| Dhariwal Buildtech Limited | ||||||
| 'CRISIL BBB/Stable/CRISIL A3+' assigned to Bank Debt | ||||||
| Rating Action | ||||||
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| 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 facilities of Dhariwal Buildtech Limited (DBL).
The ratings reflect the extensive experience of the promoters in the civil construction industry, strong order book and reputed clientele, and healthy financial risk profile. These strengths are partially offset by moderate scale of operations and geographical concentration in order book. |
Analytical Approach Unsecured loan from the promoters and related parties estimated at Rs. 4.87 crores as on March 31, 2022, has been treated as neither debt nor equity as the same has stayed in the business over the years and shall be maintained over the medium term as well |
Key Rating Drivers & Detailed Description Strengths:
Strong order book and reputed clientele: DBL had a strong order book of Rs 832 crore as on January 31, 2022, providing healthy revenue visibility over the medium term. The company has a proven track record of executing civil construction projects on time. Company’s recognition for timely completion by state and strong counter party relations with National Highways Authority of India (rated ‘CRISIL AAA/Stable’), National Highways and Infrastructure Development Corporation Limited (NHIDCL), Public Work Departments (PWDs), and reputed private companies, such as Gawar Construction (rated ‘CRISIL AA-/Stable’) helps the company de-risk its business model in terms of client or geographical concentration.
Healthy financial risk profile: Financial risk profile is comfortable, driven by healthy profit after tax margin, low debt, prudent working capital management and absence of any large, debt-funded capital expenditure. Net-worth remains a constraining factor, estimated at Rs 42 crore as on March 31, 2022. Gearing (0.70 time as on March 31, 2022) has been below 1.0 time over past three fiscals through 2022. Debt protection metrics were robust too, owing to steady operating profitability and cash accrual; interest coverage and net cash accrual to adjusted debt ratios were 21.91 times and 2.24 times respectively, in fiscal 2021.
Weakness: Moderate Scale of operations: Though revenue increased at a CAGR of over 45% during the three fiscals through 2022, it is expected to remain moderate at around Rs 308 crore during fiscal 2022. Though sizeable order book of Rs 832 crore outstanding as of Jan-22, amounting to approx. 2.7 times the revenue of fiscal 2022, provides revenue visibility over the medium term, its timely execution will remain a key monitorable. Delay in receipt of Commercial Operation Date (COD) or time & cost overruns in execution of projects might further derail the scalability and shall be closely monitored.
Geographical concentration in order book: Company’s order book is constrained in northeast India with 80% of order pertaining to state of Assam and Mizoram. Lack of track record in executing large projects in the stated territories, along with any change in economic policy of the state, might impinge the order execution and hence the overall business risk profile of DBL, and hence its successful execution will be closely monitored. |
Liquidity: Adequate Liquidity should remain supported by surplus cash accrual over repayments and cushion in bank lines. Bank limit utilisation averaged 20% over the 12 months through February 2022. Cash accrual, expected at Rs 22-32 crore per annum, will sufficiently cover yearly debt obligation of Rs 7.5-11.3 crore over the medium term and surplus will aid the incremental working capital requirement. Current ratio is expected at 1.66 times on March 31, 2022. Cash and cash equivalences of Rs. 5.26 crores as on 28th Feb 2022 providing additional comfort to the liquidity profile. |
Outlook: Stable DBL will continue to benefit from the promoters’ extensive experience and healthy relationships with clients. |
Rating Sensitivity Factors Upward factors
Downward factors
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About the Company DBL (previously known as SKC Infra Projects Ltd) was incorporated on May 02, 2016, and is engaged in civil construction work, such as that of roads, highways, bridges, railway over bridges and buildings. The roads and highways segment are the key focus area of DBL, and it is enlisted with Haryana PWD (B&R) as a Class-I contractor for road works. Mr Chet Ram Dhariwal is the promoter of the company. |
Key Financial Indicators
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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 31-Mar-2022 in line with the lender-wise facility details as on 30-Mar-2022 received from the rated entity.
Criteria Details
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