Paliya Construction Kailarash

Brickwork Ratings assigns the long-term ratings of BWR BBB-/Stable and short-term ratings of BWR A3 for the Bank Loan Facilities of Rs.70.00 Crs. of Paliya Construction Kailarash

Particulars

Facilities**	Amount(Rs.Crs.)	Tenure	Rating#
Fund Based	20.00	Long Term	BWR BBB - /Stable Assignment
Non Fund Based	50.00	Short Term	BWR A3 Assignment
Grand Total	70.00	(Rupees Seventy 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
*** The company has banking arrangements with Canara Bank and ICICI Bank. RATING ACTION / OUTLOOK

The ratings assigned to the bank facilities of Paliya Construction Kailarash (PCK) remained constrained on account of geographically concentrated revenue and order book, tender-based nature of operations, presence in an intensely competitive and fragmented construction industry with exposure of profit margins to fluctuation in raw material prices, and constitution of PCK as a partnership firm. However, the above ratings derive strength from the experience of promoters in the construction sector, growing scale of operations with improvement in profitability and comfortable order book position providing revenue visibility for short to medium term.

BWR believes that PCK will continue to derive benefit from its experienced promoters and well-established operational track record in the construction industry and comfortable order book position reflecting good revenue visibility in the near to medium term.

KEY RATING DRIVERS

Credit Strengths:

• Experienced promoters :

  Paliya Constructions Kailarash (PCK), established in 2007, is promoted by Gwalior, M.P based Paliya family. The firm is currently managed by Mr. Anoop Sharma and Mr. Navneet Sharma (sons of founder of PCK- Mr. Dwarika Prasad Paliya), who possess experience of around two decades in the construction business and look after the day-to-day operations of the firm. The firm executes small to medium-sized projects for various government departments and has established relationships with its customers and suppliers.

• Growing scale of operations and improvement in profitability :

  The scale of operations, as marked by TOI-reported growth of more than twofold in FY24 to Rs.91crores from Rs.38crores in FY23, with execution of 7 projects of CM Rise Schools. However, the firm has reported a slight dip of ~4% in its TOI in FY25 to Rs.88crores mainly due to an increase in raw material cost. The firm has, although, achieved a TOI of Rs.144crores in FY26 (provisional) along with improvement in its profitability from 3.82% in FY24 to 5.30% in FY26 (provisional) based on the execution of newly allotted projects of IT Park, Rewa and 300 Bedded Hospital at Ashok Nagar, etc. 

• Revenue Visibility :

  A comfortable order book size that provides a strong, reliable baseline for near to medium-term revenue. The order book of the firm stood at Rs.336crores as of April, 2026, leading to an order book-to-TOI ratio of 2.33x, which provides a strong reflection of good revenue in the medium term. 

Credit Risks:

• Constitution as a partnership firm :

  PCK, being a partnership firm, is exposed to inherent risk of partner’s capital being withdrawn at the time of personal contingency, leading to erosion of capital base and adversely affecting the capital structure of the firm. Furthermore, partnership entities have restricted access to external borrowing as credit worthiness of partner would be the key factors affecting credit decision for the lenders.

• Geographically concentrated : :

  PCK’s revenue and overall order book are almost completely concentrated in and around a single state, Madhya Pradesh (MP). The firm operates primarily as a registered contractor with the Public Works Department (PWD) of Madhya Pradesh, executing state-backed infrastructure projects like public schools, government hospitals, hostels, and residential units under state housing board schemes.

• Volatility associated with fluctuations in input prices :

  The major input materials for the entity are structural steel, plywood, bitumen, cement, TMT bar, bricks, sand, etc., the prices of which are volatile. Apart from this, any increase in labour prices will also impact its profitability, as it is present in a highly labour-intensive industry. However, some of the contracts executed by the firm contain a price escalation clause, which helps the firm in maintaining its profitability during the year.

• Tender-Driven Business Model :

  The operating margins in the civil construction business are compressed by heavy competition and the aggressive pricing nature of bidding on tender contracts. The business of PCK is tender-driven in nature, and the operating margins primarily depend upon the rates quoted at the time of bidding, and the same vary depending on the nature & size of the project after gauging the level of competition prevailing at the time of bidding. Moreover, the availability of tenders is mainly dependent on the allocation of budgetary funds. 

ANALYTICAL APPROACH - Standalone

For arriving at its ratings, BWR has considered the standalone Audited Financial results for FY23, FY24, FY25, management-certified provisional for FY26, and projections for the next two years of Paliya Construction Kailarash, along with the information/clarification provided by the entity. BWR has applied its rating methodology as detailed in the Rating Criteria (hyperlinks provided at the end of this rationale).

Unsecured loans to the extent of Rs.5.90crore (as on March 31, 2025) from the partners have been treated as equity as these funds are subordinated to bank debts and expected to remain in the business

RATING SENSITIVITIES

Positive factors

• Growth in scale of operations marked by Total operating income (TOI) above Rs.200crore with PBILDT margin above 11% on a sustained basis.

• Sustaining order book to TOI ratio more than 3x.

• Improvement in capital structure with an overall gearing below 1x.

Negative factors

• Decline in TOI below Rs.100 crore along with PBILDT margin below 6%.

• Further deterioration in capital structure or debt coverage indicators from the present level.

LIQUIDITY INDICATORS - Adequate

The liquidity position of the firm seems to be adequate on account of a comfortable operating cycle and moderate utilization of its bank limits. The Net Cash Accruals (NCA) level remained adequate at Rs.5.48 crore in FY25 and Rs.8.46crore in FY26 (provisional) as against CPLTD of Rs.1.20 in the next fiscal year. Average utilization of fund-based and non-fund-based working capital limits remained moderate at around 78% and 86%, respectively, as of April 2026. The operating cycle of the firm has improved to 5 days in FY25 from 9 days in FY24 (42 days in FY23). The current ratio and quick ratio remained moderate at 1.80 times (PY:1.77 times) and 1.67 times (PY : 1.57 times), respectively, for FY26 (provisional). The unsecured loans of Rs.5.90crores are subordinated to bank debts and will continue to remain in business. Further, the partners are likely to extend equity to meet working capital requirements and debt obligations, if any.

ABOUT THE ENTITY

Paliya Construction Kailarash (PCK), based at Gwalior (Madhya Pradesh), was established in 2007 by Mr. Anoop Sharma as a partnership firm. The firm is engaged in civil construction, structural and finishing works for various government bodies of Madhya Pradesh, including the Public Works Department (MP PWD), MP Housing and Infrastructure Development Board (MPH&IDB), MP Building Development Corporation (MPBDC), and MP Industrial Development Corporation (MPIDCL). PCK secures projects through competitive government tenders and has a track record of successful execution of projects, including district court buildings, commercial complexes, hospitals, schools, colleges, hostels, swimming pools, Collectorate offices, residential units under housing board schemes, etc.

ESG Profile

BWR believes that ESG profile of PCK supports its credit risk profile.

The real estate sector has a significant impact on the environment owing to high emissions, waste generation, and impact on land and biodiversity. The sector also has a significant impact on social factors given its labour-intensive operations and safety issues in construction-related activities.

Environmental: The firm has sustainable material sourcing, waste reduction (construction & demolition), and compliance with local pollution control norms.

Social: As confirmed by the entity, the firm is strictly adhering to labour standards, fair wages, and workplace safety protocols for the labourers.

Governance: The firm has transparent bidding processes, ethical anti-corruption policies, and compliance with statutory tax and regulatory frameworks.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 23 - 24 (Audited)	FY 24 - 25 (Audited)	FY 25 - 26 (Provisional)
Operating Revenue	Rs.Crs.	91.86	88.10	144.09
EBITDA	Rs.Crs.	5.65	6.93	11.48
PAT	Rs.Crs.	3.51	4.62	7.63
Tangible Net Worth	Rs.Crs.	13.12	17.16	24.58
Total Debt / Tangible Net Worth	Times	1.81	1.20	1.22
Current Ratio	Times	1.87	1.77	1.80

KEY COVENANTS OF THE FACILITY RATED

As per the sanction letter of ICICI - 

• Maintanance of adjusted tangible net worth :  Total outside liability / Adjusted tangible net worth shall be maintained at a minimum of 3.77 times during the currency of the ICICI Bank loan, Adjusted Tangible Net Worth shall be maintained at a minimum of Rs.197.8 million during the currency of the ICICI Bank loan
• Unsecured Loan-Subservient to ICICI Bank Liability: Interest or any other obligations towards unsecured loans, Partners / Director remuneration payable will be subservient to the interest payable to ICICI Bank Ltd.
• Investment/Advance to subsidiary/Group Companies: The borrower shall not invest/lend/extend advances to group or subsidiary companies other than genuine trade transactions without prior written approval of ICICI Bank.
• The facilities availed from ICICI Bank will not be diverted/utilized to sister concern or for financing activity.
• Infusion of Capital / Quasi Capital: Sum of Rs. 2.5 million shall be infused by way of Capital / Quasi Capital in the form of unsecured loans on/before upfront. 
• Restriction on withdrawal of quasi equity: The loan amount of Rs 58.3Mn, treated as quasi equity, will not be withdrawn during the currency of the ICICI Bank facility.
• Diversion of Funds: The facilities availed from ICICI Bank will not be diverted/utilized to sister concern or for financing activity.

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

Creadit Rating Agency	Status and Reason for Non-Cooparation	Date of Press Release
CARE	CARE BB-; Stable / CARE A4; ISSUER NOT COOPERATING*, Non sharing of requisite information by the entity.	18Nov2025

ANY OTHER INFORMATION

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	20.00	BWR BBB-/Stable (Assignment)	NA	NA	NA	NA	NA	NA
Non Fund Based	ST	50.00	BWR A3 (Assignment)	NA	NA	NA	NA	NA	NA
Grand Total		70.00	(Rupees Seventy Crores Only)

*** The company has banking arrangements with Canara Bank and ICICI Bank. Hyperlink/Reference to applicable Criteria

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

Analytical Contacts
Akanksha Maindiratta Senior Rating Analyst akanksha.m@brickworkratings.com	Ravi Rashmi Dhar Director - Ratings ravi.d@brickworkratings.com
Media Contact | media@brickworkratings.com	Client Support | clientsupport@brickworkratings.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	Canara Bank	Cash Credit - Sanctioned	17.00	_	17.00	Simple##
2	Canara Bank	Bank Guarantee - Sanctioned	_	23.00	23.00	Simple##
3	ICICI Bank	Bank Guarantee - Sanctioned	_	27.00	27.00	Simple##
4	ICICI Bank	Over Draft - Sanctioned	3.00	_	3.00	Simple##
Total			20.00	50.00	70.00
TOTAL (Rupees Seventy Crores Only)

* The company has banking arrangements with Canara Bank and ICICI Bank.

## 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.