RATING RATIONALE
04 May 2022
Amit Buildwell Pvt. Ltd.
Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.25.00 Crs. of Amit Buildwell Pvt. Ltd.
Particulars| Facility** | Amount (Rs.Crs) | Tenure | Rating* |
|---|---|---|---|
| Fund Based | |||
| Cash Credit | 07.00 | Long Term | BWR BB + (Stable) |
| Sub Total | 07.00 | ||
| Non-Fund Based | |||
| Bank Guarantee | 18.00 | Short Term | BWR A4 + |
| Sub Total | 18.00 | ||
| Grand Total | 25.00 | (Rupees Twenty Five Crores Only) | |
**Details of Bank facilities are provided in Annexure-I RATING ACTION / OUTLOOK : Stable
BWR believes that Amit Buildwell Pvt. Ltd. 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:
-
Management Experience :
The company is in existence for 17 years and has seen complete business cycles. The directors are well experienced. They always operate with the highest levels of integrity and responsibility so as to build on the trust that they have earned over the years.
-
Overall Improvement in Financials :
DSCR and ISCR of the company stand at 3.64x and 4.67x respectively in FY21(Audited) and 3.85x and 5.93x in FY22 (Provisionals) indicating company’s adequacy to meet its debt obligations. PAT has increased from Rs. 3.53 Crs. in FY21 (Audited) to Rs. 5.94 Crs. in FY22 (Provisionals). Gearing Ratio (Total Debt/TNW) has improved from 0.67X in FY21 (Audited) to 0.58X in FY22 (Provisionals). TOL/TNW has improved from 1.95X in FY21 (Audited) to 1.28X in FY22 (Provisionals).
-
Impact of Covid-19 and Risk of Tender Based Projects :
The COVID-19 pandemic has had a significant impact on the construction sector, which is sensitive to economic cycles. Yet, on the upside, construction holds much potential to stimulate recovery, thanks to its potential to create jobs; and in turn, recovery measures can support the sector’s transformation towards sustainability and digitalization. Tripartite cooperation and social dialogue, together with international labour standards, are key to promote a human-centred recovery of the construction sector from the crisis. The Company is working on Tenders given by different large Clients, so there is a involvement of risk of tender based projects. Tendering usually refers to the process whereby governments and financial institutions invite bids for large projects that must be submitted within a finite deadline.
-
Competition in the 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.
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 firm to improve its scale of operations and profitability as envisaged, ensure timely execution of projects, increase in its ongoing projects folio, ensure timely sales and realisation of collections, efficiently manage its working capital requirements and strengthen its overall credit profile would be the key rating sensitivities.
Positives:
- Improvement in scale of operations with improvement in net cash accruals on a sustained basis
- Improvement in the business profile with increased sales velocity on a sustained basis for completed projects and timely progress of ongoing projects.
Negatives:
- Decline in revenue or profitability thereby impacting cash accruals
- Deterioration in financial risk profile on account of stretch in working capital cycle or any large, debt-funded capital expenditure.
- Prolonged adverse impact of Covid-19 related disruptions on company operations.
- Time and cost overruns in respect of the ongoing projects and delays in commencement of upcoming projects
- The Company has a Cash & Bank balance of INR 0.21 Crs in FY21(Audited) and INR 0.61 Crs in FY22(Provisionals).
- The Current Ratio of the company is 1.40x in FY21 (Audited) and 1.68x in FY22 (Provisionals) , which is above the industry average.
- Net Cash Accruals has increased from Rs. 5.68 Crs. in FY21 (Audited) to Rs. 7.98 Crs. in FY22 (Provisionals) against Nil CPLTD in FY21 and FY22 . Net Cash Accruals estimates to marginally decrease to Rs. 6.30 Crs in FY23 (Projected) against CPLTD of Rs. 4.37 Crs.
- DSCR has improved in FY22 from 3.64X in FY21 (Audited) to 3.85X in FY22 (Provisionals).
- ISCR has improved in FY22 from 4.67X in FY21 (Audited) to 5.93X in FY22 (Provisionals).
- Cash Credit Account Limit Utilization 93.99%.
- Hence, Overall liquidity is Moderate.
Amit Buildwell Private Limited is a Private incorporated on 14 October 2005. It is classified as Non-govt company and is registered at Registrar of Companies, Delhi. ABPL (Amit Buildwell Pvt Ltd) our contracting division has contributed in building numerous iconic builds and structures – like residential commercial, retail – mall, institutional, industrial and infra projects. ABPL has grown nearly fourfold in the last five years and has developed new capabilities. They are committed to deliver excellent construction quality through: High standard of workmanship. Deployment of adequate resources. Deployment of sophisticated building systems & adoption of current innovation in construction technology. Dedicated human resource of experienced personnel to get the job well done.
KEY FINANCIAL INDICATORS| Key Parameters | Units |
FY 20-21 (Audited) |
FY 19-20 (Audited) |
|---|---|---|---|
| Operating Revenue | Rs.Crs. | 60.09 | 88.04 |
| EBITDA | Rs.Crs. | 6.95 | 7.09 |
| PAT | Rs.Crs. | 3.53 | 5.04 |
| Tangible Net Worth | Rs.Crs. | 19.74 | 16.21 |
| Total Debt/Tangible Net Worth | Times | 0.67 | 0.62 |
| Current Ratio | Times | 1.40 | 1.28 |
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 | Long Term | 07.00 | BWR BB+(Stable) | NA | NA | NA | |||
| Non-Fund Based | ||||||||||
| 2 | Bank Guarantee | Short Term | 18.00 | BWR A4+ | NA | NA | NA | |||
| Total | 25.00 | (Rupees Twenty Five 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 | |
|---|---|
|
Yashika Goyal Lead Analyst yashika.g@brickworkratings.com |
Hari Kishan Yadav Associate Director - Ratings hari.ky@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 | State Bank Of India (SBI) | Cash Credit | 7.00 | _ | 7.00 |
| 2 | State Bank Of India (SBI) | Bank Guarantee | _ | 18.00 | 18.00 |
| Total | 7.00 | 18.00 | 25.00 | ||
| TOTAL (Rupees Twenty Five 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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