RATING RATIONALE
11 Nov 2019
ARM Infra Projects Pvt. Ltd.
Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.14.00 Crs. of ARM Infra Projects Pvt. Ltd.
Particulars| Facility** | Amount (Rs.Crs) | Tenure | Rating* |
|---|---|---|---|
| Fund Based | |||
| Cash Credit Sanctioned | 05.00 | Long Term | BWR C (Stable) |
| Sub Total | 05.00 | ||
| Non-Fund Based | |||
| Letter of Credit Sanctioned | 09.00 | Short Term | BWR A4 |
| Sub Total | 09.00 | ||
| Grand Total | 14.00 | (Rupees Fourteen Crores Only) | |
**Details of Bank facilities are provided in Annexure-I RATING ACTION / OUTLOOK : Stable
BWR has assigned a rating of BWR C/A4 to ARM Infra Projects Pvt Ltd on account of experienced management, moderate scale of operations, moderate gearing, moderate debt protection metrics, improving liquidity profile, improving operating margins. The ratings have also taken into consideration the weak interest servicing capability, stretched working capital cycle, weak profitability, cost escalation risks.
The ratings have been assigned a stable outlook on account of the favourable demand outlook for commercial and residential living on account of increasing income, urbanisation and economic growth. BWR believes that ARM Infra Projects Pvt Ltd business risk profile will be maintained over the medium term.
KEY RATING DRIVERS
BWR has essentially relied upon the audited financial statements of ARM Infra Projects Pvt. Ltd. of FY16,FY17,FY18,provisional financial statements of FY19 and projected financial statements FY20,FY21 publicly available information and information / clarifications provided by the entity’s management.
Credit Strengths:
- Scale of operations :
Moderate scale of operations with the TOI standing at Rs.32.43cr in FY19(Prov) as compared to Rs.26.13cr in FY18.
- Gearing Ratios :
TOL/TNW ratio is 1.56x in FY19(Prov) as compared to 2.03x in FY18.
- DSCR and Current Ratio :
DSCR is 1.32x in FY19(Prov) as compared to 1.73x in FY18. Current ratio is adequate as it stands at 1.52x in FY19(Prov) as compared to 1.07x in FY18.
- OPBDIT :
OPBDIT is Rs.1.31Cr in FY19(prov) as compared to Rs.0.44Cr in FY18.It is positive in FY18 owing to other operating income.OPM is 4.04% in FY19(Prov) as compared to 1 .67% in FY18 .
Credit Risks:
- ISCR :
ISCR is 1.43x in FY19(Prov) as compared to 2.64x in FY18 and 1.87x in FY17. ISCR is comfortable in FY18 and FY17 only due to other operating income.
- Liquidity Profile :
The GCA/ Total Sales(TOI) in FY19(Prov) is 102%(32.97/32.43) as compared to 113%(29.58/26.13) in FY18 .In FY19(Prov) 42%(13.72/32.97) of GCA are blocked in Trade receivables as compared to 53%(15.54/29.58) in FY 18 adding to stretched liquidity.The company’s Account Receivable days is 165 in FY19(Prov)as compared to 225 in FY18 and Accounts Payable days is 238 in FY19(Prov) as compared to 452days in FY18 . In FY19 there is 100% cash credit utilisation.In FY19(Prov) net cash accruals is Rs.0.30Cr against Interest and Financial charges of Rs.0.92Cr. Net cash accruals in FY18 is Rs.0.14Cr against Interest and financial charges of Rs.0.17Cr.
- Profit % and PAT :
NPM is is 0.63% in FY19(Prov) as compared to 0.18% in FY18. PAT is Rs.0.20Crs in FY19(Prov) as compared to 0.05Crs in FY 18.
- Other Risks :
The major business risk involved include the completion risk that the project might not be completed on time because of costs overrun, technology failure etc. The other risk involves the risk of price escalation due to the volatility of the price of the project’s output which is influenced by the demand and supply factors and high competition from other established players in the market.The ARMIP projects are mainly in Maharashtra i.e Mumbai and surrounding areas and as such is exposed to geographical concentration risk.
For arriving at its ratings, BWR has considered the standalone performance of ARM Infra Projects Pvt Ltd. BWR has applied its rating methodology as detailed in the Rating Criteria (hyperlinks provided at the end of this rationale).
RATING SENSITIVITIES
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: The rating will be upgraded if the company is able to achieve significant growth in revenue and profitability backed by a favourable industry scenario and optimum utilisation of capacities, and sustained improvement working capital management.
Negative: The rating may be downgraded if there is lower than expected revenues affecting the profitability margins, coverage ratios, liquidity and gearing ratios adversely.
LIQUIDITY POSITION
LIQUIDITY POSITION: Stretched
The cash and cash equivalents of ARMIP stand at Rs 0.44 Cr in FY18. The company has no long term debt obligations. The current ratio of the company stands at 1.07x in FY18. The average CC utilization for the last 6 months is 100%.
PROFILEARMIP was incorporated on 14th January 2012.Their Corporate Office is at Dahisar (W), Mumbai.Directors of Arm Infra Projects Private Limited are Mr.Aniket Rohidas Mhatre and Ashish Vasantrao Kini. Mr. Aniket(Director - Operations) has the sole responsibility of setting the direction & overseeing the overall operations of the organization.ARM Infrastructure, a company having PEATA(Practicing Engineers Architects & Town Planners Association, India) membership wherein ARM actively participates for betterment of real estate development, and ARM is a multi-dimensional construction corporation involved in designing & constructing value-for-money residential/commercial complexes.They take projects on turn key basis.They have completed projects such as Sadakamal CHSL at Dahisar and Vasundhara CHSL at Goregaon for Haritara Construction, VIVA Girivihar at Virar and VIVA Sarovar at Pune and VIVA Vajreshwari at Virar for VIVA Homes Pvt. Ltd.
KEY FINANCIAL INDICATORS| Key Parameters | Units |
FY 17-18 |
FY 16-17 |
|---|---|---|---|
| Operating Revenue | Rs.Crs. | 26.13 | 17.95 |
| EBITDA | Rs.Crs. | 0.44 | 0.73 |
| PAT | Rs.Crs. | 0.05 | 0.12 |
| Tangible Net Worth | Rs.Crs. | 13.77 | 13.70 |
| Total Debt/Tangible Net Worth | Times | 0.37 | 0.01 |
| Current Ratio | Times | 1.07 | 0.67 |
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 - Sanctioned | Long Term | 5.00 | BWR C(Stable) | NA | NA | NA | |||
| Non-Fund Based | ||||||||||
| 2 | Letter of Credit - Sanctioned | Short Term | 9.00 | BWR A4 | NA | NA | NA | |||
| Total | 14.00 | (Rupees Fourteen Crores 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 |
|---|---|
|
Saloni R Singh Ratings Analyst D : +91 22 6745 6647 B : +91 22 2831 1426, +91 22 2831 1439 saloni.s@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 CreditSanctioned | 5.00 | _ | 5.00 |
| 2 | Letter of CreditSanctioned | _ | 9.00 | 9.00 |
| Total | 14.00 | |||
| TOTAL (Rupees Fourteen Crores Only) | ||||
| Instrument | Issue Date | Amount (Rs.Crs) | Coupon Rate | Maturity Date | ISIN Particulars |
|---|---|---|---|---|---|
| NA | NA | NA | NA | NA | NA |
| Name of Entity | % Ownership | Extent of consolidation | Rationale for consolidation |
|---|---|---|---|
| NA | NA | NA | NA |
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