| Ramky Infrastructure Limited | ||||
| Rating upgraded to 'CRISIL C ' | ||||
| Rating Action | ||||
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| 1 crore = 10 million | ||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has upgraded its ratings on the bank facilities of Ramky Infrastructure Ltd (RIL) to ‘CRISIL C’ from ‘CRISIL D’.
CRISIL Ratings has withdrawn its rating on the term loan facility of Rs 440.52 crore on the company’s request and confirmation from the statutory auditor that no long-term debt was outstanding as on April 30, 2021. Also, CRISIL Ratings has withdrawn its rating on the working capital facility of Rs 1641.35 crore basis confirmation of sanctioned lines by the statutory auditor and on the company’s request. This is in-line with CRISIL Ratings’ withdrawal policy.
The upgrade factors in a track record of more than three months in timely debt servicing. The company does not have long-term loan outstanding as on April 30, 2021. Debt servicing on working capital demand loan (WCDL) and cash credit facilities have been timely. While there are instances of overutilisation of WCDL, it is due to interest charged on the last day of the month, which is recovered from the cash credit lines on the next working day. As confirmed by all the lenders this is an operational issue.
The ratings continue to reflect the company’s modest debt protection metrics and working capital intensive operations. These weaknesses are partially offset by RIL’s established position in the construction industry, and improvement in capital structure. |
Analytical Approach CRISIL Ratings has combined the business and financial risk profiles of RIL and its special purpose vehicle (SPV) Sehore Kosmi Tollways Ltd where the company has extended corporate guarantee of Rs 5.12 crore. The company has also extended corporate guarantee to its SPV, Srinagar Banihal Expressway Ltd. However, given the validity of the same is being contested in the High Court, the debt of these SPVs have not been consolidated with RIL. CRISIL Ratings has moderately combined the business and financial risk profiles of RIL with its subsidiaries to the extent of support requirement.
CRISIL Ratings has considered interest-bearing unsecured loans from the promoters/subsidiaries or inter corporate deposits from related parties as debt (Rs 405 crore as on March 31, 2020).
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: Established position in the construction industry, and moderate revenue visibility The experience of over two decades of the promoters (in the construction of roads and buildings, power, and in irrigation and water projects), established execution capabilities, and healthy relationship with customers, should continue to support the business. The group manages projects efficiently, backed by its trained labour force, adequate equipment, and good sub-contracting management systems.
Operating performance in fiscal 2021 was impacted because of the lockdown imposed by the central government to curb Covid-19 – revenue declined by around 32% in 9MFY21 as compared to 9MFY20. Revenue was impacted in the first and second quarters of fiscal 2021, operations reached pre-Covid levels in the third and continued at a similar pace in the fourth. Operating performance is expected to remain under pressure in this fiscal as well given the second wave of the pandemic. However, orders of ~Rs 2600 crore outstanding as on December 31, 2020 are to be executed in the next 2-3 years. Order book to revenue (fiscal 2020) ratio is about ~2 times, which gives visibility for the near-to-medium term.
Improvement in capital structure Debt has reduced substantially in the last two fiscals as reflected in the sharp reduction in total outside liabilities to adjusted networth ratio to 2.8 times as on March 31, 2020 (estimated at a similar level for fiscal 2021) from 9.26 times as on March 31, 2017. The company has relied on unsecured loans from the promoters/subsidiaries and sales proceeds from monetising assets including sale of NAM Expressways to reduce debt. Unsecured loans from promoters/subsidiaries have increased from Rs 136 crore as on March 31, 2017 to Rs 405 crore as on March 31, 2020. Additionally, external debt has come down from Rs 1200 crore to Rs 350 crore for the same period (Rs 300 crore as on December 31, 2020). There is no long-term loan outstanding as on April 30, 2021.
Weakness: Modest debt protection metrics While the debt has come down to around Rs 300 crore as on Dec ember 31, 2020, moderate accrual limits the improvement in debt protection metrics. Interest coverage stood at 1.5 times during the first nine months of fiscal 2021 (it has remained at 1.0-1.5 times in the past three years). Also net cash accrual to total debt ratio has remained low at 0.5-0.10 time in the last three fiscals.
Working capital intensive operations Operations remain working capital intensive with gross current assets of around 272 days as on March 31, 2020 driven by large debtors of ~125 days and inventory days of around 95. |
Liquidity: Poor There is no buffer in the fund-based working capital limits and unencumbered cash balances are minimal. Fund-based limit was utilised 97% on average in the six months ended March 2021. Further, unencumbered cash balances were low at around Rs 12 crore as on March 31, 2021. The company however does not have any repayment obligations (term loan is nil as on April 30, 2021). |
Rating Sensitivity factors Upward factors
Downward factors
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About the Company RIL, the flagship company of the Ramky group, was incorporated as Ramky Engineers Pvt Ltd in 1994 to provide civil and environmental engineering consultancy services. In 1998, it started executing civil and environmental engineering, procurement, and construction projects, primarily in the water and waste-water sector. Subsequently, it expanded into road, building, irrigation, and industrial construction. In 2003, the company got its present name and was thereafter reconstituted as a public limited company. RIL principally operates in two business segments: construction (under RIL) and development (under SPVs). In the development business, the group constructs roads under built-operate-transfer (BOT modes, industrial parks, special economic zones, and bus terminals.
RIL’s debt was restructured in June 2015 by the Joint Lenders Forum comprising seven lenders.
For nine months ended December 31, 2020, the company reported topline of Rs 658 crore against net profit of Rs 6 crore as compared to topline and net loss of Rs 972 crore and Rs 9 crore, respectively, for the corresponding period last year. |
Key Financial Indicators (Standalone)
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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)
*Interchangeable with non-fund based facility @Interchangeable with fund based facility |
Annexure – List of entities consolidated
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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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$ sublimit letter of credit Rs 21.17 crore
# sublimit letter of credit Rs 21.42 crore
^ sublimit letter of credit Rs 10 crore
Criteria Details
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