Aarvanss Buildwell and Infracon LLP

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.15.00 Crs. of Aarvanss Buildwell and Infracon LLP

Particulars

Facility**	Amount (Rs.Crs)	Tenure	Rating*
Fund Based
Cash Credit - Proposed	03.00	Long Term	BWR BB - (Stable)
Sub-Limit (Letter of Credit) - Proposed	(03.00)	Short Term	BWR A4
Sub Total	03.00
Non-Fund Based
Bank Guarantee - Proposed	12.00	Long Term	BWR BB - (Stable)
Sub Total	12.00
Grand Total	15.00	(Rupees Fifteen Crores 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

Brickwork Ratings has assigned the long term rating of BWR BB-/Stable and short term rating of BWR A4 to the proposed bank loans of Aarvanss Buildwell and Infracon LLP. The rating takes into account the experience of partners, comfortable financial risk profile. However the rating is constrained by susceptibility to risk inherent in tender based business, project execution risk and high gearing level.

KEY RATING DRIVERS

Credit Strengths:

• Experienced Partners :

  Aarvanss Buildwell & Infracon LLP was established by its promoters Mr. Rohit Pandey and Mr. Sunil Dutt Pandey. Both the partners are having an experience of more than a decade in the business of electricity transmission utility shifting and turnkey projects in distribution sector, which has helped the entity in securing various contracts from government authorities within a short span of time.

• Comfortable Financial Risk Profile :

  The revenue of the entity is increasing continuously over the last 3 years, with revenue of INR 18.68 crores in FY17, INR 35.10 crores in FY18 and INR 52.90 crores in FY19. The entity has an order book position of INR 203.78 crores, providing revenue visibility for the medium term. Debt service metrics is above average, ISCR & DSCR stood at 5.73x & 4.22x in FY19 against 3.61x & 3.13x in FY18. Profit after tax stood at INR 1.25 crores in FY19 against INR 1.02 crores in FY18. The Conversion cycle is negative on account of higher credit period enjoyed by the firm from sub contractors as compared to the realization cycle of the firm.

Credit Risks:

• Susceptibility to risk inherent in tender based business :

  Since the entire income is tender based, the business will depend on the ability to bid tenders successfully. Though the company has an order book position of INR 203.78 crores as on date, providing medium term revenue visibility, incremental revenue growth will depend on the ability of the company to receive work orders, government policies etc.

• Execution Risk and Overall Gearing :

  Revenue remains exposed to delays in execution of project as there is significant execution risk due to delays arising from slow regulatory approvals, bureaucratic interventions which might impact its revenue growth and liquidity position. The overall gearing of the entity is high as it stood at 7.28x in FY19 against 11.76x in FY18.

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 achieve projected revenue, further improve its profitability margins and manage liquidity would be key rating sensitivities.

• Positive :
  The outlook may be revised to positive if the entity is able to achieve significant growth in revenue along with a significant improvement in profit margins, improve its overall gearing and sustained improvement in working capital management.

• Negative :
  The outlook may be revised to negative if revenue and profit margins substantially deteriorates from current level, increase in operating cost, fails to achieve estimated results, withdrawal of capital by partners and if there is an overall deterioration in the financial risk profile of the entity.

LIQUIDITY POSITION

1. The Entity has Cash & Bank balance of INR 0.13 crores in FY19. Net cash accruals for FY19 stands at INR 1.31 crores.

2. The Expected CC utilization for FY20 is around 75%.

3. The Entity has a current ratio of 1.13x in FY19.

4. Entity is having above average debt protection metrics, ISCR & DSCR stood at 5.73x & 4.22x in FY19 against 3.61x & 3.13x in FY18. It is estimated to be remain above average in FY20 also.

5. The receivable and payable days stood at 174 days & 458 days in FY19 against 163 days & 338 days in FY18.

The Overall Liquidity appears to be adequate.

PROFILE

Aarvanss Buildwell & Infracon LLP is a limited liability partnership incorporated on 23rd January, 2015 at Noida, Uttar Pradesh by its promoters Mr. Rohit Pandey and Mr. Sunil Dutt Pandey. The core competencies of the entity are in the field of electricity transmission utility shifting and turnkey project in power distribution sector. The Entity is dealing with design, supply, erection, testing & commissioning for shifting, modification raising the height of 132KV/220KV and above voltage transmission line by using steel monopole structures. It undertakes services for survey, design and construction of transmission and distribution lines, substations and rural electrification projects.

KEY FINANCIAL INDICATORS

Key Parameters	Units	FY 18-19 (Audited)	FY 17-18 (Audited)
Operating Revenue	Rs.Crs.	52.90	35.10
EBITDA	Rs.Crs.	2.21	1.81
PAT	Rs.Crs.	1.25	1.02
Tangible Net Worth	Rs.Crs.	5.53	3.27
Total Debt/Tangible Net Worth	Times	0.05	0.12
Current Ratio	Times	1.13	1.08

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 - Proposed	Long Term	03.00	BWR BB- (Stable)	NA	NA	NA
2	Sub-Limit (Letter of Credit) - Proposed	Short Term	03.00	BWR A4	NA	NA	NA
Non-Fund Based
3	Bank Guarantee - Proposed	Long Term	12.00	BWR BB- (Stable)	NA	NA	NA
Total			15.00	(Rupees Fifteen Crores 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
• Infrastructure Sector
• Short Term Debt

For More Information Contact:

Analytical Contacts	Investor Contacts
Deepak Kumar Ratings Analyst deepak.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

SL.No.	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)
1	Cash Credit - Proposed	3.00	_	3.00
Sub-Limit (Letter of Credit) - Proposed		(3.00)
2	Bank Guarantee - Proposed	12.00	_	12.00
Total				15.00
TOTAL (Rupees Fifteen Crores Only)