| C. S. Infraconstruction Limited | ||||||
| Ratings Reaffirmed | ||||||
| Rating Action | ||||||
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| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has reaffirmed its 'CRISIL BB+/Stable/CRISIL A4+' ratings on the bank facilities of C. S. Infraconstruction Limited (CSIL).
CRISIL Ratings had on June 17, 2021, upgraded its rating on the long-term bank facilities of CSIL to 'CRISIL BB+/Stable' from 'CRISIL BB/Stable’ and has reaffirmed the short-term rating at ‘CRISIL A4+’.
The rating reflects extensive experience of promoters and company’s healthy financial risk profile. These strengths are partially offset by working capital intensive operations and risk of geographical concentration in revenue. |
Analytical Approach For arriving at the rating, CRISIL Ratings has combined the business and financial risk profiles of C.S. Infraconstruction Ltd and Khaki Baba Construction Company (KBCC). The entities have common business and management, along with operational and financial linkages.
Unsecured loans of Rs 2.25 crore from promoters have been treated as debt as these loans are expected to be repaid over the medium term.
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 Strengths Extensive experience of promoters: The promoters have spent over two decades in the civil construction industry. Their strong understanding of market dynamics and healthy relationships with suppliers and customers have helped in establishing a strong position in the market and to secure regular orders. Though revenue profile has weaken in fiscal 2021 due to pandemic related disturbances, it is expected to improve in fiscal 2022 supported by revenue of Rs 245 crore till October 2021 and strong order book of over Rs 1472 crore, outstanding as at October 2021. Group has also ventured into backward integration, through KBCC, which will further aid the operating efficiency over the medium term.
Healthy financial risk profile: Capital structure is healthy as reflected in net worth of Rs. 239.81 crores and gearing of less than 1 time as on March 31, 2021. Though gearing is expected to increase in fy22 on account of debt-funded capex done by CSIL but will remain comfortable at below 0.5 time. Networth is further expected to improve with the healthy accretion to reserves along with no withdrawals plan of the management. Debt protection metrics shall remain remain robust too with estimated interest coverage ratio and net cash accruals to adjusted debt of 5-6 times and 1-1.5 times respectively, over the medium term.
Weaknesses Working capital intensive operations: Gross current assets (GCA’s) were large at 403 days as on March 31, 2021, even though debtors and inventory were low at 13 days & 45 days, respectively. GCA’s were high due to sizeable portion being stuck in the form of GST recoverable, commercial tax, deposits with government authorities and advances to supplier etc. This has also led to high dependence on external debt to fund working capital requirement and thereby impacting liquidity position. Resultantly, bank limit utilization stood high at 95% over the past 14 months, with few instances of overutilization; though regularised timely. Though company has already received GST recoverable of Rs 51 crore on November 16th, 2021 but efficient deployment of funds thereby leading to improvement in working capital cycle will remain a key monitorable.
Risk of geographical concentration in revenue: The Company mainly executes road and highway projects in UP, thus leading to geographic and segmental concentration. Hence, any change in government policy in the state or any political turmoil or occurrence of natural phenomenon would affect the business risk profile of company. Though company has started bidding orders in others territories like Nagaland and Chhattisgarh etc., the quantum of orders towards the stated territories remain small. |
Liquidity: Stretched On account of large working capital requirements, bank limit utilisation has been high at around 95% for the past 12 months ended October 21, with few instance of overutilization due to month end interest charges; though regularized timely. Cash accrual are expected to be over Rs 45 crores which will be sufficient against nil term debt obligation over the medium term. Current ratio is healthy at 2.25 times on March31, 2021. Moderate cash and bank balances of Rs 5-6 crore will continue to partially support the liquidity profile. |
Outlook: Stable CRISIL Ratings believes CSIL will continue to benefit from extensive experience of its promoters. |
Rating Sensitivity Factors Upward factors
Downward factors
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About the Company Established in 2002 as a partnership firm by Mr Uma Shankar Singh, it was called Chhatrashakti Construction Company. The firm was reconstituted as a private limited company with its present name in 2009. The company undertakes civil construction works in UP, primarily construction of roads and bridges. Ms Pushpa Singh, Mr Ramesh Singh, Mr Saumen Bose, Mr Ghurahu Singh, Mr Bhuneswar Singh, Mr Shyam Narayan Singh, Ms Pratima Singh and Ms Priyanka Jain are the directors.
Khaki Baba Construction Company is established in 2005 as proprietorship firm by Mr. Ramesh Singh. The firm is engaged in supplying boulders to the construction companies. |
Key Financial Indicators
*Provisional |
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. The CRISIL Ratings' complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL Ratings' 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 Bank Lenders & Facilities | ||||||||||||
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This Annexure has been updated on 18-Nov-2021 in line with the lender-wise facility details as on 21-Sep-2021 received from the rated entity.
Criteria Details
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