| BRN Infrastructures Private Limited | ||||||
| 'Crisil BBB/Stable/Crisil A3+' assigned to Bank Debt | ||||||
| Rating Action | ||||||
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| 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 assigned its ‘Crisil BBB/Stable/Crisil A3+’ ratings to the bank loan facilities of BRN Infrastructures Private Limited (BRN).
The ratings reflect the extensive experience of the promoters in the civil construction industry, their established relationships with customers, adequate revenue visibility, comfortable working capital cycle and adequate debt protection metrics. These strengths are partially offset by the moderate capital structure and exposure to risks posed by concentration in geographic reach and the tender-based nature of operations. |
Analytical Approach Crisil Ratings has evaluated the standalone business and financial risk profiles of BRN. |
Key Rating Drivers & Detailed Description Strengths: Extensive experience of the promoters and adequate revenue visibility: The four-decade-long experience of the promoters in the civil construction industry, has enabled the company to successfully execute several large road and bridge projects in a timely manner. This led to repeat orders from different government departments such as the National Highway Authority of India (NHAI; rated ‘Crisil AAA/Stable/Crisil A1+’), National Highways & Infrastructure Development Corporation Ltd (NHIDCL) and the Border Roads Organisation (BRO). All these factors have helped BRN establish a healthy presence and credentials in the market, especially in the state of Mizoram. Revenue has grown from around Rs 147.7 crore in fiscal 2022 to Rs 456.6 crore in fiscal 2024 and is estimated to be around Rs. 585 to 590 crores for fiscal 2025. Further, the company has an unexecuted orderbook of Rs 1580 crores as on December 31, 2024 (including L1 orders if Rs 580 crores), to be executed over the next 24-36 months, providing adequate revenue visibility. Its successful track record of timely and efficient project execution should support growth in revenue over the medium term.
Moderate working capital cycle: Gross current assets (GCAs) were moderate at around 83 days as on March 31, 2024, driven by receivables of 55 days, along with retention money provided to counterparties. The company bills customers on a monthly or milestone basis, depending on the nature of the contracts and receives the payment within 10 to 15 days. Receivables tend to be higher towards the end of the year, due to higher billing during fourth quarter. Although, the company has to provide security deposits and retention money, GCAs are expected to remain in the range of 90 to 105 days over the medium term.
Adequate debt protection measures: Debt protection metrics have remained adequate marked by interest coverage and net cash accrual to adjusted debt (NCAAD) ratios of 9.36 times and 0.43 time, respectively, for fiscal 2024 (9.79 and 0.70 time, respectively, for the previous fiscal). With steady profitability, along with controlled interest expenditure, debt protection measures are expected to remain comfortable over the medium term.
Weaknesses: Moderate capital structure: Capital structure is marked by moderate networth of around Rs 67 crore as on March 31, 2024 (compared to Rs 35.7 crore, a year ago). Total outside liabilities to adjusted networth and gearing ratios were around 2.35 times and 1.61 times, respectively, as on March 31, 2024 (2.38 times and 1.2 times, respectively, as on March 31, 2023) due to reliance on external debt for funding machinery and equipment along with the working capital requirement. Although capital structure has improved in fiscal 2025 driven by equity infusion by promoters to the extent of Rs. 25 crores, TOLANW and gearing is estimated to remain at moderate levels of 1.2 times and 0.86 times respectively for fiscal 2025. Sustenance of healthy capital structure backed by no large debt funded capex amid increasing scale of operations remains a key monitorable.
Exposure to risks posed by concentration in geographical reach and the tender-based nature of operations: The company generates majority of its revenue from Mizoram. Overall business performance remains susceptible to flow of tenders, changes in policies related to civil infrastructure and political conditions within this region. The company is also highly dependent on government projects released via tenders, which further limits the bargaining power. Intense competition may continue to constrain scalability, pricing power and profitability in the medium term. |
Liquidity: Adequate Bank limit utilisation averaged around 78% for the 12 months ending December 31, 2024. Expected net cash accrual of Rs 50-60 crore, in fiscal 2025 and 2026 should comfortably cover the annual debt obligation of Rs 20-30 crores. Current ratio was around 1.00 time as on March 31, 2024. The company has unencumbered cash and bank balance of Rs 6.3 crore as on March 31, 2024. Crisil Ratings expects internal accruals and cash & cash equivalents to be sufficient to meet its repayment obligations and incremental working capital requirements over the medium term |
Outlook: Stable Crisil Ratings believes that the business risk profile of BRN will remain supported by the extensive experience of the promoters in the civil construction industry. |
Rating Sensitivity Factors Upward factors:
Downward factors:
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About the Company BRN is a Jaipur-based entity, which was incorporated in 2017. The business was established around 40 years ago by Mr Bhanwar Lal, under a proprietorship named M/S Bhanwar Lal, to undertake construction of roads and bridges for government bodies.
BRN undertakes civil construction contracts, primarily for roads and bridges. Earlier, the company used to undertake subcontracting projects for principal bidders of government bodies. However, it has now become a primary bidder, catering directly to government bodies such as NHAI, BRO, NHIDCL etc. Majority of counterparties are central government entities, and most of the projects are undertaken in Mizoram. Some projects are based in Maharashtra and Himachal Pradesh as well. |
Key Financial Indicators
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Any other information: Not Applicable |
Note on complexity levels of the rated instrument: |
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 Bank Lenders & Facilities | ||||||||||||||||
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Criteria Details
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