VSA INFRA PROJECTS PRIVATE LIMITED

Brickwork Ratings (BWR) has assigned a long-term rating of BWR BBB- (Stable) and a short-term rating of BWR A3 for the Rs. 150.00 crore bank loan facilities of VSA Infra Projects Private Limited (VSA).

Particulars

Facilities**	Amount(Rs.Crs.)	Tenure	Rating#
Fund Based	30.00	Long Term	BWR BBB - /Stable Assignment
Non Fund Based	120.00	Long Term	BWR BBB - /Stable Assignment
	(30.00)	Short Term	BWR A3 Assignment
Grand Total	150.00	(Rupees One Hundred Fifty Crores 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

Brickwork Ratings (BWR) has assigned a long-term rating of BWR BBB- Stable outlook and a short-term rating of BWR A3 for the Rs. 150.00 crore bank loan facilities of VSA Infra Projects Private Limited (VSA).

The ratings reflect VSA’s robust business risk profile, underpinned by an expansive and highly diversified order book totaling Rs. 38,294.88 crore as of February 28, 2026. This provides exceptional long-term revenue visibility, anchored by a transformative Rs. 35,000 crore bauxite mining block in Chhattisgarh and a cluster of high-priority Jal Jeevan Mission (JJM) water supply projects in Uttar Pradesh. The ratings also derive strength from the company's experienced promoters, an established execution track record spanning over three decades, moderate but stable profitability margins, and a comfortable capital structure. However, the ratings are constrained by revenue volatility, exposure to administrative delays in government-funded projects, working-capital-intensive operations, high customer concentration, and the inherent risks of a highly competitive, tender-driven industry.

The "Stable" outlook reflects the expectation that VSA will maintain its conservative financial risk profile while benefiting from its robust unexecuted order book. This outlook is supported by the company’s low reliance on external debt, healthy net worth, and proven expertise in executing government infrastructure works. The outlook further incorporates VSA’s strategic pivot into bauxite mining scheduled for late 2026, which is expected to provide long-term, annuity-style revenue and reduce cyclical EPC risks. BWR expects the company’s internal accruals to be sufficient for managing mobilization expenses without significantly impacting its strong debt-coverage metrics or conservative capital structure.

KEY RATING DRIVERS

Credit Strengths:

• Experienced Promoters and Established Execution Track Record :

  VSA Infra Projects Private Limited (VSA) is led by a management team of seasoned professionals with over two decades of specialized expertise in civil construction, infrastructure development, and government contracting. The company is promoted by Mr. Kondal Reddy and Mr. Sai Kiran Reddy, whose combined experience in project execution and business development significantly enhances the entity's operational efficiency and growth prospects. Mr. Kondal Reddy, serving as Managing Director, specifically oversees strategic administration and stakeholder management, leveraging his extensive experience with financial institutions and government departments to ensure seamless fund management and project delivery.

  The promoters possess profound domain knowledge in large-scale water supply and civil infrastructure, supported by a dedicated team of technical and finance experts. Their long-standing relationships with reputable government bodies and central PSUs serve as catalysts for steady order inflows and operational continuity. VSA has consistently demonstrated its technical capability by managing projects of varying complexity while adhering to strict quality standards and timelines. This execution resilience was particularly evident in FY2025; despite facing administrative disruptions and certification bottlenecks, the company successfully executed works totaling approximately Rs. 400 crore, underscoring a robust operational performance and a reliable execution track record.

• Healthy Order Book and Revenue Visibility :

  VSA Infra Projects Private Limited (VSA) maintains a robust and highly diversified business risk profile, underpinned by an expansive unexecuted order book of approximately Rs. 36,000 crore as of February 28, 2026. With a total order book value of Rs. 38,294.88 crore and cumulative execution to date standing at Rs. 2,026.59 crore, the company possesses exceptional long-term revenue visibility. The portfolio is strategically anchored by the Jal Jeevan Mission (JJM) in Uttar Pradesh across nine districts, including Ghazipur, Chandauli, and Ayodhya. While these projects—with a balance work of approximately Rs. 1,111 crore—have seen timelines extended to December 28, 2028, due to administrative funding reallocations, management has confirmed that there are no land acquisition or "Right of Way" (RoW) impediments, ensuring steady execution momentum as central funding stabilizes.

  Beyond its core EPC segment, VSA has executed a transformative strategic pivot into long-term, high-margin assets, most notably through the Sendurkhar Bauxite Mining Block in Chhattisgarh. Valued at Rs. 35,000 crore, this asset serves as a structural anchor for the business. While the formal contract reflects a 50-year lease, management estimates that the 70 million units of reserves can realistically sustain operations for up to 50 years, providing annuity-style cash flows. Exploration is scheduled to commence on April 1, 2026, with an expected annual revenue contribution of Rs. 300–400 crore. Furthermore, the company is diversifying into ESG-compliant infrastructure with an Rs. 83.06 crore solar rooftop project for NREDCAP (AP) and an active tender pipeline of Rs. 589.56 crore, including a significant Rs. 466.56 crore standalone Battery Energy Storage System (BESS) project in Chhattisgarh. While the presence of reputable government counterparties and central PSUs minimizes counterparty credit risk, the timely mobilization of the Sendurkhar mining block and efficient working capital management during late-stage EPC execution remain critical credit monitorables to sustain this growth trajectory.

• Comfortable Capital Structure :

  The company’s net worth improved significantly to Rs. 75.32 crore as on March 31, 2025, from Rs. 30.65 crore in FY2023, supported by healthy internal accruals. The overall leverage profile remains conservative, with total debt at Rs. 13.85 crore in FY2025. Consequently, gearing improved to 0.18x in FY2025 (FY2024: 0.08x; FY2023: 0.34x), indicating a low reliance on external borrowings. The modest leverage provides adequate financial flexibility to support incremental working capital requirements and bank guarantees typical in EPC operations. Coverage indicators remain strong, with interest coverage at 21.07x in FY2025 (FY2024: 13.81x) and DSCR at 9.91x, reflecting comfortable debt servicing ability. Net cash accruals to total debt stood at 1.01x in FY2025, further supporting financial strength.

• Moderate but Stable Profitability :

  Operating margin improved to 5.00% in FY2024 from 4.63% in FY2023, supported by higher scale and favourable revenue mix, including upfront material billing. In FY2025, operating margin moderated to 4.50% due to lower revenue booking, normalisation of the material supply component, and relatively fixed overhead absorption at a reduced scale. Nevertheless, margins remain broadly aligned with industry norms for EPC contractors operating in competitive tender-driven environments. Profit after tax increased to Rs. 31.41 crore in FY2024 from Rs. 9.92 crore in FY2023, in line with the sharp revenue growth. In FY2025, PAT declined to Rs. 13.25 crore due to lower billing; however, net profit margin improved marginally to 3.81% (FY2024: 3.44%), reflecting cost discipline and relatively lower finance expenses. Overall profitability remains moderate but stable for the segment.

Credit Risks:

• Revenue Volatility and Exposure to Administrative Delays :

  The company reported substantial revenue expansion in FY2024, with total operating income increasing to Rs. 912.62 crore from Rs. 310.51 crore in FY2023, largely driven by accelerated execution and upfront material billing (approximately 70% of FY2024 revenue, amounting to around Rs. 638.83 crore). However, revenue declined to Rs. 348.18 crore in FY2025. This moderation was primarily timing-related rather than execution-related; during FY2025, the Uttar Pradesh general elections (April–June 2024) resulted in the redeployment of government officials for election duties, leading to delays in Measurement Book (MB) certifications and DPR approvals. Additionally, the prioritization of central government spending toward Kumbh Mela activities slowed the release of water works grants. Although works worth approximately Rs. 400 crore were executed during the year, billing could be processed for only about Rs. 200 crore, resulting in lower reported revenue.

  In the current financial year, the company's performance continues to reflect this back-ended recovery. For 9M FY2026 (ending December 31, 2025), VSA Infra recorded an unaudited turnover of Rs. 63.63 crore, as administrative certifications for major Jal Jeevan Mission projects were still in process. However, as of 11M FY2026 (ending February 28, 2026), the cumulative revenue has surged to Rs. 133.13 crore. Furthermore, including work-in-progress and bills under certification as of March 20, 2026, the total achieved sales stand at Rs. 215.94 crore, with a robust billing pipeline for the final month of March expected to bridge the gap toward the annual projection of Rs. 383.00 crore.

• Working Capital Intensive Operations :

  The company’s operations are milestone-based and exposed to elongated receivable cycles typical of government EPC contracts. In FY2025, receivable days increased to 88 days from 19 days in FY2024 due to delayed certifications and slower fund disbursement. Payable days also stretched to 82 days (FY2024: 20 days), indicating higher reliance on supplier credit to manage liquidity. Inventory levels remained low at approximately 9 days, consistent with the project execution model. Although the operating cycle remained moderate at 15 days in FY2025, the increase in receivables and dependence on administrative approvals remain key credit monitorables.

• High Customer Concentration :

  The revenue profile remains highly concentrated, with a major share derived from joint venture entities and government-linked counterparties. The company’s joint ventures, namely VSAIPPL-SMC JV and VSAIPPL-SCL JV, accounted for approximately 69% of revenues in FY2023, which increased to about 79% in FY2024 and moderated slightly to around 76% in FY2025. Including SMC Infrastructures Private Limited, the top three customers contributed nearly the entire operating income across the last three fiscals. Such concentration increases dependence on a limited set of counterparties for revenue and cash flows, exposing the company to counterparty-specific risks and administrative delays.

• Highly Competitive and Tender-Driven Industry :

  The domestic construction and infrastructure sector is fragmented, with the presence of numerous players across various scales of operation. The competitive intensity in government tenders often results in aggressive pricing, exerting pressure on margins. The company’s operations are exposed to tender-based bidding processes, where profitability is dependent on disciplined cost management and efficient execution. Any significant decline in EBITDA margins from current levels may impact overall credit metrics. Furthermore, the business remains exposed to risks inherent to EPC contracting, including regulatory changes, fluctuations in input costs, project execution challenges, and delays in payments from government authorities.

ANALYTICAL APPROACH - Standalone

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

Positive Sensitivities:

• Operational Scaling & Margin Profile: Sustained growth in Total Operating Income (TOI) above Rs. 400.00 crore and EBITDA margins exceeding 5.0%, driven by the timely execution of JJM projects and high-margin operationalization of the Sendurkhar Mining Block.
• Financial Discipline & Working Capital: Maintenance of a conservative capital structure with Total Debt/TNW below 0.25x and a streamlined working capital cycle, specifically keeping receivable days below 60 days through efficient government bill certifications.

Negative Sensitivities:

• Execution Delays & Revenue Contraction: A significant decline in operating performance with revenues falling below Rs. 275.00 crore or margins weakening below 4.0%, primarily due to prolonged administrative delays in UP or hurdles in mining mobilization.
• Leverage & Liquidity Stress: Deterioration of the financial risk profile characterized by Total Debt/TNW exceeding 1.50x or ISCR falling below 2.0x, resulting from aggressive debt-funded CAPEX or a stretch in receivables beyond 120 days.

LIQUIDITY INDICATORS - Adequate

VSA Infra’s liquidity position is characterized by healthy internal accruals and significant financial flexibility. The company generated Gross Cash Accruals (GCA) of Rs. 13.97 crore in FY25, which provides robust coverage against its modest debt repayment obligations of Rs. 0.66 crore as of March 31, 2025. This strong debt-servicing capability is further supported by unencumbered cash and bank balances, alongside a Current Ratio of 1.61x, reflecting satisfactory short-term solvency.

The company maintains a substantial liquidity buffer, with cash and cash equivalents totaling Rs. 36.55 crore (of which Rs. 34.29 crore is held as margin money/FDs). Furthermore, VSA Infra enjoys a considerable banking cushion, with average working capital limit utilization remaining low at 28.48% for the 12 months ended February 2026. This underutilization provides ample headroom to meet the mobilization requirements of upcoming large-scale projects in the mining and solar segments. While a conservative leverage profile and positive operating cash flows reinforce the liquidity floor, the timely certification and realization of receivables from government authorities remain critical monitorables to ensure uninterrupted cash flow.

ABOUT THE ENTITY

VSA Infra Projects Private Limited (VSA), headquartered in Hyderabad, Telangana, is a prominent multi-disciplinary infrastructure development company incorporated on May 20, 2011. The company is promoted by Mr. Kondal Reddy and Mr. Sai Kiran Reddy, whose combined experience in project execution and business development significantly enhances the entity's operational efficiency and growth prospects. The entity represents the strategic evolution of the partnership firm M/s Venkata Sai Agencies, which began operations in 1992 by trading heavy motors and pumps. VSA is recognized as a Special Class Contractor, specializing in a wide array of civil engineering projects. Its core portfolio includes the execution of large-scale rural water supply schemes under the Jal Jeevan Mission (JJM), underground drainage systems, lift irrigation, and road construction across several Indian states, including Uttar Pradesh, Telangana, Karnataka, and Andhra Pradesh.

The company is currently undergoing a transformative strategic pivot toward long-term, asset-backed revenue streams. This is anchored by a 30-year lease (with a 50-year reserve potential) for the Sendurkhar Bauxite Mining Block in Chhattisgarh, alongside the establishment of new verticals in Solar power and Battery Energy Storage Systems (BESS). A significant operational differentiator for VSA is its ownership of 100% of its project machinery. This asset-heavy approach at the equipment level ensures superior execution control, eliminates mobilization delays, and preserves operating margins by removing dependency on third-party rentals. With a steadfast focus on technical excellence, VSA has solidified its reputation as a reliable partner for major public bodies, including the State Water & Sanitation Mission (UP), GHMC, and NREDCAP.

ESG Profile

The company’s ESG profile is assessed as Evolving, reflecting developing systems and processes aligned with its scale and regulatory requirements. While statutory compliance is maintained, formal ESG disclosures and structured sustainability frameworks are still at a nascent stage. Currently, ESG factors do not materially constrain the credit profile but remain an area for progressive strengthening.

Environmental: Environmental risks arise mainly from construction activities, including resource consumption and C&D waste generation. The company complies with applicable environmental regulations and contractual norms, with no reported material violations. However, quantified disclosures on energy usage, water consumption, emissions, and carbon reduction strategies remain limited.

Social: Social exposure is linked to the labour-intensive nature of EPC operations, particularly workforce health and safety. The company adheres to statutory labour laws and maintains site-level supervision to support safe execution practices. Formal reporting on safety metrics, employee diversity, and structured community engagement initiatives is limited.

Governance: Governance is promoter-led, with active oversight of operations, finance, and risk management by experienced management. Financial reporting and statutory compliance are in line with regulatory requirements for a private limited company. However, board independence, formal ESG oversight mechanisms, and structured sustainability reporting frameworks are still evolving.

Overall, the ESG framework is at a developmental stage. Continued strengthening of formal policies, internal controls, and transparent reporting mechanisms would enhance long-term sustainability alignment and improve the assessment of ESG-related credit risk.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 22 - 23 (Audited)	FY 23 - 24 (Audited)	FY 24 - 25 (Audited)
Operating Revenue	Rs.Crs.	310.51	912.62	348.18
EBITDA	Rs.Crs.	14.37	45.65	15.67
PAT	Rs.Crs.	9.92	31.41	13.25
Tangible Net Worth	Rs.Crs.	30.65	62.07	75.32
Total Debt / Tangible Net Worth	Times	0.34	0.08	0.18
Current Ratio	Times	1.57	1.82	1.61

KEY COVENANTS OF THE FACILITY RATED

The terms of the sanction include standard covenants typically required for such facilities. 

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

Not Applicable

RATING HISTORY FOR LAST THREE YEARS (including withdrawal and suspended)

Facilities	Current Rating  (2026)			2025		2024		2023
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	30.00	BWR BBB-/Stable (Assignment)	NA	NA	NA	NA	NA	NA
Non Fund Based	LT	120.00	BWR BBB-/Stable (Assignment)	NA	NA	NA	NA	NA	NA
NFB SubLimit	ST	(30.00)	BWR A3 (Assignment)	NA	NA	NA	NA	NA	NA
Grand Total		150.00	(Rupees One Hundred Fifty Crores Only)

Hyperlink/Reference to applicable Criteria

• General Criteria
• Approach to Financial Ratios
• Short Term Debt
• Engineering Procurement and Construction

Analytical Contacts
Shreekant Digambar Kadere Senior Rating Analyst shreekant.dk@brickworkratings.com	Niraj Kumar Rathi Senior Director Ratings niraj.r@brickworkratings.com
1-860-425-2742 | media@brickworkratings.com	Customer Support | CustSupport@brickwrokratings.com

SL.No.	Name of the Bank/Lender	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)	Complexity of the Instrument
1	Central Bank of India	Cash Credit - Sanctioned	30.00	_	30.00	Simple##
2	Central Bank of India	Bank Guarantee - Sanctioned	120.00	_	120.00	Simple##
	Sub-Limit (Letter of credit (LC) ) - Sanctioned		(30.00)
Total			150.00	0.00	150.00
TOTAL (Rupees One Hundred Fifty 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.