	15.00	Long Term	BWR BB (Stable)
Sub Total	15.00
Grand Total	19.90	(Rupees Nineteen Crores and Ninety lakhs Only)

*Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank facilities are provided in Annexure-I RATING ACTION / OUTLOOK : Stable

BWR believes that Arora Construction Co. 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 financial statements of Arora Construction Co. Pvt. Ltd. upto FY18 and unaudited financial statements of FY19, publicly available information and information / clarifications provided by the entity’s management. The rating draws strength from the vast business experience of the directors, established track of operations, moderate financial risk profile and a reasonable work order in hand. However, the rating is constrained by the small scale of operations, an elongated collection cycle and exposure to the risks associated with tender based businesses.

Going forward, the ability of the entity to achieve projected revenue & profitability margins, complete the ongoing projects on time and manage its liquidity efficiently would be key rating sensitivities.

Strengths

Experienced promoters :
The company is managed by its main promoters/directors Mr. Sunder Lal Arora and Mr. Vipin Arora who have decades of experience in the real estate construction industry. Their vast experience has helped the company establish a long term relationship with some of its clients.
Moderate financial risk profile :
The overall gearing (TOL/TNW) of the company was 0.90 times as on 31 Mar 2019 (Unaudited financials) as compared to 1.02 times a year ago. The coverage indicators, although declined in FY19 as compared to FY18, were still moderate as reflected in DSCR & ISCR of 1.81 & 2.73 respectively for FY19. (1.92 & 5.15 for FY18).
Moderate Networth :
The Networth of the company stood at Rs.9.97 Crs. as on 31 Mar 2019 (unaudited) as compared to Rs.9.49 Crs. as on 31 Mar 2018. The Networth is also supported by the Unsecured Loans from Directors & related parties which was Rs.1.47 Crs. as on 31 Mar 2019 and Analyzed Networth stood at Rs.11.44 Crs. as on that date.
Moderate work orders in hand :
The company has total work orders of approximately Rs.100 Crs. from various clients which are to be executed in the next two years i.e. FY20 & FY21 indicating revenue visibility in the medium term.

Weakness

Small scale of operations :
The company has a small scale of operation considering it has been operating in this sector for so many years. The operating income of the company was Rs.23.16 Crs. for FY19 as per the Unaudited financials as compared to Rs.17.12 Crs. in FY18.
Elongated collection cycle :
The receivable days for the company stood at 126 days for FY19 which was 164 days for FY18.
Exposure to the risks of tender based business :
The company undertakes projects which are awarded to it through tenders. Thus the company is exposed to the risks related to tender based business which is characterized by a high level of competition and thin margins.

ANALYTICAL APPROACH AND APPLICABLE RATING CRITERIA

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

The Company's average utilization of cash Credit facility was around 50% in the past year which gives it a cushion with respect to working capital needs. The Net cash Accruals of the company increased to Rs.0.97 Crs. in FY19 as compared to Rs.0.72 Crs. in FY18. The Current Ratio also improved to 1.94 in FY19 as compared to 1.81 in FY18. Although the operating profit improved in the FY19, the ISCR declined to 2.73 from 5.15 in FY18 due to a rise in Interest cost and bank charges.

PROFILE

Incorporated in 1990 at Faridabad (Haryana), Arora Construction Co. Pvt. Ltd. (ACCPL) is engaged in civil construction work mainly commercial & residential real estate construction for private and government companies. Mr. Sunder Lal Arora and Mr. Vipin Arora are the main promoters/directors of the company who have decades of experience in the real estate construction sector.

KEY FINANCIAL INDICATORS

Key Parameters	Units	FY 17-18	FY 16-17
Operating Revenue	Rs.Crs.	17.12	49.94
EBITDA	Rs.Crs.	0.75	2.46
PAT	Rs.Crs.	0.24	1.51
Tangible Net Worth	Rs.Crs	9.49	9.25
Total Debt/Tangible Net Worth	Times	0.48	0.24
Current Ratio	Times	1.81	1.68

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	4.90	BWR BB (Pronounced as BWR Double B ) (Outlook: Stable)	NA	NA	NA
Non-Fund Based
2	Bank Guarantee	Long Term	15.00	BWR BB (Pronounced as BWR Double B ) (Outlook: Stable)	NA	NA	NA
Total			19.90	(Rupees Nineteen Crores and Ninety lakhs Only)

COMPLEXITY LEVELS OF THE INSTRUMENTS

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.

For More Information Contact:

Analytical Contacts	Investor Contacts
Raushan Kedia Ratings Analyst B : +91 11 2341 2232 raushan.k@brickworkratings.com	Liena Thakur Assistant Vice President - Corporate Communications M : +91 84339 94686 liena.t@brickworkratings.com
Satvinder Kumar Gakhar Associate Director - Ratings B : +91 11 2341 2232 satvinder.g@brickworkratings.com
1-860-425-2742

Arora Construction Co. Pvt. Ltd.

ANNEXURE-I

Details of Bank Facilities rated by BWR

SL.No.	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)
1	Cash Credit	4.90	_	4.90
2	Bank Guarantee	15.00	_	15.00
Total				19.90
TOTAL (Rupees Nineteen Crores and Ninety lakhs Only)

Additional information is available at www.brickworkratings.com The ratings above were solicited by,or on behalf of , the issuer, and therefore, Brickwork Ratings has been compensated for the provision of the ratings.
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About Brickwork Ratings

Brickwork Ratings (BWR), a SEBI registered Credit Rating Agency, accredited by RBI and empaneled by NSIC, offers Bank Loan, NCD, Commercial Paper, MSME ratings and grading services. NABARD has empaneled Brickwork for MFI and NGO grading. BWR is accredited by IREDA & the Ministry of New and Renewable Energy (MNRE), Government of India. Brickwork Ratings has Canara Bank, a leading public sector bank, as its promoter and strategic partner.
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DISCLAIMER

Brickwork Ratings (BWR) has assigned the rating based on the information obtained from the issuer and other reliable sources, which are deemed to be accurate. BWR has taken considerable steps to avoid any data distortion; however, it does not examine the precision or completeness of the information obtained. And hence, the information in this report is presented "as is" without any express or implied warranty of any kind. BWR does not make any representation in respect to the truth or accuracy of any such information. The rating assigned by BWR should be treated as an opinion rather than a recommendation to buy, sell or hold the rated instrument and BWR shall not be liable for any losses incurred by users from any use of this report or its contents. BWR has the right to change, suspend or withdraw the ratings at any time for any reasons.