| Ashok Kumar Chhabra Constructions Private Limited | ||||||
| Ratings upgraded to 'CRISIL BB-/Stable/CRISIL A4+' | ||||||
| Rating Action | ||||||
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| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL has upgraded its rating on the bank facilities of Ashok Kumar Chhabra Constructions Private Limited (AKCCPL) to ‘CRISIL BB-/Stable/CRISIL A4+‘ from ‘CRISIL B+/Stable/CRISIL A4’.
The upgrade reflects the continued improvement expected in the business risk profile of AKCCPL. This is largely driven by the successful bids for tenders by the company in FY21. The company now has an unexecuted order book of Rs~35 crores as on Feb 28, 2021, which is ~7.7 times revenues of fiscal 2020. As a result moderate revenues are expected to be booked in FY21. Additionally, on account of healthy unexecuted order, it provides adequate revenue visibility for FY22 as well. Financial risk profile continues to remain stable with gearing of less than 1 times and interest coverage of over 6 times in FY20. Additionally, bank limit utilization of 34.28% for the past 12 months ending Nov,20 provides cushion to the liquidity.
The ratings reflect extensive experience of the promoters, revenue visibility due to order book and above-average financial risk profile. These strengths are partially offset by susceptibility to tender based nature of operations and geographical concentration in revenues. |
Key Rating Drivers & Detailed Description Strengths: * Extensive experience of the promoters and revenue visibility due to order book AKCCPL benefits from the promoters’ experience of over two decades, their strong understanding of local market dynamics, and healthy relations with suppliers and customers should continue to support the business.
* Above-average financial risk profile Gearing was comfortable at 0.27 time as on March 31, 2020, with a moderate networth of Rs 6.2 crore. Debt protection metrics were above average, with interest coverage and net cash accrual to adjusted debt ratios at 6.1 times and 0.41 time, respectively, for fiscal 2020.
Weakness: * Susceptibility to tender based nature of operations The company has been able to ramp up its scale of operations in FY21 by successfully bidding for tenders. Additionally, revenue visibility is also available for FY22 on account of unexecuted order book. However, the operations will remain susceptible to tender based nature of operations.
As a majority of AKCCPL’s revenue is derived from eastern Uttar Pradesh, the business is likely to remain exposed to infrastructure growth in these regions. |
Liquidity: Stretched Bank limit utilisation is low around 34.28 percent for the past twelve months ended Nov 2020. Cash accrual are expected to be over Rs 1.2 cr which are sufficient against expected repayment obligations over the medium term. Current ratio stood at 2.31 times on March 31, 2020. Additionally unsecured loans of Rs 1.02 cr in FY20 are expected to support liquidity. |
Outlook Stable CRISIL Ratings believes AKCCPL will continue to benefit from the extensive experience of the promoters. |
Rating Sensitivity factors Upward factors
Downward factors
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About the Company AKCCPL, incorporated in September 2000, is a Delhi-based company that undertakes road construction projects for municipal and development authorities, and Public Works Departments of Uttar Pradesh and Delhi. Mr Sachin Chhabra and his brother, Mr Khitij Chhabra, are the promoters. |
Key Financial Indicators
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Any other information: Not applicable |
| Note on complexity levels of the rated instrument: CRISIL complexity levels are assigned to various types of financial instruments. The CRISIL complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL complexity levels for instruments that they consider for investment. Users may also call the Customer Service Helpdesk with queries on specific instruments. |
Annexure - Details of Instrument(s)
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| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of various bank facilities | ||||||||||||||||||||||||||||||||||||
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