RATING RATIONALE
02 Apr 2022
Amiraj Infrastructure
Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.6.00 Crs. of Amiraj Infrastructure
Particulars| Facility** | Amount (Rs.Crs) | Tenure | Rating* |
|---|---|---|---|
| Fund Based | |||
| Cash Credit Sanctioned | 06.00 | Long Term | BWR BB - (Stable) |
| Sub Total | 06.00 | ||
| Grand Total | 06.00 | (Rupees Six Crores Only) | |
**Details of Bank facilities are provided in Annexure-I RATING ACTION / OUTLOOK : Stable
BWR has essentially relied upon the audited financial statements of Amiraj Infrastructure for FY19, FY20, FY21, provisional statements of F21, and projected financial statements of FY22, FY23 publicly available information, and information/clarifications provided by the entity’s management. The rating draws strength from the vast business experience of the member/s, established track of operations, and adequate financial risk profile. However, the rating is constrained by the scale of operations, high competition from other established players in the market.
Going forward, the ability of the entity to achieve projected revenue & profitability margins and manage liquidity would be key rating sensitivities
BWR believes that Amiraj Infrastructure 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 revised to 'Negative' if the revenues go down and profit margins show lower than expected figures.
KEY RATING DRIVERS
Credit Strengths:
- Established track record in industry aided by promoters' extensive industry experience: :
Amiraj Infrastructure's business risk profile benefits from the promoters' extensive industry experience in the real estate development business; the founder-promoter, Mr. Nitin Kanaiyalal Patel, has 35 years of industry experience. Due to the promoters' extensive experience, the company could successfully complete multiple residential and commercial projects and ensure healthy booking traction in the last completed project
- Adequate Financial Risk: :
Though there is a rise in the analyzed net worth of the company at Rs. 12.04 Crores in FY21, the Gearing ratio stands at 0.61x, indicating the lower composition of debt in the financing mix. The Debt Protection Metrics of the company stands moderate with DSCR at 1.00x and ISCR at 0.97x in FY21, but till Dec 2021 DSCR and ISCR was adequate at 1.25x and at 3.18x respectively. The Current Ratio of the company remains at 1.48x and Net Profit Margin stands at 6.22% till Dec 2021.
- Strategic Location of the project and Requisite approval for the project in place: :
The Firm has developed a commercial and residential project in Shilaj, Ahmedabad. This project is in a prime location in Ahmedabad as the schools, colleges, markets, mall, cinema house and banks are in close proximity to the housing complex. The project has all the necessary approval in place and has been registered with the Gujarat Real Estate Regulatory Authority.
Credit Risks:
- Susceptibility to cyclicality in the real estate sector: :
The real estate sector in India is cyclical and marked by sharp movements in prices and a highly fragmented market structure. The overall uncertain economic climate, and, higher caution by banks towards exposure to the sector, can also impact company's credit profile.
- Capital withdrawal : :
There has been a withdrawal of capital by the partners, resulting in low net worth and less cash in hand.
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
Positive
- Timely construction of Project and availability of funding from banks.
- More than the anticipated inflow of customer advances
Negative
- Any adverse changes in Real Estate Regulations may affect the project revenue.
- Simultaneous launch of the new project may increase the project execution risk
The current ratio of the company stands at Rs.1.48 times in FY21 and till Dec 21 it stood at 1.64 times. Net cash accruals stood at 0.02 in FY21 which increased to 0.70 by Dec 2021. The average Cash credit utilization for the last 6 months ending January 2022 remains 17.49%. With a healthy booking of projects, the firm is likely to generate sufficient cash flow to meet debt obligations and construction costs. Till Dec 2021 the company has a Tangible Net Worth of Rs. 10.06 crs. (FY21: Rs. 9.71 crs). Long-term borrowings include RS 4.65 crs USL/term loans from family and friends in FY21. Short-term borrowings denote Rs. 1.31 Cr in FY21. Total borrowings are RS. 5.96 crs in FY21. Cash and Bank balance are moderate at Rs. 0.09 Crs in FY21.
PROFILEAmiraj Infrastructure, a partnership firm was established on 26th Aug 2010 by Mr.Nitin Kanaiyalal Patel, Mr. Sunny Nitinbhai Patel and Mr. Soham Nitinbhai Patel. The firm’s registered office is in Ahmedabad, Gujarat and it is engaged in the residential real estate business of construction business to build Residential & Commercial in the name of Mulberry Heights in City Ahmedabad, Gujarat.
KEY FINANCIAL INDICATORS| Key Parameters | Units |
FY 20-21 (Audited) |
FY 19-20 (Audited) |
|---|---|---|---|
| Operating Revenue | Rs.Crs. | 0.00 | 0.00 |
| EBITDA | Rs.Crs. | 0.44 | 0.32 |
| PAT | Rs.Crs. | 0.00 | 0.00 |
| Tangible Net Worth | Rs.Crs. | 9.71 | 9.65 |
| Total Debt/Tangible Net Worth | Times | 0.61 | 0.33 |
| Current Ratio | Times | 1.48 | 1.18 |
RATING HISTORY (INCLUDING WITHDRAWAL AND SUSPENSION)
| S.No | Current Rating (2022) | Rating History | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Facilities | Tenure | Amount (Rs.Crs) | Rating | 2021 | 2020 | 2019 | ||||
| Fund Based | ||||||||||
| 1 | Cash Credit - Sanctioned | Long Term | 06.00 | BWR BB-(Stable) | NA | NA | NA | |||
| Total | 06.00 | (Rupees Six 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 | |
|---|---|
|
Mistry Jinal Lead Analyst mistry.j@brickworkratings.com |
Dileep Narayan Singh Director dileep.s@brickworkratings.com |
| 1-860-425-2742 | media@brickworkratings.com | |
| SL.No. | Name of the Bank/Lender | Type Of Facilities | Long Term(Rs.Crs.) | Short Term(Rs.Crs.) | Total(Rs.Crs.) |
|---|---|---|---|---|---|
| 1 | The Mehsana Urban Co-operative Bank | Cash CreditSanctioned | 6.00 | _ | 6.00 |
| Total | 6.00 | 0.00 | 6.00 | ||
| TOTAL (Rupees Six 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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