February 26, 2024

Ashwini Infradevelopments Private Limited: Rating reaffirmed

Summary of rating action

Previous Rated Amount Current Rated Amount

Instrument* Rating Action
(Rs. crore) (Rs. crore)
Long-term – Non-fund based – BG 25.00 25.00 [ICRA]BBB-(Stable) reaffirmed

Long-term – Unallocated limits 15.00 15.00 [ICRA]BBB-(Stable) reaffirmed

Total 40.00 40.00

*Instrument details are provided in Annexure-I

Rationale

The rating reaffirmation factors in the continued comfortable financial profile of Ashwini Infradevelopments Private Limited
(AIPL), as reflected in a conservative capital structure with TOL/TNW of 0.62 times as on March 31, 2023 (FY2022: 0.53 times)
and healthy interest coverage of 12.06 times (FY2022: 20.74 times). The rating continues to draw comfort from the extensive
experience of the promoters spanning over three decades in the construction industry, having executed various road
development and civil construction projects for Government and semi-government bodies in Maharashtra.
The aforementioned rating strengths are, however, offset by the company’s modest scale of operations and order book
position, which limits medium-term revenue visibility. The overall order inflow remains muted in YTD FY2024, which has
resulted in a decline in order book position to Rs. 255 crore (as on November 2023) from Rs. 353 crore (as on November 2022).
ICRA notes that the order book remains concentrated in Mumbai Metropolitan Region (MMR), with high concentration on top
five orders constituting 84.5% and top five customers contributing to 89% of the order book. However, the concentration risk
is partly mitigated by the strong counterparty credit profile. AIPL’s principal customers are retaining cash during the defect
liability period, instead of bank guarantees, which along with the increasing scale of operations will block additional funds in
working capital. Going forward, AIPL’s ability to judiciously manage its working capital cycle and maintain adequate liquidity
buffer remain important from the credit perspective. The rating note the stiff competition in the construction sector, which
could put pressure on the new order inflows and the company’s exposure to sizeable contingent liabilities in the form of bank
guarantees, mainly for contractual performance, mobilisation advance and retention money. Nonetheless, ICRA draws comfort
from its execution track record and absence of invocation of guarantees in the past.
The Stable outlook on the rating reflects ICRA’s opinion that AIPL will continue to benefit from extensive experience of
promoters in the construction industry, sustained scale of operations, adequate liquidity and conservative capital structure.

Key rating drivers and their description

Credit strengths

Established track record, extensive experience of promoters in construction industry and reputed clientele – The company’s
promoters have over three decades of experience in the civil construction industry and have executed various road
development and civil construction projects for Government and semi-government bodies in Maharashtra. It is registered as
a Class 1-A contractor with the Public Works Department (PWD) and a Class-2 contractor with other municipal corporations,
including Navi Mumbai Municipal Corporation (NMMC), Municipal Corporation of Greater Mumbai (MCGM), Nagpur Municipal
Corporation (NMC) and Pimpri–Chinchwad Municipal Corporation (PCMC).

Comfortable capital structure and debt coverage indicators – The company’s financial risk profile is strong, with a conservative
capital structure as reflected in TOL/TNW of 0.62 times as on March 31, 2023 (FY2022: 0.53 times) and healthy interest
coverage of 12.06 times (FY2022: 20.74 times). This is further supported by its adequate liquidity position and a net debt-free

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 balance sheet.
Credit challenges
Moderate scale of operations – The scale of operations, though improved YoY by 14% in FY2023, still remains modest
compared to other established players in the industry. Although the scale of operations improved to Rs. 230.46 crore in FY2023,
it is expected to decline in FY2024 on the back of modest order book addition, based on the billing for 8M FY2024. ICRA notes
that AIPL’s operations remain exposed to risks related to postponement in execution of projects due to delays in site handover
and unavailability of space, as inherent in the construction industry. Further, ~50% of the order book is in the nascent stages
(<20% executed) as on November 30, 2023.

Declining revenue visibility, concentrated order book position – The company has an outstanding order book position of Rs.
255.39 crore as on November 30,2023 translating to 1.11 times of FY2023 revenue compared to 1.74 times as of November
2022, leading to declining revenue visibility, thus necessitating fresh order inflows for improved order book position, going
forward. AIPL has high project concentration risk with top five orders constituting ~85% of the order book as on November 30,
2023. Further, most of the projects currently being undertaken are located in Mumbai and Navi Mumbai, exposing the
company to geographical concentration risks. However, the concentration risk is partly mitigated by the strong counterparty
credit profile.
Liquidity position: Adequate

AIPL has outstanding term loans of Rs. 7.61 crore as on March 31, 2023. In 11M FY2024, it has availed term loan of Rs. 2.12
crore. AIPL has an annual repayment of Rs. 3.8 crore in FY2024 and Rs. 2.7 crore in FY2025, which can be met through its cash
flow from operations. It had cash and liquid investments of cash balances of Rs. 59.59 crore (free Rs. 25.12 crore) as on January
31, 2024. Going forward, the company’s ability to judiciously manage its working capital cycle and maintain adequate liquidity
buffer remain important from the credit perspective.

Rating sensitivities

Positive factors – The rating could be upgraded in case of an improvement in the order book position, scale of operations and
earnings profile resulting in improved debt coverage metrics and liquidity position on a sustained basis.

Negative factors – Pressure on the rating could emerge if significant delays in order execution lead to lower revenues or
profitability, or if there is stretch in the working capital cycle adversely impacting its liquidity position on a sustained basis.
Lack of healthy order book addition leading to further deterioration of OB/OI ratio could also negatively impact the rating.
Specific factor that may lead to rating downgrade is interest cover below 3 times on a consistent basis.

Analytical approach

Analytical Approach Comments

Corporate Credit Rating Methodology

Applicable rating methodologies
Rating Methodology for Construction Entities

Parent/Group support Not Applicable

Consolidation/Standalone Standalone

About the company

AIPL was started as a partnership firm in 1981, before being converted into a private limited entity in 2002. It is involved in the
construction of roads, buildings and other civil works. The company has executed various road development and civil
construction projects for Government and semi-government bodies in Maharashtra. AIPL is registered with the Public Works
Department (PWD) of Government of Maharashtra, the Municipal Corporation of Greater Mumbai (MCGM), and the City and

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 Industrial Development Corporation of Maharashtra Ltd. (CIDCO). It has a ready-mix concrete plant, an asphalt plant and two
crushing plants at Mahape, in Navi Mumbai (Maharashtra).

Key financial indicators (audited)

AIPL Standalone FY2022 FY2023

Operating income (Rs. crore) 202.83 230.46
PAT (Rs. crore) 17.64 16.35
OPBDIT/OI (%) 12.05% 10.77%
PAT/OI (%) 8.70% 7.09%
Total outside liabilities/Tangible net worth (times) 0.53 0.62
Total debt/OPBDIT (times) 0.83 1.20
Interest coverage (times) 20.74 12.06
Source: Company, ICRA Research; PAT: Profit after Tax; OPBDIT: Operating Profit before Depreciation, Interest, Taxes and Amortisation

Status of non-cooperation with previous CRA: Not Applicable

Any other information: None

Rating history for past three years

Chronology of rating history

Current rating (FY2024)
for the past 3 years
Amount Date & Date & Date &
outstanding Date & rating Date & rating in
Instrument Amount rating in rating in rating in
as on Nov in FY2024 FY2023
Type rated FY2022 FY2021 FY2020
30, 2023
(Rs. crore) Sep 17, Mar 31,
(Rs. crore) Feb 26, 2024 Dec 23, 2022 -
2021 2020
Long-term
Long [ICRA]BBB- [ICRA]BBB- [ICRA]BBB-
1 Non-fund 25.0 23.64 [ICRA]BBB-(Stable) -
term (Stable) (Stable) (Stable)
based – BG
Fund based Long [ICRA]BBB-
2 0.00 - - - - -
CC term (Stable)
Long-term
Long [ICRA]BBB-
3 Unallocated 15.0 -- [ICRA]BBB-(Stable) - - -
term (Stable)
limits

Complexity level of the rated instrument

Instrument Complexity Indicator

Long-term – Non-fund based – BG Very Simple
Long-term – Unallocated limits Not applicable

The Complexity Indicator refers to the ease with which the returns associated with the rated instrument could be estimated.
It does not indicate the risk related to the timely payments on the instrument, which is rather indicated by the instrument's
credit rating. It also does not indicate the complexity associated with analysing an entity's financial, business, industry risks or
complexity related to the structural, transactional or legal aspects. Details on the complexity levels of the instruments are
available on ICRA’s website: Click Here.

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 Annexure I: Instrument details

Instrument Coupon Amount Rated

ISIN Date of Issuance Maturity Current Rating and Outlook
Name Rate (Rs. crore)
NA Bank guarantee NA NA NA 25.00 [ICRA]BBB-(Stable)
Unallocated
NA NA NA NA 15.00 [ICRA]BBB-(Stable)
limits
Source: Company

Annexure II: List of entities considered for consolidated analysis- Not applicable

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 ANALYST CONTACTS
Rajeshwar Burla Ashish Modani
+91 40 6939 6443 +91 20 6606 9912
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Chintan Dilip Lakhani Rohit Pati

+91 22 6169 3345 +91 80 43326426
chintan.lakhani@icraindia.com rohit.pati@icraindia.com

RELATIONSHIP CONTACT
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communications@icraindia.com

Helpline for business queries

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info@icraindia.com

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