Ashiyana Constructions

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.10.00 Crs. of Ashiyana Constructions

Particulars

Facilities**	Amount (Rs.Crs.)	Tenure	Rating#
Fund Based
Cash Credit - Sanctioned	02.00	Long Term	BWR
Cash Credit - Proposed	01.50
Sub Total	3.50
Non-Fund Based
Bank Guarantee - Sanctioned	03.00	Short Term	BWR
Bank Guarantee - Proposed	03.50
Sub Total	6.50
Grand Total	10.00	(Rupees Ten 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 has essentially relied upon the audited financials of Ashiyana Constructions for FY 19, provisional financials for FY 20 and projections for FY 21 as well as the information/clarifications provided by the firm and its bankers, to arrive at the present ratings.

Brickwork Ratings has assigned long term rating of BWR B+(Stable) and short term rating of BWR A4 for the bank loan facilities aggregating Rs. 10.00 crs of Ashiyana Constructions. The rating derives strength from the experience of the partner, improvement of revenue in the recent year, adequate debt protection matrices and healthy order book position of the firm. However the ratings are constrained by low net worth of the firm, high competition in the industry, constitution of the entity, tender based nature of business and risk related to the industry.

BWR believes that the business profile of Ashiyana Constructions 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 the revenues and profit show sustained improvement. The rating outlook may be revised to 'Negative' if the revenues go down and profit margins show lower than expected figures.

KEY RATING DRIVERS

Credit Strengths:

• Experience of Partners :

  The partner of the firm Mr. Abdul Jabbar has over 2 decades of experience in this line of business and is well supported by the other two partners. The firm has been in existence for more than two decades and has seen complete business cycles.

• Improvement in Revenue :

  As per the provisional financial figures the firm has shown improvements and the total operating income of the firm has improved from Rs. 5.80 crs in FY19 to Rs.19.05 crs in FY20 provisional.

• Acceptable Debt Protection Metrics :

  DSCR and ISCR of the firm stood at 1.12 and 1.79 respectively in FY19 indicating firm's adequacy to meet its debt obligations. Further as per the provisional figures ISCR & DSCR of the firm has improved to 4.16 & 2.28 times in FY20.

• Healthy Order Book Position :

  The firm currently has a healthy order book position of Rs. 63.47 crs in hand which is to be executed in a period of 12-24 months which shows revenue visibility in near future.

Credit Risks:

• Competition in Industry :

  The industry is fragmented and the firm faces stiff competition from organised and unorganised players in the industry.

• Low Net Worth :

  The net worth of the firm remained low at Rs.1.40 crs in FY19 resulting in high gearing. As per the provisional financials TNW of the firm stood at Rs 2.51 crs in FY20.

• Constitution :

  The firm is exposed to inherent risk of fluctuation in capital due to withdrawal of capital by partners. Further withdrawal of capital by the partners for any personal contingency would adversely affect the capital structure of the firm.

• Industry-related risks :

  AC, like any other construction company/firm, is exposed to the risks inherent in the construction sector including slowdown in new order inflows, risks of delays in execution, vulnerability of margins to adverse variation in the raw materials, labour and other input costs. In addition factors like timely clearances from various regulatory bodies, the handover of the sites, mobilisation of funds, change in governments policies and directives, cost escalation due to departmental delays, labour unrest and climatic vagaries also pose a risk. The effect of any of these could be substantial on the firm's timeline of completion of the projects, working capital utilisation level and overall profitability. In addition COVID-19 has added an unprecedented execution risk for the EPC contractors in general which can lead to delays in project execution and cost overruns with loss of manpower and days of work.

ANALYTICAL APPROACH

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

Going forward the ability of the firm to further improve its scale of operations, to successfully secure more tenders and the ability of the firm to execute its orders on time will be the key rating sensitivities.

Positive: Ratings may be upgraded in case of substantial improvements in revenues from current level and increase in profit margins along with increase in its net worth position and order book position of the firm.

Negative: Ratings may be downgraded in case of substantial deterioration in the financial position of the firm or delay in execution of its orders and in case of any delay in payment of its debt obligations. 

LIQUIDITY INDICATORS -

ADEQUATE

The liquidity position of the firm stood adequate with current ratio of the firm standing at 1.38 times in FY19. The average CC utilisation of the firm stood at 80-85%. Net Cash Accruals of the firm stood at Rs. 0.21 crs in FY19. Furrther the same stood at Rs.0.85 crs in FY20. ISCR & DSCR of the firm stood at Rs. 1.79 & 1.12 times in FY19. 

ABOUT THE ENTITY

Ashiayana Constructions, a partnership firm incorporated in 1995 is based out of Ranchi. Mr. Abdul Jabbar, Mr. Zulfekar Ali and Mr. Saif Ul Jabbar are the partners of the firm. The firm is engaged in civil construction works for government bodies such as Jharkhand State Building Construction Corporation Limited, Central Public Work Department, National building Construction Corporation Limited, etc.

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

ANY OTHER INFORMATION

RATING HISTORY FOR LAST THREE YEARS (including withdrawal and suspended) COMPLEXITY LEVELS OF THE INSTRUMENTS -

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.

Analytical Contacts
Mayank Sethi Ratings Analyst Board : +91 80 4040 9940 mayank.s@brickworkratings.com	Anuradha Gupta anuradha.g@brickworkratings.com
1-860-425-2742 | media@brickworkratings.com

SL.No.	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)
1	Cash Credit - Sanctioned	2.00	_	2.00
2	Cash Credit - Proposed	1.50	_	1.50
3	Bank Guarantee - Sanctioned	_	3.00	3.00
4	Bank Guarantee - Proposed	_	3.50	3.50
Total				10.00
TOTAL (Rupees Ten Crores Only)