Rating Rationale
August 07, 2023 | Mumbai
BL Kashyap and Sons Limited
Ratings upgraded to 'CRISIL B-/Stable/CRISIL A4'
 
Rating Action
Total Bank Loan Facilities RatedRs.539.34 Crore (Reduced from Rs.625 Crore)
Long Term RatingCRISIL B-/Stable (Upgraded from 'CRISIL D')
Short Term RatingCRISIL A4 (Upgraded from 'CRISIL D')
Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings.
1 crore = 10 million
Refer to Annexure for Details of Instruments & Bank Facilities

Detailed Rationale

CRISIL ratings has upgraded its ratings on the bank loan facilities of BL Kashyap and Sons Limited (BLK) to ‘CRISIL B-/Stable/CRISIL A4’ from ‘CRISIL D/CRISIL D’.

 

CRISIL Ratings has also withdrawn its rating on Rs. 85.66 crore bank loan facilities of BLK, at the company's request and on receipt of 'No Due Certificate/ revised sanction letters' from lender(s). The withdrawal is in line with CRISIL Ratings’ withdrawal policy.

The upgrade in the ratings reflects timely servicing of debt obligations for a period of more than 90 days.

 

The ratings continue to reflect BLK’s susceptibility to cyclicality in the commercial real estate segment, its limited revenue diversity and modest liquidity position as reflected in high working capital utilisation. These rating weaknesses are partially offset by BLK’s established position in the construction industry.

Analytical Approach

For arriving at its ratings, CRISIL Ratings has combined the business and financial risk profiles of BLK and its subsidiaries, BLK Lifestyle Ltd, Security Information Systems (India) Ltd, BLK Infrastructure Ltd, and Soul Space Pvt Ltd (SSPL). SSPL is BLK's real estate arm, and the other subsidiaries provide related services. All the companies are together referred to as the BLK group.

 

Please refer Annexure - List of entities consolidated, which captures the list of entities considered and their analytical treatment of consolidation.

Key Rating Drivers & Detailed Description

Weakness:

Modest Financial Risk Profile: The liquidity position of the group is stretched as reflected in instances of over-utilisation of working capital facilities. Financial risk profile is constrained by large working capital requirement. The interest coverage ratio over the years has also remained modest.

Strength:

Long Vintage: The promoters of the company have a long vintage of more than three decades in the industry

Liquidity: Stretched

Liquidity is stretched as reflected in average bank loan utilisation of more than 80%.

Outlook: Stable

CRISIL Ratings believes BLK will continue to benefit from its established market position and experienced promoters.

Rating Sensitivity Factors

Upward factors

  • Significant and sustained improvement in liquidity along with improvement in interest coverage
  • Sustenance of revenue and operating margins above 9-10% leading to higher net cash accruals

 

Downward factors

  • Worsening of liquidity position and deterioration in interest coverage ratio
  • Operating margin declining below 6% weakening net cash accruals

About the Company

BLK was established in 1989 by Mr. Vinod Kashyap, Mr. Vineet Kashyap, and Mr. Vikram Kashyap. The company was reconstituted as a public limited company with the current name in 1995. The promoters have been active in the real estate sector since 1978; they transferred their business to BLK after it was formed.

 

BLK provides construction services to customers in the commercial, residential, and industrial segments. The company has also ventured into real estate development and related services, such as furnishing. It has partly restructured its debt under a corporate debt structuring package, which was approved under statutory guidelines then on December 31, 2014.

 

As per the audited financial statements of fiscal 2023, operating income was Rs. 1110 crore and PAT was Rs. 22 crore, against Rs. 1158 crore and loss of Rs. 44 crore respectively for the previous fiscal.

Key Financial Indicators (Consolidated)

As on/for the period ended March 31

Unit

2023

2022

Revenue

Rs crore

1110

1158

Profit after tax

Rs crore

22

44

PAT margin

%

2.0%

3.8%

Adjusted debt/Adjusted networth

Times

0.72

0.90

Interest coverage

Times

2.29

1.69

Any other information: Not applicable

Note on complexity levels of the rated instrument:
CRISIL Ratings` complexity levels are assigned to various types of financial instruments and are included (where applicable) in the 'Annexure - Details of Instrument' in this Rating Rationale.

CRISIL Ratings will disclose complexity level for all securities - including those that are yet to be placed - based on available information. The complexity level for instruments may be updated, where required, in the rating rationale published subsequent to the issuance of the instrument when details on such features are available.

For more details on the CRISIL Ratings` complexity levels please visit www.crisilratings.com. Users may also call the Customer Service Helpdesk with queries on specific instruments.

Annexure - Details of Instrument(s)

ISIN

Name of instrument

Date of allotment

Coupon rate (%)

Maturity date

Issue size

(Rs.Crore)

Complexity levels

Rating assigned with outlook

NA

Bank Guarantee

NA

NA

NA

269.11

NA

CRISIL A4

NA

Bank Guarantee

NA

NA

NA

44.71

NA

Withdrawn

NA

Cash Credit

NA

NA

NA

188.51

NA

CRISIL B-/Stable

NA

Working Capital Demand Loan

NA

NA

NA

81.72

NA

CRISIL B-/Stable

NA

Proposed Long Term Bank Loan Facility

NA

NA

NA

40.95

NA

Withdrawn

Annexure - List of Entities Consolidated

Names of Entities Consolidated

Extent of Consolidation

Rationale for Consolidation

BLK Lifestyle Limited

Full consolidation

Operational and financial linkages

Security Information Systems (India) Limited

Full consolidation

Operational and financial linkages

BLK Infrastructure Limited

Full consolidation

Operational and financial linkages

Soul Space Projects Limited (SSPL)

Full consolidation

Operational and financial linkages

Soul Space Realty Limited

Full consolidation

Operational and financial linkages

Soul Space Hospitality Limited

Full consolidation

Operational and financial linkages

Annexure - Rating History for last 3 Years
  Current 2023 (History) 2022  2021  2020  Start of 2020
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Fund Based Facilities LT 311.18 CRISIL B-/Stable 19-05-23 CRISIL D 19-10-22 CRISIL D (Issuer Not Cooperating)* 29-07-21 CRISIL D (Issuer Not Cooperating)* 29-04-20 CRISIL D (Issuer Not Cooperating)* CRISIL D (Issuer Not Cooperating)*
      -- 15-03-23 CRISIL D   --   --   -- --
Non-Fund Based Facilities ST 313.82 CRISIL A4 19-05-23 CRISIL D 19-10-22 CRISIL D (Issuer Not Cooperating)* 29-07-21 CRISIL D (Issuer Not Cooperating)* 29-04-20 CRISIL D (Issuer Not Cooperating)* CRISIL D (Issuer Not Cooperating)*
      -- 15-03-23 CRISIL D   --   --   -- --
All amounts are in Rs.Cr.
* - Issuer did not cooperate; based on best-available information
Annexure - Details of Bank Lenders & Facilities
Facility Amount (Rs.Crore) Name of Lender Rating
Bank Guarantee 44.71 ICICI Bank Limited Withdrawn
Bank Guarantee 7.19 IndusInd Bank Limited CRISIL A4
Bank Guarantee 16.88 Punjab National Bank CRISIL A4
Bank Guarantee 3.46 YES Bank Limited CRISIL A4
Bank Guarantee 23.9 ICICI Bank Limited CRISIL A4
Bank Guarantee 87.68 Canara Bank CRISIL A4
Bank Guarantee 130 State Bank of India CRISIL A4
Cash Credit 21.2 Punjab National Bank CRISIL B-/Stable
Cash Credit 26.03 YES Bank Limited CRISIL B-/Stable
Cash Credit 31.8 Punjab National Bank CRISIL B-/Stable
Cash Credit 40 State Bank of India CRISIL B-/Stable
Cash Credit 55 Canara Bank CRISIL B-/Stable
Cash Credit 14.48 IndusInd Bank Limited CRISIL B-/Stable
Proposed Long Term Bank Loan Facility& 40.95 Not Applicable Withdrawn
Working Capital Demand Loan 21.72 IndusInd Bank Limited CRISIL B-/Stable
Working Capital Demand Loan 40 State Bank of India CRISIL B-/Stable
Working Capital Demand Loan 20 State Bank of India CRISIL B-/Stable
& - *Not yet sanctioned
Criteria Details
Links to related criteria
CRISILs Approach to Financial Ratios
CRISILs Bank Loan Ratings - process, scale and default recognition
Assessing Information Adequacy Risk
CRISILs Approach to Recognising Default
CRISILs Criteria for Consolidation

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