RATING RATIONALE
11Jun2024

Dhanchandra Construction

Brickwork Ratings upgrades the long term rating and reaffirms the short term rating and removes the ratings from the "Issuer not cooperating" category for the Bank Loan Facilities of Rs. 11.80 Crs. of Dhanchandra Construction

Particulars
Facilities** Amount (Rs.Crs.) Tenure Rating#
Previous Present Previous
(02 May 2024)
Present
Fund Based 6.50 7.80 Long Term BWR B /Stable
Continues to be in ISSUER NOT COOPERATING* category/Reaffirmed
BWR B + /Stable
removal from ISSUER NOT COOPERATING* category/Upgraded
Non Fund Based 1.00 4.00 Short Term BWR A4
Continues to be in ISSUER NOT COOPERATING* category/Reaffirmed
BWR A4
removal from ISSUER NOT COOPERATING* category/Reaffirmed
Grand Total 7.50 11.80 (Rupees Eleven Crores and Eighty lakhs Only)
#Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank Loan facilities,consolidation or instruments are provided in Annexure


RATING ACTION / OUTLOOK

BWR has revised the ratings to BWR B+/Stable/BWR A4 and removed them from "Issuer not cooperating" category for the bank loan facilities of Bindaas Foods Pvt. Ltd.

BWR had initially assigned the rating to BWR B+ (Stable) / BWR A4 for the bank loan facilities as on 25 Feb 2022. The rating was due for renew in Feb 2022. On 03 Mar 2023, the rating was downgraded to BWR B (Stable) and the short term rating was reaffirmed at BWR A4 and the rating was migrated under the 'Issuer Not Cooperate' category for the bank loan facilities.  

The rating draws strength from from the rich experience of the promoters of the company and moderate financial risk profile. The rating of the company is constrained by the risk associated with the tender based nature of operations and intense competition, geographical concentration of the revenue and Susceptibility in profit due to the nature of business.

BWR believes that the business risk profile of “Dhanchandra Construction” 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 there is significant improvement in revenues, and profit margins of the company. The rating outlook may be revised to “Negative” if there is any deterioration in the financial risk profile including liquidity of the company.

KEY RATING DRIVERS

Credit Strengths:


Credit Risks:

ANALYTICAL APPROACH - Standalone

For arriving at its ratings, BWR has considered the standalone financials of the company. BWR has applied its rating methodology as detailed in the Rating Criteria (hyperlinks provided at the end of this rationale).

RATING SENSITIVITIES

Going forward, the ability of the company to improve its financial profile and maintaining adequate liquidity will remain the key rating sensitivities.

Positive:Rating may be upgraded in case of substantial improvement in revenues and profit of the company, or on account of any other favourable factor.

Negative:Rating may be downgraded in case there is deterioration in financial profile of the company including the liquidity of the company or on account of any unforeseen unfavourable events.

LIQUIDITY INDICATORS - Adequate

The company has no associate companies. The cash and bank balance stood at Rs. 1.70 cr cr as on March 31, 2023 (Aud.). It stood at Rs. 0.19 cr as on March 31, 2024 (Prov.). The company also has FD for Rs. 1.49 cr as on 31 Mar 2023 (Aud.). It stood at Rs. 3.52 cr as in 31 Mar 2024 (Prov.). The long term borrowings as on March 31, 2023 (Aud.) stood at Rs. 3.82 cr. The current portion of term debt stood at Rs. 1.71 cr as on March 31, 2023 (Aud.) and the company has cash accruals of Rs. 2.66 cr during FY23(Aud.) . The long term borowings stood at Rs. 3.80 cr as on 31 Mar 2024 (Prov.) and the current portion of long term debt stood at Rs. 1.71 cr as on 31 Mar 2024 (Prov.). The company has cash accruals of Rs. 2.64 cr during FY23. The CC limits are utilized at approx 74.9% during the 6 month period ending May 2024. The current ratio stood at 1.49x as on March 31, 2023 (Aud) and 1.49x as on 31 Mar 2024 (Prov). The ISCR has stood at 3.90x as on March 31, 2023 (Aud.)and the DSCR has stood at 2.23x as on March 31, 2023 (Aud).  The ISR and DSCR during FY24 (Prov.) stood at 3.90x and 2.48x respectively. The conversion cycle stood at 67 days as on as on March 31, 2023 (Aud).  The conversion cycle stood at 132 days as on 31 Mar 2024 (Prov.). 

ABOUT THE ENTITY
Macro Economic Indicator Sector Industry Basic Industry

Dhanchandra Constructions, the firm is being promoted by an eminent personality from Latur city. This was a proprietorship concern belonging to Shri. Dhananjay Chandrasen Deshmukh family who have decades of experience in the field of contracting of Latur city. Backed by in-depth knowledge of constriction procedures, work allotment, and completion. In the year 2014, with an increase in the business and requirement of human resources, the firm has converted into a partnership firm adding sons of the promoter as partners with effect from 17th July 2014. The firm undertakes the construction work of Government, semi-government and private firms. Contract work related to road construction, civil construction, and irrigation work has been completed in the last decades. The firm has their own metal crushing plant as metal is used for road construction and there is minor sales to other parties. 

KEY FINANCIAL INDICATORS (Standalone)
Key Parameters Units FY 21 - 22
(Audited)
FY 22 - 23
(Audited)
FY 23 - 24
(Provisional)
Operating Revenue 21.28 23.18 23.53
EBITDA 3.56 3.42 3.37
PAT 1.81 1.51 1.61
Tangible Net Worth 7.06 8.27 9.84
Total Debt / Tangible Net Worth 1.33 1.05 1.10
Current Ratio 1.25 1.49 1.50
KEY COVENANTS OF THE FACILITY RATED

Not applicable

 


NON-COOPERATION WITH PREVIOUS CREDIT RATING AGENCY

No outstanding rating from other CRAs

 

ANY OTHER INFORMATION

nil

RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)
Facilities Current Rating (2024) 2024 (History) 2023 2022 2021
Type Tenure Amount
(Rs.Crs.)
Rating Date Rating Date Rating Date Rating Date Rating
Fund Based LT 7.80
BWR B+/Stable
(removal from ISSUER NOT COOPERATING* category/Upgraded)
02May2024
BWR B Stable
(Continues to be in ISSUER NOT COOPERATING* category/Reaffirmed)
03Mar2023
BWR B Stable
(ISSUER NOT COOPERATING* /Downgrade)
25Feb2022
BWR B+ Stable
(Assignment)
NA
NA
Non Fund Based ST 4.00
BWR A4
(removal from ISSUER NOT COOPERATING* category/Reaffirmed)
02May2024
BWR A4
(Continues to be in ISSUER NOT COOPERATING* category/Reaffirmed)
03Mar2023
BWR A4
(ISSUER NOT COOPERATING* /Reaffirmation)
25Feb2022
BWR A4
(Assignment)
NA
NA
Grand Total 11.80 (Rupees Eleven Crores and Eighty lakhs Only)
COMPLEXITY LEVELS OF THE INSTRUMENTS - Simple

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
Analytical Contacts

Vaishali Khandelwal

Rating Analyst vaishali.k@brickworkratings.com

V.K.Kukreja

Associate Director - Ratings Board : +91 11 2341 2232 kukreja.vk@brickworkratings.com
1-860-425-2742 | media@brickworkratings.com
Dhanchandra Construction
ANNEXURE-I
Details of Bank Facilities rated by BWR
SL.No. Name of the Bank/Lender Type Of Facilities Long Term(Rs.Crs.) Short Term(Rs.Crs.) Total(Rs.Crs.)
1 Maharashtra Gramin Bank Term LoanSanctioned 0.80 _ 0.80
2 Maharashtra Gramin Bank Cash CreditSanctioned 7.00 _ 7.00
3 Maharashtra Gramin Bank Bank GuaranteeSanctioned _ 4.00 4.00
Total 7.80 4.00 11.80
TOTAL (Rupees Eleven Crores and Eighty lakhs Only)
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Brickwork Ratings (BWR), a Securities and Exchange Board of India [SEBI] registered Credit Rating Agency and accredited by Reserve Bank of India [RBI], offers credit ratings of Bank Loan, Non- convertible / convertible / partially convertible debentures and other capital market instruments and bonds, Commercial Paper, perpetual bonds, asset-backed and mortgage-backed securities, partial guarantees and other structured / credit enhanced debt instruments, Security Receipts, Securitization Products, Municipal Bonds, etc. BWR has rated over 11,560 medium and large corporates and financial institutions’ instruments. BWR has also rated NGOs, Educational Institutions, Hospitals, Real Estate Developers, Urban Local Bodies and Municipal Corporations. BWR has Canara Bank, a leading public sector bank, as one of the promoters and strategic partner.

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