Rating Rationale Sri Krishna Engineering & Construction co. Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs 19.00 Crores of Sri Krishna Engineering & Construction co. Particulars Amount (Rs in Crs) Rating* Facility Previous Present Tenure Previous (Jan, 2017) Present Fund based Cash Credit 3.00 3.00 Long BWR Single B ) Outlook:Stable BWR Single B) Outlook:Stable Reaffirmation Non Fund Based Bank Guarantee 16.00 16.00 Short BWR Single A Four) BWR Single A Four) Reaffirmation Total 19.00 19.00 Rupees Nineteen Crores Only *Please refer to BWR website www.brickworkratings.com/ for definition of the ratings Complete details of Bank facilities is provided in Annexure-I Ratings: Reaffirmed Rationale/Description of Key Rating Drivers/Rating sensitivities: BWR has essentially relied upon audited financials upto FY17and given by trust s management. information/ clarification 1
The Rating has factored experience of the promoter, long track record of the firm, satisfactory liquidity position However, the rating is constrained by small scale of operations with,declined sales, low net worth and high gearing, inherent risk of the constitution and information risk Going forward the ability of the firm to scale up its operations, improve its net worth, to improve its capital structure and to manage its working capital efficiently will be the key rating sensitivities. Description of Key Rating Drivers Credit Strengths: Experience of one of the partners is more than a decade, the firm was established in 1974 liquidity is at 1.56 times.in FY 17 Credit Risks: The revenue is reduced from Rs 11.16 Crs in FY16 to Rs 10.84 Crs in FY17, net worth is at Rs 3.97 Crs as at FY17, gearing is 3.27 times.as at FY17 constitution of the firm is partnership. No default statement is not submitted from July 2017 till Mar2018 Analytical Approach For arriving at its ratings, BWR has applied its rating methodology as detailed in the Rating Criteria detailed below (hyperlinks provided at the end of this rationale). Rating Outlook: Stable BWR believes that Sri Krishna Engineering & Construction co. business risk profile will be maintained over the medium term. The Stable outlook indicates a low likelihood of rating change over the medium term. The rating outlook may be revised to 'Positive' in case the revenues and profit show sustained improvement. The rating outlook may be revised to 'Negative' if the revenues go down and profit margins show lower than expected figures. About the firm Sri Krishna Engineering and Construction co is a Partnership firm established in the year 1974, is engaged in execution of Transport & Handling Contracts The Firm also offers its machinery to other firm on hire basis The Firm is located in Visakhapatnam, Andhra Pradesh Mr.Y S V Rama Rao Chowdary, Managing Partner of the firm has been in the line of business since 1974 and his sons Mr. Y Venkateswara Rao and Mr. Y V V Rayudu are in the line of activity for the last 12 years The firm executes the work for different public sector undertakings Viz.,Steel authority of India Ltd, Rashtriya Ispat Nigam Ltd,Bharat heavy electricals Limited etc. 2
Firm Financial Performance Based on Audited financials of FY17, firm has reported a net profit of Rs 0.21 Crs on a revenue of Rs.10.84Crs. The firm has high gearing with the debt equity ratio of 3.27 times. Its current ratio is 1.56 times. Rating History for the last three years S. No Facili ty Current Rating (2018) Rating History Type Amou nt ( Crs) Rating 27.01.2017 21.07.201 6 20.4.2015 6.1.2014 Fund Based Long 3.00 (Pronounced as BWR Single B) Outlook: Stable Rating not reviewed Non Fund Based Short 16.00 BWR (Pronounced as BWR Single A Four) Rating not reviewed Total 19.00 Rupees Nineteen Crores Only 3
Key Financial Indicators Key Parameters FY15 FY16 FY17 Result Type Audited Audited Audited Operating Revenue (Rs in Crs ) 9.64 11.16 10.84 EBITDA (Rs in Crs ) 1.05 1.16 1.39 PAT (Rs in Crs ) 0.20 0.28 0.21 Tangible Net worth (Rs in Crs ) 3.04 3.53 3.97 Total Debt/Tangible Net worth (Times) 3.39 2.96 3.27 Current Ratio (Times) 1.34 1.45 1.56 Hyperlink/Reference to applicable Criteria General Criteria Approach to Financial Ratios Manufacturing Industry For any other criteria obtain hyperlinks from website Analytical Contacts S Venkatesh CGM-Ratings analyst@brickworkratings.com Media media@brickworkratings.com Relationship Contact bd@brickworkratings.com Phone: 1-860-425-2742 For print and digital media The Rating Rationale is sent to you for the sole purpose of dissemination through your print, digital or electronic media. While it may be used by you acknowledging credit to BWR, please do not change the wordings in the rationale to avoid conveying a 4
meaning different from what was intended by BWR. BWR alone has the sole right of sharing (both direct and indirect) its rationales for consideration or otherwise through any print or electronic or digital media. Note on complexity levels of the rated instrument: BWR complexity levels are meant for educating investors. The BWR complexity levels are available at www.brickworkratings.com/download/complexitylevels.pdf Investors queries can be sent to info@brickworkratings.com. About Brickwork Ratings Brickwork Ratings (BWR), a SEBI registered Credit Rating Agency, has also been accredited by RBI and empaneled by NSIC, offers Bank Loan, NCD, Commercial Paper, MSME ratings and grading services. NABARD has empaneled Brickwork for MFI and NGO grading. BWR is accredited by IREDA & the Ministry of New and Renewable Energy (MNRE), Government of India. Brickwork Ratings has Canara Bank, a Nationalized Bank, as its promoter and strategic partner. BWR has its corporate office in Bengaluru and a country-wide presence with its offices in Ahmedabad, Chandigarh, Chennai, Guwahati, Hyderabad, Kolkata, Mumbai and New Delhi along with representatives in 150+ locations. BWR has rated debt instruments/bonds/bank loans, securitized paper of over 10,00,000 Cr. In addition, BWR has rated over 6300 MSMEs. Also, Fixed Deposits and Commercial Papers etc. worth over 24,440 Cr have been rated. DISCLAIMER Brickwork Ratings (BWR) has assigned the rating based on the information obtained from the issuer and other reliable sources, which are deemed to be accurate. BWR has taken considerable steps to avoid any data distortion; however, it does not examine the precision or completeness of the information obtained. And hence, the information in this report is presented as is without any express or implied warranty of any kind. BWR does not make any representation in respect to the truth or accuracy of any such information. The rating assigned by BWR should be treated as an opinion rather than a recommendation to buy, sell or hold the rated instrument and BWR shall not be liable for any losses incurred by users from any use of this report or its contents. BWR has the right to change, suspend or withdraw the ratings at any time for any reasons. 5