Jayantisuper Construction Pvt. Ltd.

Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 253.60 Crs. of Jayantisuper Construction Pvt. Ltd.

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
	Previous	Present		Previous (23 Nov 2021)	Present
Fund Based	3.29	13.10	Long Term	BWR BBB /Stable Assignment	BWR BBB /Stable Reaffirmation
	(1.00)	(1.00)
	(0.00)	(3.00)
	(0.00)	(3.00)
	(0.00)	(2.00)
Non Fund Based	111.00	240.50	Short Term	BWR A3+ Assignment	BWR A3 + Reaffirmation
	(0.00)	(20.00)
	(0.00)	(22.00)
Grand Total	114.29	253.60	(Rupees Two Hundred Fifty Three Crores and Sixty 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
*** Note : Annual review cum enhancement mandate was assigned to Brickwork  prior to 6th Oct, 2022

RATING ACTION / OUTLOOK

Brickwork Ratings (BWR) has considered the standalone financials of Jayanti Super Construction Pvt. Ltd.  (JSCPL or the company) and essentially relied on audited financial statements upto FY22, Management certified sales for 7MFY23, projected financials upto for FY23 & FY24 and publicly available information and clarifications provided by the entity’s management.

The rating reaffirmation draws strength from the improvement in the operating income during last fiscal FY22, healthy work orders on hand in multiple states, adequate liquidity position and comfortable financial risk profile. The company also benefits from promoters’ vast business experience of  in the line of infrastructure sector. These rating strengths are partially offset by project implementation and inherent risk related to tender driven operations.

BWR believes the business risk profile will be maintained over the medium term. The Stable outlook indicates a low likelihood of a rating change over the medium term. Going forward, the entity’s ability of executing projects in a timely manner, repaying debt, improving sales and efficiently managing liquidity would be key rating sensitivities.

KEY RATING DRIVERS

Credit Strengths:

• Experienced management with three decades of experience in construction sector: :

  Promoter Mr. Jayanti Patel has an extensive experience of more than three decades in  civil construction such as water supply and Drainage systems. Over the years, they have developed long-standing relations with clients in the government departments and and established track record withstanding industry cycles.  The company benefits from the promoters’ significant experience in the tender bidding process, which helps in the continuous receipt of orders.

• Comfortable financial risk profile: :

  . The tangible net worth is  Rs. 125.24 Crs as on 31 March 2022  on the back of  accumulated profits of past years. Given the moderate indebtedness, largely towards working capital requirements, the gearing stood low, at 0.03x in FY22, against 0.01x in FY21, and the TOL/TNW is 0.16x in FY22. Operating profit margin are stagnant at 6.27% and 5.68% and Net profit margin is 4.70% and 4.37% in FY21 & FY22 , respectively due to fluctuation of raw material prices.  Thought debt protection metrics are comfortable with interest and debt service coverage, at 7.36x and 5.63x, respectively as on 31st March, 2022.

• Growth in revenues and Healthy work orders on hand :

  ---

  The scale of operation improved in the last  fiscals with TOI of Rs. 205.35 Crs and Rs. 229.92  Crs in FY21 & FY22 respectively. As per the management certified provisional financials the company has achieved an operating income of Rs.  97.86 Crs as on 31st October 2022. JSCPL has been catering to reputed government clients such as projects for  Smart city mission, Gujarat, various projects for states like Karnataka, Madhya Pradesh, Gujarat, Maharashtra, Uttarpradesh, Bihar etc. As on 20th October, 2022, the company has work on hand worth Rs  1963.38 Crs and L1 orders worth Rs. 1643.54 Crs. This provides revenue visibility in the medium term since the construction work of multiple projects is in progress. Past record of the successful project execution and established relationships with these clients, lend some comfort. 

Credit Risks:

• Execution risk and tender driven business: :

  The company’s operations are susceptible to many external factors such as timely clearances from various regulatory bodies, the handover of sites, the mobilization of funds, the change in governments policies, labour unrest and climatic vagaries. 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 for EPC contractors 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.

• Raw material price volatility: :

  Operations are vulnerable to price variations in key raw materials, however, the risk is largely mitigated in case of contracts that include an escalation clause. Tender based operations limit pricing flexibility in an intensely competitive industry which in turn adversely impacts the profitability.

ANALYTICAL APPROACH - Standalone

For arriving at its ratings, BWR has considered a standalone financials of the company and applied its rating methodology as detailed in the Rating Criteria: 

RATING SENSITIVITIES

Positive:

Significant ramp-up in operating revenues on the back of timely project completion, maintaining new order flows and efficient debtor's collections.

Improvement in profitability and the further infusion of additional funds by way of capital and unsecured loans

Negative: 

Lower-than-expected cash flow from operations either because of subdued sales or due to a significant delay in completion and a delay in collection weakening of the liquidity position.

Significant rise in debt, thereby deterioration in the gearing and debt coverage metrics, the withdrawal of unsecured loans

LIQUIDITY INDICATORS - Adequate

The liquidity position of JSCPL is adequate as the utilization working capital facilities remained partially unutilized. Net cash accruals remained stagnant at Rs. 10.30 Crs in FY21 & Rs. 10.51 Crs in FY22. Going further, the company expecting to generate net cash accrual between Rs. 12 -14 Crs in current fiscal FY23 and next fiscal FY24 against absence of any major current portion of long term debt.  The rating derives comfort by  short receivable cycle of 14 days in FY21 and 12 days in FY22.  Average utilization of cash credit limits is below 50% and bank guarantee utilization is 56% for the last six months ending as on 30 Sept 2022. Additionally, the company maintains investments such as fixed deposits reserves of Rs. 69.75 Crs  and Cash and Bank Balance of Rs. 4.71 Crs as on 30 Sept 2022.

ABOUT THE ENTITY

Incorporated in June 2016, Jayantisuper Construction Pvt. Ltd. is promoted and managed by Mr Jayantibhai Patel for executing water supply works, construction of drainage systems etc. The company is registered as a class AA Contractor with the Gujarat government. Previously, the operation was carried out  as a partnership firm named “Super Construction Company since 1987 and later reconstituted in 2016. 

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 21-22 (Audited)	FY 20-21 (Audited)
Operating Revenue	Rs.Crs.	229.92	205.35
EBITDA	Rs.Crs.	13.06	12.88
PAT	Rs.Crs.	10.05	9.64
Tangible Net Worth	Rs.Crs.	125.24	115.19
Total Debt/TNW	Times	0.03	0.01
Current Ratio	Times	3.53	2.55

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

Infomerics Ratings has migrated the rating IVR BB+ (Stable)/ A4+ to 'Issuer not cooperating' category on 23 December 2021, 

RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)

Facilities	Current Rating (2022)			2021		2020		2019
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	13.10	BWR BBB/Stable (Reaffirmation)	23Nov2021	BWR BBB Stable (Assignment)	NA	NA	NA	NA
FB SubLimit	LT	(1.00)	BWR BBB/Stable (Reaffirmation)	NA	NA	NA	NA	NA	NA
		(3.00)	BWR BBB/Stable (Reaffirmation)	NA	NA	NA	NA	NA	NA
		(3.00)	BWR BBB/Stable (Reaffirmation)	NA	NA	NA	NA	NA	NA
		(2.00)	BWR BBB/Stable (Reaffirmation)	NA	NA	NA	NA	NA	NA
Non Fund Based	ST	240.50	BWR A3+ (Reaffirmation)	23Nov2021	BWR A3+ (Assignment)	NA	NA	NA	NA
NFB SubLimit	ST	(20.00)	BWR A3+ (Reaffirmation)	NA	NA	NA	NA	NA	NA
		(22.00)	BWR A3+ (Reaffirmation)	NA	NA	NA	NA	NA	NA
Grand Total		253.60	(Rupees Two Hundred Fifty Three Crores and Sixty lakhs Only)

*** Note : Annual review cum enhancement mandate was assigned to Brickwork  prior to 6th Oct, 2022 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

• General Criteria
• Approach to Financial Ratios
• Infrastructure Sector
• Short Term Debt

Analytical Contacts
Kunjal Dabhi Rating Analyst Board : +91 79 66174046 / 47 kunjal.r@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	Indian Bank	Bank Guarantee - Sanctioned	_	26.00	26.00
	Sub-Limit (OCC) - Sanctioned	(1.00)
2	Karnataka Bank Ltd	Bank Guarantee - Sanctioned	_	50.00	50.00
3	Karnataka Bank Ltd	Overdraft - Sanctioned	5.00	_	5.00
4	Kotak Mahindra Bank	Overdraft - Sanctioned	1.10	_	1.10
5	Kotak Mahindra Bank	Bank Guarantee - Sanctioned	_	30.00	30.00
6	Punjab National Bank	Bank Guarantee - Sanctioned	_	65.00	65.00
	Sub-Limit (Cash Credit) - Sanctioned	(3.00)
	Sub-Limit (ILG-purchase of raw material) - Sanctioned	(3.00)
7	Punjab National Bank	Cash Credit - Sanctioned	2.00	_	2.00
8	Union Bank of India	Cash Credit - Sanctioned	5.00	_	5.00
9	Union Bank of India	Bank Guarantee - Sanctioned	_	45.00	45.00
	Sub-Limit (BG for JV projects) - Sanctioned		(22.00)
10	Yes Bank	Bank Guarantee - Sanctioned	_	24.50	24.50
	Sub-Limit (BG against 100% margin) - Sanctioned		(20.00)
	Sub-Limit (Cash Credit) - Sanctioned	(2.00)
11	Yes Bank	Term Loan - Out-standing	_	_	0.00
Total			13.10	240.50	253.60
TOTAL (Rupees Two Hundred Fifty Three Crores and Sixty lakhs Only)

* Note : Annual review cum enhancement mandate was assigned to Brickwork  prior to 6th Oct, 2022