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#
Facilities**	Previous	Present	Tenure	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:

Management Experience & Locational Advantage :
The promoter of the company has more than a decades’ experience in EPC contract execution. The promoters are qualified and experienced and have demonstrated execution capabilities over the years in this sector. Also, the firm is located in the Latur cluster and thus has a competitive advantage in terms of skilled labor, logistics, production knowledge, and vendors making the company more efficient and cost-effective.
Moderate scale of operations :
The total operating income increased to Rs. 23.18 cr during FY23 (PY: Rs. 21.28 cr) on account of the project revenue/ sales in metal sales in FY23. The TOI increased marginally at Rs. 23.53 cr during FY24 (prov) on account of an increase in the contract sales revenue. The metal sales formed 35.35% of the total revenue in FY24 (Prov.) (PY: 36.06%) as the firm also has their own metal crushing plant which is used in road construction. The OPBDIT declined nmarginally to Rs. 3.42 cr during FY23 (PY: Rs. 3.56 cr) on account of the increase in purchase costs. The OPBDIT declined marginally to Rs. 3.37 cr during FY24 (prov) on account of the increase in purchase cost. The PAT declined at Rs. 1.51 cr during FY23 (PY: Rs. 1.81 cr) on account of an increase in the interest cost. The PAT improved to Rs. 1.61 cr during FY24 (prov) on account of decrease in depreciation cost. The operating margin decreased to 14.77% during FY2023 (PY: 16.75%). The operating margin decreased to 14.77% during FY2023 (PY: 16.75%) on accout of declrease in the EBIDTA. The operating margin decreased at 14.33% during FY24 (prov) on account of decrease in the EBIDTA. The net margin decreased to 6.50% during FY2023 (PY: 8.51%) on account of decrease in the net profits. The net margin improved to 6.85% during FY24 (prov) on account of increase in the net profits.

The tangible networth increased to Rs. 8.27 cr as on 31 Mar 2023 (PY: Rs. 7.06 cr) owing to the accmulation of profitabilityin FY23. The tangible networth stood at Rs. 9.84 cr as on 31 Mar 2024 (Prov) owing to increase in profitability. The total debt/TNW improved to 1.05x as on 31 Mar 2023 (PY: 1.33x) owing to the increase in the networth in FY23. The total debt/TNW declined at 1.10x during FY24 (prov) owing to increase in total debt. The TOL/TNW improved to 1.39x as on 31 Mar 2023 (PY: 1.86x) owing to the increase in networth. The TOL/TNW stood at 1.18x during FY24 (prov) on account of increase in networth. The current ratio improved to 1.49x during FY2023 (PY: 1.25x). The current ratio stood at 1.49x during FY24 (prov). The ISCR deteriorated to 3.90x during FY2023 (PY: 4.23x) owing to the increase in interest. The ISCR stood at 3.90x during FY24 (prov). The DSCR stood at 2.23x during FY2023 (PY: 2.37x). The DSCR stood at 2.48xr during FY24 (prov).

Credit Risks:

The risk associated with the tender based nature of operations and intense competition :
The business operations are tender based which exhibits an inherent risk of uncertainty of revenue due to the non-availability of information from competitors, not succeeding in all the bids in which the client participates also carries potential risk in the timely implementation of various contracts. However, the risk is mitigated to an extent as the management has been in the business for over a long time and has a healthy order book position. Further, the company faces competition from other established players in the market. Also, there have been delays in the execution of a few of the contracts, though the client has got the extension of such contracts.
Geographical concentration of the revenue :
The operations of the company are concentrated in the regions of Maharashtra and Telangana, restricting the geographical boundaries for revenue. The operations remain exposed to any adverse change in the administration policies along with the geopolitical risk since the customer concentration is high as the top 3 customers contribute 97.34 % of sales.
Susceptibility in profit due to the nature of business :
The business remains exposed to fluctuations in profit due to the volatile nature of the cost of inputs like cement, iron. Any adverse fluctuation may impact the profitability of the business. However, to mitigate the same, the company has a price escalation clause in place.

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	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

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

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 Loan - Sanctioned	0.80	_	0.80
2	Maharashtra Gramin Bank	Cash Credit - Sanctioned	7.00	_	7.00
3	Maharashtra Gramin Bank	Bank Guarantee - Sanctioned	_	4.00	4.00
Total			7.80	4.00	11.80
TOTAL (Rupees Eleven Crores and Eighty lakhs Only)

Print and Digital Media

The Rating Rationale is sent to you for the sole purpose of dissemination through your print, digital or electronic media. While it may be used by you acknowledging credit to BWR, please do not change the wordings in the rationale to avoid conveying a meaning different from what was intended by BWR. BWR alone has the sole right of sharing (both direct and indirect) its rationales for consideration or otherwise through any print or electronic or digital media.

About Brickwork Ratings

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.

Disclaimer

Brickwork Ratings India Pvt. Ltd. (BWR), a Securities and Exchange Board of India [SEBI] registered Credit Rating Agency and accredited by the Reserve Bank of India [RBI], offers credit ratings of Bank Loan facilities, 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. [ hereafter referred to as "Instruments"]. BWR also rates NGOs, Educational Institutions, Hospitals, Real Estate Developers, Urban Local Bodies and Municipal Corporations.

BWR wishes to inform all persons who may come across Rating Rationales and Rating Reports provided by BWR that the ratings assigned by BWR are based on information obtained from the issuer of the instrument and other reliable sources, which in BWR's best judgment are considered reliable. The Rating Rationale / Rating Report & other rating communications are intended for the jurisdiction of India only. The reports should not be the sole or primary basis for any investment decision within the meaning of any law or regulation (including the laws and regulations applicable in Europe and also the USA).

BWR also wishes to inform that access or use of the said documents does not create a client relationship between the user and BWR.

The ratings assigned by BWR are only an expression of BWR's opinion on the entity / instrument and should not in any manner be construed as being a recommendation to either, purchase, hold or sell the instrument.

BWR also wishes to abundantly clarify that these ratings are not to be considered as an investment advice in any jurisdiction nor are they to be used as a basis for or as an alternative to independent financial advice and judgment obtained from the user's financial advisors. BWR shall not be liable to any losses incurred by the users of these Rating Rationales, Rating Reports or its contents. BWR reserves the right to vary, modify, suspend or withdraw the ratings at any time without assigning reasons for the same.

BWR's ratings reflect BWR's opinion on the day the ratings are published and are not reflective of factual circumstances that may have arisen on a later date. BWR is not obliged to update its opinion based on any public notification, in any form or format although BWR may disseminate its opinion and analysis when deemed fit.

Neither BWR nor its affiliates, third party providers, as well as the directors, officers, shareholders, employees or agents (collectively, "BWR Party") guarantee the accuracy, completeness or adequacy of the Ratings, and no BWR Party shall have any liability for any errors, omissions, or interruptions therein, regardless of the cause, or for the results obtained from the use of any part of the Rating Rationales or Rating Reports. Each BWR Party disclaims all express or implied warranties, including, but not limited to, any warranties of merchantability, suitability or fitness for a particular purpose or use. In no event shall any BWR Party be liable to any one for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of any part of the Rating Rationales and/or Rating Reports even if advised of the possibility of such damages. However, BWR or its associates may have other commercial transactions with the company/entity. BWR and its affiliates do not act as a fiduciary.

BWR keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of the respective activity. As a result, certain business units of BWR may have information that is not available to other BWR business units. BWR has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with each analytical process.

BWR clarifies that it may have been paid a fee by the issuers or underwriters of the instruments, facilities, securities etc., or from obligors. BWR's public ratings and analysis are made available on its web site, www.brickworkratings.com. More detailed information may be provided for a fee. BWR's rating criteria are also generally made available without charge on BWR's website.

This disclaimer forms an integral part of the Ratings Rationales / Rating Reports or other press releases, advisories, communications issued by BWR and circulation of the ratings without this disclaimer is prohibited.

BWR is bound by the Code of Conduct for Credit Rating Agencies issued by the Securities and Exchange Board of India and is governed by the applicable regulations issued by the Securities and Exchange Board of India as amended from time to time.