Amit Construction Company

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.6.80 Crs. of Amit Construction Company

Particulars

Facility**	Amount (Rs.Crs)	Tenure	Rating*
Fund Based
Cash Credit - Sanctioned Over Draft - Sanctioned	02.00 00.30	Long Term	BWR B + (Stable)
Sub Total	02.30
Non-Fund Based
Bank Guarantee - Sanctioned	04.50	Short Term	BWR A4
Sub Total	04.50
Grand Total	06.80	(Rupees Six Crores and Eighty 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

While assigning the ratings of Amit Construction Company (ACCor ‘the firm’), BWR has factored in experienced promoters and moderate financial risk profile. The ratings, however, remain constrained by limitation of proprietorship firm and highly competitive as well as fragmented industry.

Outlook: Stable

BWR believes that Amit Construction Company 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

Credit Strengths:

• Experienced Promoters :

  The promoter of the firm has a long standing experience of over 15 years and the firm has an established track record of operating since its inception in 2003. The same will help in strengthening their relationship with customers and suppliers.

• Moderate Financial Risk Profile :

  ACC’s financial risk profile is moderate with Analysed Tangible Net Worth of Rs. 3.16crs and analysed gearing ratio (Total Debt/TNW) of 1.25 times in FY19. The debt coverage metrics stand at 2.90 times of ISCR and 2.14 times of DSCR in FY19.

Credit Risks:

• Limitations of Proprietorship firm :

  Inherent risks relating to financial flexibility in terms of raising of capital and withdrawal of capital as ACC is constituted as a proprietorship firm is quite high.

• Highly Competitive and fragmented Industry :

  Entry barriers in the industry are low on account of limited capital and technology requirement and also low differentiation in the end product leading to intense competition and limiting the pricing power resulting in low profitability.

ANALYTICAL APPROACH AND APPLICABLE RATING CRITERIA

For arriving 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).

RATING SENSITIVITIES

Going forward, the ability of the entity to improve revenue & profitability margins, manage liquidity, infuse capital, achieve projected financials and timely repay of debt obligations would be key rating sensitivities.

Positive: The rating outlook may be revised to 'Positive' in case the revenues, profit and liquidity position show sustained improvement.

Negative: The rating may be  downgraded  if there is any deterioration in financial position.

LIQUIDITY POSITION

Adequate Liquidity: ACC has liquid investments of Rs. 2.72crs and the Cash & Bank balances of  Rs. 0.05Cr as on March 31 2019. The long term borrowings stand at Rs. 2.38crs which includes unsecured loans of Rs. 1.33crs. Current ratio was average at 1.43 times in FY19. The firm has not submitted cash flow statement. Average working capital utilization for the six months period (April 2018 to September 2019) is 82.05%. The firm’s debt protection metrics are moderate with ISCR at 2.90 times and DSCR at 2.14 times as on March 31 2019.

Holding/Subsidiary Company: NA

PROFILE

Amit Construction Company ('The firm' or 'AMC') is a proprietorship concern of Mr. Amit Garg. AMC is engaged in civil construction as a contractor for PWD, RSAMB, UIT, Municipal Council as well as Private concerns. Established in 2003, the firm mainly operates in Rajasthan and plans to expand to the states of Punjab, Himachal Pradesh and Jammu & Kashmir over the medium term.

KEY FINANCIAL INDICATORS

Key Parameters	Units	FY 18-19 (Audited)	FY 17-18 (Audited)
Operating Revenue	Rs.Crs.	20.50	18.64
EBITDA	Rs.Crs.	1.52	1.11
PAT	Rs.Crs.	0.95	0.90
Tangible Net Worth	Rs.Crs.	2.48	2.00
Total Debt/Tangible Net Worth	Times	1.85	1.45
Current Ratio	Times	1.43	1.36

KEY COVENANTS OF THE INSTRUMENT/FACILITY RATED

NA

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 Over Draft - Sanctioned	Long Term	2.00 0.30	BWR B+ (Stable)	NA	NA	NA
Non-Fund Based
2	Bank Guarantee - Sanctioned	Short Term	4.50	BWR A4	NA	NA	NA
Total			06.80	(Rupees Six Crores and Eighty 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.

Hyperlink/Reference to applicable Criteria :

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

For More Information Contact:

Analytical Contacts	Investor Contacts
Aditi Bhatt Ratings Analyst D : +91 22 6745 6657 B : +91 22 2831 1426, +91 22 2831 1439 aditi.b@brickworkratings.com	Liena Thakur Assistant Vice President - Corporate Communications M : +91 84339 94686 liena.t@brickworkratings.com
V.K.Kukreja Associate Director - Ratings B : +91 11 2341 2232 kukreja.vk@brickworkratings.com
1-860-425-2742

SL.No.	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)
1	Bank Guarantee - Sanctioned	_	4.50	4.50
2	Cash Credit - Sanctioned	2.00	_	2.00
3	Over Draft - Sanctioned	0.30	_	0.30
Total				6.80
TOTAL (Rupees Six Crores and Eighty lakhs Only)