| GCKC Projects and Works Private Limited | ||||||
| Rating outlook revised to 'Positive'; Ratings Reaffirmed | ||||||
| Rating Action | ||||||
| ||||||
| 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 revised its outlook on the long-term bank facilities of GCKC Projects and Works Pvt Ltd (GCKC) to 'Positive' from 'Stable', while reaffirming the long-term rating at 'CRISIL BBB' and short-term rating at 'CRISIL A3+'.
The revision in outlook is on account of the improvement in the business risk profile, as indicated by revenue of Rs 342 crore in fiscal 2022 (against 168 crore in fiscal 2021) driven by addition of new customers in like Manipur, Assam and Uttar Pradesh. GCKC has already booked sales of Rs 57 crore in April and May 2022 and has a healthy order book of Rs 1000 crore outstanding as at May 2022 which provides strong revenue visibility over the medium term. Timely execution of these orders leading to sustenance in revenue profile of GCKC will be monitored. Operating profitability are expected to remain stable at 9-10% over the medium term.
Financial risk profile continues to remain strong marked by healthy capital structure and adequate debt protection metrics. Liquidity profile has remained adequate with sufficient cushion in bank lines and healthy accruals against nil repayment obligations.
The ratings continue to reflect the extensive experience of the promoter in the civil construction industry and healthy financial risk profile. These strengths are partially offset by large working capital requirement and risk of geographical concentration in revenue. |
Analytical Approach Unsecured loan of Rs 8.38 crore as on March 31, 2022, has been treated as debt as they will be repaid over the medium term. |
Key Rating Drivers & Detailed Description Strengths: Extensive experience of the promoter in the civil construction industry: The promoter has experience of over two decades and his industry insights and knowledge have helped the company establish a strong reputation in the market. This has helped GCKC to get regular orders from key customers and add new customers in states, such as Assam, Manipur and Uttar Pradesh. This has led to significant improvement in revenue to Rs 342 crore in fiscal 2022. Furthermore, the company has a healthy order book of Rs 1,000 crore as on May 31, 2022, which provides strong revenue visibility over the medium term.
Healthy financial risk profile: The financial risk profile continues to be strong with estimated total outside liabilities to tangible networth (TOLTNW) ratio at 0.7 time while networth is Rs 124.2 crore as on March 31, 2022. The debt protection metrics are adequate with interest coverage and net cash accrual to total debt ratios at 9.3 times and 2.2 time, respectively, in fiscal 2022. With no major debt-funded capital expenditure and steady accretion to reserves, financial risk profile is expected to remain healthy over the medium term.
Weaknesses Large working capital requirement: Operations are working capital intensive as reflected in gross current assets (GCAs) at 134 days as on March 31, 2022, driven by high cash and bank balances, moderate debtors at 65 days and inventory at 50 days. Debtors The working capital cycle is partially supported by creditors of 60-90 days and sufficient cushion in bank lines. Prudent management of working capital cycle amid ramp up of scale of operations will be closely monitored.
Risk of geographical concentration in revenue: GCKC derives a significant portion of its revenue from Rajasthan. Out of the total revenue in fiscal 2022, 45% came from projects executed in and around Rajasthan. Therefore, any change in the government policy in this state or political turmoil or occurrence of natural phenomenon would affect the business risk profile of the company. Though GCKC has already started bidding for orders in other states, including Manipur, Assam and Uttar Pradesh, in order to reduce the geographical concentration risk, continuous receipts of orders from these states will remain a key monitorable. |
Liquidity: Adequate Bank limit utilization is moderate at around 70.94 percent for the past twelve months ended March-2022. Cash accruals are expected to be over Rs 18-20 crore which are sufficient against nil term debt obligation over the medium term. In addition, it will be act as cushion to the liquidity of the company. Current ratio is healthy at 2 times on March31, 2022. Further, company has an unencumbered cash & bank balances of Rs 2-3 crore which also provide cushion to liquidity. |
Outlook - Positive GCKC’s business risk profile will improve over the medium term owing to higher revenue and operating margin, while financial risk profile remains comfortable. |
Rating Sensitivity factors Upward factors
Downward factors
|
About the Company Incorporated in 2009 and promoted by Ashok Kumar (after demise of Mr. Roop Chand Samdaria in 2021), GCKC mainly undertakes water distribution system projects (erection, procurement, commissioning, operations, and maintenance) in Rajasthan, Karnataka, Uttarakhand, Assam, Manipur, Uttar Pradesh and Gujarat. In fiscal 2013, the company entered the road construction business. It is based in Jaipur, Rajasthan. |
Key Financial Indicators
*Provisional |
Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
|
| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | |||
| Facility | Amount (Rs.Crore) | Name of Lender | Rating |
| Bank Guarantee | 28 | Kotak Mahindra Bank Limited | CRISIL A3+ |
| Bank Guarantee | 99 | Punjab National Bank | CRISIL A3+ |
| Bank Guarantee | 12 | State Bank of India | CRISIL A3+ |
| Bank Guarantee | 3.69 | YES Bank Limited | CRISIL A3+ |
| Cash Credit | 6.31 | Kotak Mahindra Bank Limited | CRISIL BBB/Positive |
| Cash Credit | 26 | Punjab National Bank | CRISIL BBB/Positive |
| Cash Credit | 6.5 | State Bank of India | CRISIL BBB/Positive |
| Overdraft Facility | 1 | YES Bank Limited | CRISIL A3+ |
This Annexure has been updated on 23-Feb-23 in line with the lender-wise facility details as on 09-Feb-23 received from the rated entity.
Criteria Details
|