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CRISIL has assigned its ‘BB-/Stable/P4+’ ratings to Raju Construction Company’s (Raju Construction’s) bank facilities. The ratings reflect Raju Construction’s exposure to risks related to limited project diversity, geographic concentration in revenues, tender-based nature of its operations, and intense competition in the civil construction industry. These rating weaknesses are partially offset by Raju Construction’s financial risk profile, marked by moderate debt protection measures, and the benefits that the company derives from its strong order book.
Outlook: Stable
CRISIL believes that Raju Construction’s credit profile will sustain backed by moderate debt protection measures. The outlook may be revised to ’Positive’ if Raju Construction’s revenues increase steadily, and if it reports stable profitability and improvement in capital structure. Conversely, the outlook may be revised to ‘Negative’ if the firm undertakes a large debt-funded capital expenditure programme over the medium term, leading to material deterioration of capital structure.
About the Firm
Set up in 1981, Raju Construction undertakes civil construction activities. The firm’s operations are managed by the partners Mr. Jethanand Israni, Mr. Prakash Israni, and Mr. Jagdish Israni. The firm predominantly takes up road construction projects for various state government agencies. It is registered with various government agencies such as Madhya Pradesh (MP) Public Works Department, MP Road Development Corporation (MPRDC), and Water Resource Department.
Raju Construction reported a profit after tax (PAT) of Rs.3.2 million on net sales of Rs.234.6 million for 2008-09 (refers to financial year, April 1 to March 31) against a PAT of Rs.5.7 million on net sales of Rs.200.6 million for 2007-08.
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CRISIL Rating Desk
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Mitu Samar
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Tanuja Abhinandan
Market Development & Communications
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Gurpreet S Chhatwal
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Manish Kumar Gupta
Head - CRISIL Ratings
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Email: mkgupta@crisil.com
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