Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.7.25 Crs. of Akshar Construction Co.
Particulars| Facility** | Amount (Rs.Crs) | Tenure | Rating* |
|---|---|---|---|
| Fund Based | |||
| Cash Credit Sanctioned | 04.75 | Long Term | BWR B + (Stable) |
| Sub Total | 04.75 | ||
| Non-Fund Based | |||
| Bank Guarantee Sanctioned | 02.50 | Short Term | BWR A4 |
| Sub Total | 02.50 | ||
| Grand Total | 07.25 | (Rupees Seven Crores and Twenty Five lakhs Only) | |
BWR has principally relied upon the Audited Financial statements up to FY21, Provisional financials for FY22 & Projected Financials for FY23, and information/ clarification provided by the firm's management. The rating factors the experience of the promoter in the civil construction business and established relations with customers. The ratings take into consideration significant delays in some of the projects due to various internal and external factors. However, the rating draws strength from an established track record with reputed clients and healthy work orders.
BWR believes that Akshar Construction Co. 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:
Promoters have extensive experience of more than 4 decades in the civil construction industry and have established track record withstanding industry cycles. Over the years, the promoters have established strong relationships with its clients, which has helped company in getting repeat business.
Akshar Construction Co. has been working on various government projects such as Western Railway, Vadodara, Executive Engineer, Dist R&B Division, Vadodara, etc. The company has total work orders on hand worth Rs. 51.33 crs as on 31st March 2022. which shows the revenue visibility in the medium term since the construction work of multiple projects is in progress. Past record of the successful project executed within the stipulated time period and established relationships with the clients, lend some comfort.
Debt/TNW is 1.37 times & TOL/TNW is 2.16 in FY21. TNW is Rs. 3.69 Crs in FY21. Comfortable debt protection metrics with DSCR at 1.53 times & ISCR at 1.67 times in FY21.
Credit Risks:
The firm is exposed to the inherent risk of capital withdrawal by the partners. Going forward, any significant decline/withdrawal of capital may further put pressure on the capital structure of the firm.
The company’s operations are susceptible to many external factors such as timely clearances from various regulatory bodies, the handover of sites, labour unrest, and other factors. The effect of any of these could be substantial on the company's timeline of the completion of projects, The onset of Covid-19 has added an unprecedented execution risk in general and the company in particular. Since the entire operations are tender based, the business depends on the ability to bid for tenders successfully.
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:
Negative:
Liquidity: Adequate
The liquidity of Akshar Construction co. is adequate as the company's net cash accruals stand at Rs. 1.24 crs in (Provisional) FY22 (FY21: 0.81). The average Cash credit utilization for the last six months ending 31st March 2022 remains 35.02%. Cash and Bank balance are Rs. 0.07 Crs in FY22 (Provisional). The firm has Rs. 8.87 crs of Current Asset in FY21.
PROFILEAkshar Construction Co. was established on 18th Sept 1996, at Mehsana, Gujarat. The firm is engaged in the business of civil construction of bridges. Mr. Pravinbhai S Patel, Mr. Ankur P Patel, is the partner of the firm to his credit 40 years of experience in this business. The Company is engaged as Govt. Approved Contractor in “A” class and in Special category "II" Bridge Works with the Govt. Of Gujarat. Currently, the firm has applied for "AA" class registration and is expected to receive in upcoming months.
KEY FINANCIAL INDICATORS| Key Parameters | Units |
FY 20-21 (Audited) |
FY 19-20 (Audited) |
|---|---|---|---|
| Operating Revenue | Rs.Crs. | 14.45 | 19.71 |
| EBITDA | Rs.Crs. | 1.14 | 1.34 |
| PAT | Rs.Crs. | 0.44 | 0.62 |
| Tangible Net Worth | Rs.Crs. | 3.69 | 3.75 |
| Total Debt/Tangible Net Worth | Times | 1.36 | 1.06 |
| Current Ratio | Times | 1.11 | 1.48 |
| S.No | Current Rating (2022) | Rating History | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Facilities | Tenure | Amount (Rs.Crs) | Rating | 2021 | 2020 | 2019 | ||||
| Fund Based | ||||||||||
| 1 | Cash Credit - Sanctioned | Long Term | 04.75 | BWR B+(Stable) | NA | NA | NA | |||
| Non-Fund Based | ||||||||||
| 2 | Bank Guarantee - Sanctioned | Short Term | 02.50 | BWR A4 | NA | NA | NA | |||
| Total | 07.25 | (Rupees Seven Crores and Twenty Five lakhs 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 | 4.75 | _ | 4.75 |
| 2 | The Mehsana Urban Co-operative Bank | Bank GuaranteeSanctioned | _ | 2.50 | 2.50 |
| Total | 4.75 | 2.50 | 7.25 | ||
| TOTAL (Rupees Seven Crores and Twenty Five lakhs 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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