RATING RATIONALE

20Jan2025

Pushpak Rail Construction Pvt Ltd

Brickwork Ratings upgrades the long-term and reaffirms the short-term ratings for the Bank Loan Facilities of Rs. 26.98 Crs. of Pushpak Rail Construction Pvt Ltd.

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (04 Oct 2024)	Present
Fund Based	3.00	11.98	Long Term	BWR C Continues to be in ISSUER NOT COOPERATING* category/Downgraded	BWR BB /Stable removal from ISSUER NOT COOPERATING* category/Upgraded
Non Fund Based	5.00	15.00	Short Term	BWR A4 Continues to be in ISSUER NOT COOPERATING* category/Reaffirmed	BWR A4 removal from ISSUER NOT COOPERATING* category/Reaffirmed
Grand Total	8.00	26.98	(Rupees Twenty Six Crores and Ninety Eight 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

Brickwork Ratings (BWR) has last rated the bank loan facilities of “Pushpak Rail Construction Pvt Ltd” in Oct 2024 by downgraded the long-term rating rating to BWR C and reaffirmed the short-term rating at BWR A4 and continuation of ratings under the ISSUER NOT COOPERATING* category. BWR has consistently taken up with the company through emails and telephone calls to provide the requisite information for the review of the ratings. The Company has submitted the audited financials for the year of FY22, FY23 and FY24 along with provisional financials for the period for H1FY25. The company has also submitted the monthly “No Default Statement” (NDS) for the month of Dec'24 confirming no delay or default in servicing of debt obligations as required by regulatory guidelines. As the company has provided the minimum required information to review the rating, BWR is able to assess the company’s financial and operational performance and its ability to service its debt and maintain a valid rating.

Considering the improved financials of the company and experienced management, BWR upgrades the long-term to BWR BB/Stable and short-term rating to "BWR A4" and removed the ratings from ISSUER NOT COOPERATING* category, on account of cooperation of management of the company. The outlook has been retained Stable as BWR believes that the business risk profile of the Company will be maintained over the medium term. The Stable outlook indicates a low likelihood of a rating change over the medium term. However, the ratings are constraint by stiff competition and inherent risk associated with the infrastructure industry.

KEY RATING DRIVERS

Credit Strengths:

Experienced management :
The promoters have extensive experience of more than three decades in Civil Engineering contracts for Indian Railways & Private Sector Industry and have an established track record withstanding industry cycles. Over the years, they
have developed long-standing relations with clients in the government departments of Maharashtra, Gujarat, Madhya Pradesh & Uttar Pradesh. The company benefits from the promoters significant experience in the tender bidding process, which helps in the continuous receipt of orders.
Moderate financial risk profile and growing work orders position :
The company's financial profile remained moderate, marked by a healthy net worth, low gearing and increase in debt coverage ratios. The tangible net worth is Rs. 13.71 Crs as on 31 March 2024 on account of previous years’ accumulated
profits. The company’s TOL/TNW stood low, at 1.83x in FY24, against 2.16x in FY23. Co. witnessed a increased in TOI to Rs. 65.55 Crs in FY24 from Rs. 38.17 Crs in FY23. The company's operation stabilized in FY24, and as per management certified provisional sales, the company achieved TOI of Rs. 43.97 Crs as on 30th Sept 2024. The company has reported increased in operating margins in the last two fiscals. As on the company had work on hand worth Rs143.88 Crs to be executed in the coming 2 years. There is revenue visibility in the medium term since the construction work of multiple projects is in progress.

Credit Risks:

Susceptibility to risks inherent in tender based business :
Since the company’s business model is tender-based, revenue depends on the company’s ability to win tenders successfully. Additionally, the majority orders are from government entities, resulting in high dependence on timely clearances for tenders and payment. Going ahead, revenue and profitability are expected to remain susceptible to inherent risks in tender-based operations.
High competitionintensity and inherent risk associated with the infrastructure industry :
The construction industry is highly fragmented in nature, with the presence of a large number of unorganised players and a few large organised players, which, coupled with the tender driven nature of construction contracts, poses huge
competition. Pushpak construction, like any other construction company, is
exposed to risks inherent in the construction sector, such as a slowdown in new order inflows and the risks of delays in execution. Operations are vulnerable to price variations in key raw materials; however, the risk is largely mitigated in the
case of contracts that include an escalation clause

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 company's liquidity position is adequate as reflected by EBITDA and net cash accruals which adequately covers the debt obligation. The current ratio of the company is adequate as well.

OPBDIT is sufficient enough to cover the interest and finance cost and net cash accruals Rs. 4.21 crs of the company has easily covered the CPLTD of Rs. 0.79 crs in the last year.
Current Ratio Stands at 1.58 times in FY24 and is stable in the projected years.
ISCR and DSCR stands at 3.68 times and 2.32 times in FY24 and 2.78 and 2.4 times in projected FY25 indicating Adequate liquidity.
On average, the company has utilized ~75% of its CC limit in the last 7 months and the remaining 25% unutilized CC limit will serve as an additional buffer.

All the above parameters make the liquidity of the company close to Superior; however, as the company is in the Construction business which is highly cash sensitive and that their main clients are state and central government invoicing may take longer time which has an bearing on the cashflow Hence, BWR states liquidity as adequate.

ABOUT THE ENTITY

Macro Economic Indicator	Sector	Industry	Basic Industry
Industrials	Construction	Construction	Civil Construction

Pushpak Rail Construction Pvt Ltd was initially incorporated as a proprietary firm namely Pushpak Construction Company in the year 1991 & later in the year 2015 it was converted into Private Limited Company. Mr. Jhamat Hasseja is the Founder and Managing Director of the company and he has achieved excellent experience in the civil engineering & construction specifically in railways from last 26 years. Pushpak Rail Construction Pvt Ltd is engaged in the business activity of undertaking various Civil Engineering contracts for Indian Railways & Private Sector Industry. They are presently diversified in Maharashtra, Gujarat, Madhya Pradesh & Uttar Pradesh. Company has a long-term relationship with the customers.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 22 - 23 (Audited - Annual)	FY 23 - 24 (Audited - Annual)	FY 24 - 25 (Unaudited - Midterm-H1)
Operating Revenue	Rs.Crs.	38.17	65.54	44.76
EBITDA	Rs.Crs.	2.57	5.10	4.88
PAT	Rs.Crs.	2.06	3.59	2.80
Tangible Net Worth	Rs.Crs.	11.02	13.71	13.71
Total Debt / Tangible Net Worth	Times	1.43	0.97	1.20
Current Ratio	Times	1.89	1.58	6.69

KEY COVENANTS OF THE FACILITY RATED

The key covenants are the standard terms as stipulated in the sanction letters of the rated facilities.

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

Creadit Rating Agency Status and Reason for Non-Cooparation Date of Press Release
CARE CARE ratings classified the ratings as 'non cooperative' as the issuer did not provide the requisite information needed to conduct the rating exercise. 14Mar2023

Creadit Rating Agency	Status and Reason for Non-Cooparation	Date of Press Release
CARE	CARE ratings classified the ratings as 'non cooperative' as the issuer did not provide the requisite information needed to conduct the rating exercise.	14Mar2023

ANY OTHER INFORMATION

None

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

Facilities	Current Rating (2025)			2024		2023		2022
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	11.98	BWR BB/Stable (removal from ISSUER NOT COOPERATING* category/Upgraded)	04Oct2024	BWR C (Continues to be in ISSUER NOT COOPERATING* category/Downgraded)	23Aug2023	BWR B- Stable (Continues to be in ISSUER NOT COOPERATING* category/Downgraded)	25Aug2022	BWR B Stable (ISSUER NOT COOPERATING* /Downgrade)
Non Fund Based	ST	15.00	BWR A4 (removal from ISSUER NOT COOPERATING* category/Reaffirmed)	04Oct2024	BWR A4 (Continues to be in ISSUER NOT COOPERATING* category/Reaffirmed)	23Aug2023	BWR A4 (Continues to be in ISSUER NOT COOPERATING* category/Reaffirmed)	25Aug2022	BWR A4 (Continues to be in ISSUER NOT COOPERATING* category/Reaffirmed)
Grand Total		26.98	(Rupees Twenty Six Crores and Ninety Eight lakhs Only)

Hyperlink/Reference to applicable Criteria

Analytical Contacts
Harshit Rastogi Ratings Analyst harshit.r@brickworkratings.com	Hari Kishan Yadav Associate Director - Ratings hari.ky@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

Pushpak Rail Construction Pvt Ltd

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.)	Complexity of the Instrument
1	Canara Bank	Overdraft against Book Debts (ODBD) - Sanctioned	10.00	_	10.00	Simple##
2	Canara Bank	Bank Guarantee - Sanctioned	_	15.00	15.00	Simple##
3	Canara Bank	Loans to MSME - Sanctioned	1.62	_	1.62	Simple##
4	Canara Bank	GECL 1.0 - Sanctioned	0.36	_	0.36	Simple##
Total			11.98	15.00	26.98
TOTAL (Rupees Twenty Six Crores and Ninety Eight lakhs 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.

ANNEXURE-II

INSTRUMENT DETAILS

Instrument	Issue Date	Amount (Rs.Crs)	Coupon Rate (%)	Maturity Date	ISIN Particulars	Complexity of the Instrument
Nil	Nil	Nil	Nil	Nil	Nil	Nil

ANNEXURE-III

List of entities consolidated

Name of Entity	% Ownership	Extent of consolidation	Rationale for consolidation
Nil	Nil	Nil	Nil

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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.

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