Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.9.00 Crs. of Alhadin Construction
Particulars| Facility** | Amount (Rs.Crs) | Tenure | Rating* |
|---|---|---|---|
| Fund Based | |||
| Cash Credit Sanctioned | 09.00 | Long Term | BWR BB - (Stable) |
| Sub Total | 09.00 | ||
| Grand Total | 09.00 | (Rupees Nine Crores Only) | |
BWR assigns the long term ratings to M/s Alhadin Construction as BWR BB-(Stable). The rating draws its strength from the Experienced Proprietor, Moderate Financial Risk Profile and Salient Customer base and Order Book Position. The rating of the firm is constrained by the Risks associated with Proprietorship firm, Tender driven nature of business and High competition and Impact of COVID- 19.
KEY RATING DRIVERS
Credit Strengths:
The firm is constituted as a sole proprietorship concern by Mr. Alhadin who has an experience of over a decade in this industry. Since formation in 2008 the firm has achieved significant heights in terms of quality and quantity of contracts with an impressive customer base. The experience of the proprietor and the management has lead to repeat orders and consistent growth.
The firm was established in the year 2008, the firm bagged esteemed projects in their portfolio which helped the firm to build a notable customer base. The projects in hand current stand at Rs. 57.35crs which will be completed in Current year, also providing medium term revenue visibility.
AC’s financial risk profile is moderate with Tangible Net Worth of Rs. 4.96crs and low gearing ratio ( Total Debt/TNW) of 1.19 times as per FY 20. The debt coverage metrics, i.e. ISCR and DSCR stand at 6.16 x and 4.49x respectively as per Fy 20.audited financials.
Credit Risks:
Alhadin Construction being a proprietorship firm is exposed to inherent risk associated with capital being withdrawn at a time of personal exigencies which may effect the business operations of the firm. Besides, there are limited avenues available for raising capital.
Execution risks for newly awarded projects in a timely manner will be key to achieving growth in revenues and profits. Business certainty is dependent on the firm's ability to successfully bid for the tenders as entire business is tender based.
The outbreak of pandemic Coronavirus COVID-19 in the late March 2020 in India has triggered a complete lockdown in the country and across the world. The construction projects have been halted for 3 months. This may impact the revenues in the short to medium term.
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, profitability margins, overall credit risk profile and efficiently manage its working capital obligations would be the key rating sensitivities.
Positive : The rating outlook may be revised to positive if the firm is able to significantly improve its revenue and profitability.
Negative : The rating may be downgraded if there is a deterioration in financial risk profile including conversion cycle and any other unforeseen factors.
LIQUIDITY POSITION
AC has liquid investments of Rs. 2.39crs and the Cash & Bank balances of Rs. 0.16Cr as per FY 20. Current ratio was below the benchmark at 1.06 times as per FY20. Gearing of the firm is moderate at 1.19 times as per FY 20. Modest working capital utilization for the 6 months period is 60%. The firm’s debt protection metrics are healthy with ISCR at 6.16 times and DSCR at 4.49 times as per FY 20. The Net Cash accruals for Fy 21 is Rs. 4.72 Cr.
Therefore, the liquidity position is Adequate.
PROFILEAlhadin Constructions (‘The Firm’ or ‘AC’) is a proprietorship firm of Mr. Alhadin founded in 2008. AC is located in Jammu. The firm is engaged into installation of optical fibre cables, civil constructions, sub stations, line work, installation of solar panels etc. The firm is a Class A Contractor with Power Development Department of J&K State Government. AC’s customer base includes L&T, BSNL, Vodafone, Airtel, Idea, Reliance Jio, Sterlite, Ericsson, J&K energy development agency, Military Engineering Services etc. The firm has completed 4000 kms + Optic Fibre Cable installation. It operates in the state of J&K, Punjab and Himachal Pradesh.
KEY FINANCIAL INDICATORS| Key Parameters | Units |
FY 19-20 (Audited) |
FY 18-19 (Audited) |
|---|---|---|---|
| Operating Revenue | Rs.Crs. | 56.68 | 26.31 |
| EBITDA | Rs.Crs. | 6.11 | 2.36 |
| PAT | Rs.Crs. | 3.15 | 1.07 |
| Tangible Net Worth | Rs.Crs. | 4.96 | 3.10 |
| Total Debt/Tangible Net Worth | Times | 1.19 | 1.91 |
| Current Ratio | Times | 1.06 | 0.89 |
| S.No | Current Rating (2021) | Rating History | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Facilities | Tenure | Amount (Rs.Crs) | Rating | 2020 | 2019 | 2018 | ||||
| Fund Based | ||||||||||
| 1 | Cash Credit - Sanctioned | Long Term | 09.00 | BWR BB-(Stable) | NA | NA | NA | |||
| Total | 09.00 | (Rupees Nine 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.
For More Information Contact:| Analytical Contacts | |
|---|---|
|
Sanskriti Jain Rating Analyst sanskriti.j@brickworkratings.com |
Satvinder Kumar Gakhar Associate Director - Ratings B : +91 11 2341 2232 satvinder.g@brickworkratings.com |
| 1-860-425-2742 | media@brickworkratings.com | |
| SL.No. | Type Of Facilities | Long Term(Rs.Crs.) | Short Term(Rs.Crs.) | Total(Rs.Crs.) |
|---|---|---|---|---|
| 1 | Cash CreditSanctioned | 9.00 | _ | 9.00 |
| Total | 9.00 | 0.00 | 9.00 | |
| TOTAL (Rupees Nine Crores Only) | ||||
Note: Car Loan are not rated by us.
| 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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