Rating Rationale for JKCL Ltd

Rating Rationale
Brickwork Ratings Revises ratings to ‘BWR BBB’ & ‘BWR A3+’ for the Bank
Loan Facilities aggregating ₹ 187 Cr (enhanced from ₹ 105 Cr) of Sri
Gopikrishna Infrastructure Pvt. Ltd.
Brickwork Ratings (BWR) has revised the following Ratings1 for Bank Loan Facilities of
Sri Gopikrishna Infrastructure Pvt Ltd (SGIPL or ‘the company’)
Facility
Limits in (₹ Cr)
Previous Present
Tenure
Fund Based
Cash Credit
20.00
20.00
Long
Term
Non-Fund
Based
LC
33.00
40.00
BG
52.00
127.00
Total
187.00
Short
Term
Rating
BWR BBB
(Pronounced BWR Triple B)
(Outlook: Stable)
BWR A3+
(Pronounced BWR A Three
Plus)
Rating
History
BWR BBB(Pronounced BWR
Triple B Minus)
(Outlook: Stable)
(Dec 2013)
BWR A3
(Pronounced BWR A
Three)
(Dec 2013)
INR One Hundred Eighty Seven Crores only
BWR has principally relied upon the audited financial results up to FY13, provisional financials
of FY14, projected financials of FY 15 of the company, publicly available information and
information/clarifications provided by the company’s management.
The rating upgrade factors the significant increase in orders, improved operating efficiencies
and geographic diversification. The ratings continue to draw strength from the established
presence of the company in the power sector infrastructure segment, moderate business risk
profile, revenue visibility backed by robust order book position and adequate debt protection
metrics. These ratings are partially offset by high receivable days, challenges of executing large
projects within stipulated timelines and uncertainty in revenue streams emanating from the
nature of business.
1
Please refer to www.brickworkratings.com for definition of the Ratings
www.brickworkratings.com
1
10 Jul 2014
Background
Sri Gopikrishna Infrastructure Pvt. Ltd. was incorporated on 27th September 2007 in
Hyderabad by taking over the business of the partnership firm, M/s Sri Gopikrishna
Constructions. The company has its regional offices located in Guwahati (Assam) and Raipur
(Chhattisgarh). The company is promoted by Mr. K Gopala Raju, Mr. K.V.N. Soma Raju, Mr. K.
Vijay Kumar Raju and Ms. K. Neelima. Mr. K Gopala Raju and Mr. K.V.N. Soma Raju possess
over a decade’s experience in executing power sector infrastructure projects. The company is
engaged in engineering, supply, erection, testing & commissioning of EHV transmission lines,
sub-stations and distribution systems. SGIPL is registered as contractors with Andhra Pradesh,
Assam, Chhattisgarh, Haryana, Karnataka and Maharashtra state electricity boards. The
company is also executing works in the roads and railways segments. The clientele of the
company include State Electricity Boards of Assam, Chhattisgarh, Bihar, Maharashtra and
Andhra Pradesh, Nagarjuna Construction Co. Ltd., ICSA (India) Ltd., Universal Cables Ltd.,
KEC International Limited etc. SGIPL owns two Prestressed Concrete (PSC) Pole Manufacturing
Units in Chhattisgarh and Assam states with an installed capacity of 240 poles per day and
manufactures poles of 7.5, 8 and 8.5 mts.
Financial Performance
For FY 13, SGIPL reported net sales of Rs. 163.31 Crs and net profit of Rs. 7.21 Crs as against net
sales of Rs. 146.01 Crs and net profit of Rs. 8.29 Crs for FY12. The company has comfortable
debt protection metrics with ISCR of 3.16 times for FY13 and a comfortable leverage position at
0.71 times for FY13. On a provisional basis, SGPIL has achieved sales of Rs. 191.01 Crs and net
profit of Rs. 9.90 Crs for FY14. The company’s tangible net worth stands at Rs. 44.66 Crs
(Provisional) as on 31st March’14. The company’s revenue visibility for the medium term appears
satisfactory with an order book position of approx. Rs. 943.00 Crs as on 31st May’14.
Rating Outlook
The outlook is expected to remain stable over the current year. The company expects significant
scale up of operations during FY15 & effective execution of the orders on hand is crucial for the
company’s growth. The ability of the company to achieve the projected revenue, improve
profitability, achieve geographical & customer diversification in its revenue profile and improve
its liquidity position by improving receivables realisations shall remain the key monitorables.
Analyst Contact
[email protected]
Phone
1-860-425-2742
Relationship Contact
[email protected]
Media Contact
[email protected]
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.
www.brickworkratings.com
2
10 Jul 2014

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