GHV (India) Pvt. Ltd.

Brickwork Ratings upgrades the ratings for the Bank Loan Facilities of Rs. 1000.00 Crs. of GHV (India) Pvt. Ltd.

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (05 Jul 2023)	Present
Fund Based	216.00	180.00	Long Term	BWR BBB+ /Stable ISSUER NOT COOPERATING*/Downgraded	BWR A + /Stable removal from ISSUER NOT COOPERATING* category/Upgraded
Non Fund Based	984.00	820.00	Short Term	BWR A3+ ISSUER NOT COOPERATING*/Downgraded	BWR A1 removal from ISSUER NOT COOPERATING* category/Upgraded
Grand Total	1200.00	1000.00	(Rupees One Thousand Crores Only)

#Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank Loan facilities,consolidation or instruments are provided in Annexure

RATING ACTION / OUTLOOK

Brickwork Ratings (BWR) has upgraded the ratings for the bank loan facilities of GHV (India) Private Limited ("GHVIPL" or "the company") taking into account the company's demonstrated ability to improve its business profile with stable operating margins during the last 3 years. The company's financial performance improved during FY23 with ~92% y-o-y growth in total operating income and ~27% during H1FY24 on Y-o-Y basis. In line with the revenue growth, profit at EBITDA and net level have also recorded significant growth y-o-y in FY23, thereby supporting the company’s financial risk profile and capital structure.

The rating continues to factor in the extensive experience of the promoters, the company's long and established track record in the EPC industry, reputed clientele primarily government agencies and a stable above-average financial risk profile with improvement in scale of operations.

BWR also takes note of recent volatility in the unexecuted orderbook position at Rs. 3823.60 Crs as on 21 Oct 2023 primarily on account of the steady pace of project execution. Since Q2FY24, the company has reportedly bid for 15 orders ~Rs.10K Crs from different Govt agencies covering Roads, Railways, Airports sectors etc. Successful bids are expected to support the order book and revenue visibility.

However, the ratings are constrained by the associated concentration risks arising from road projects which constitute ~60% of the unexecuted order book and National Highway Authority of India (NHAI) being the primary client. The ratings are further offset by the working capital intensity and other inherent risks viz, execution risks, the competitive landscape in a tender-based industry, and susceptibility to economic cycles that impact the construction industry.

The ‘Stable’ outlook indicates a low likelihood of rating change over the medium term. BWR believes the company’s business risk profile will be maintained over the medium term. The outlook may be revised to Positive in case of a sustained significant increase in the scale of operations due to improved order accretion with a stable pace of execution of projects, and improved profitability which results in an improved financial risk profile and capital structure. The outlook may be revised to Negative due to lower-than-expected revenue or profitability, sustained decline in order accretion, a stretch in the working capital cycle, delay in receivables, unanticipated debt-funded capex, or more than envisaged investments in the group companies/ SPVs thereby weakening the gearing and further impacting the financial risk profile. Any sharp reversal in industry conditions may exert downward pressure on the ratings.

KEY RATING DRIVERS

Credit Strengths:

Long operational track record and experienced promoters :
The company is promoted by Mr. Jahid Vijapura and his brothers who have extensive experience in the construction industry and are supported by a team of experienced professionals. The Company’s long track record of nearly five decades and promoters’ experience in the EPC business have helped in understanding the business cycles, establishing relationships with suppliers and customers, obtaining repeat orders and addressing associated inherent risks. The company has also been regularly increasing its fixed asset base to maintain its order execution pace and operational flexibilities in terms of machinery deployment and site mobilization.
Moderate order book in a conducive operating environment :
GHV has a moderate unexecuted order book of ~Rs 3800 Crs as on 21 Oct 2023 (PY: Rs 6331 Crs). There has been a temporary moderation in the order book on account of a healthy order execution pace and lower new order accretion. Reportedly, the company is expected to finalise orders worth Rs.7000 Crs in the short term which is expected to provide adequate revenue visibility in the short-medium term. Moreover, the geographically diversified (across Madhya Pradesh, Maharashtra, Gujarat, and Rajasthan) order book mitigates the risk of any adverse regional developments impacting the execution pace.

Moreover, given the thrust by the Government of India (GoI) on building infrastructure including roads and highways, the company is in a position to better leverage the operating environment which is conducive to growth in the next short to medium term.
Government Clientele :
Most of the clients are Government agencies viz., NHAI, Railways, Airport Authority of India, Military Engineer Services and Municipal Corporation of Greater Mumbai etc. The company has been associated with them for a long time and successful execution of the projects has also helped it in getting repeat orders. Out of the unexecuted orderbook as on 21 Oct 2023, ~60% (FY23 ~95%) of the orderbook comprises road projects from NHAI. The company was able to secure repeat orders from NHAI on account of its long-standing presence in the EPC sector in Maharashtra.
Improvement in Scale of operations and above average financial profile :
The company has achieved a TOI of Rs.3093.13 Crs for FY23 (PY Rs 1610.77 Crs). The company has achieved a CAGR of ~50% during the last three years. With the improvement in the scale of operations, the company has achieved an EBITDA of Rs 303.14 Crs (PY Rs. 186.01 Crs) and PAT of Rs 157.34 Crs in FY23 (PY: Rs 89.86 Crs). Though there has been a decline in the Operating margins on YOY basis, the net margins have been steady ~5% in FY23. The company’s Tangible Networth improved from Rs.400.38 Crs as on 31 March 2022 to Rs. 553.12 Crs as on 31 March 2023. Resultantly, the gearing remained steady below unity despite an increase in debt. Also, the company’s TOL/TNW position remained moderate at 1.78 times as on 31 March 2023 as against 1.75 times as on 31 March 2022. The debt protection metrics remained adequate as reflected by ISCR and DSCR at 5.45 times and 2.64 times during FY23 as against 4.03 times and 2.92 times during FY22, respectively. In H1FY24, the company reported a TOI of Rs 1350.21 Crs, EBITDA of Rs 153.39 Crs and PAT of Rs 77.07 Crs on a provisional basis.

Credit Risks:

Tender based nature of business and Competitive industry and Raw material price Volatility :
The tender-based business leads to volatility in the order book and hence, the revenue and profitability of the Company. Further, the construction industry is highly fragmented with many organised and unorganised players. The Company is exposed to the risks inherent in the construction sector including slowdown in new order inflows, risks of delays in execution etc. The company’s operations are vulnerable to price variations in key raw materials as most of the contracts are fixed price contracts which is mitigated to a certain degree by built-in price escalation or variations clauses in some of the contracts. Further, the tender-based operations limit pricing flexibility in an intensely competitive industry which in turn adversely impacts the profitability.
Client concentration risk :
The company is primarily engaged in the construction of roads with the primary client being NHAI. The customer concentration from NHAI was ~95% in FY23 and is now ~60% YTD. The company has been actively broad-basing its customer base while maintaining the counterparty risk profile. The company has added projects from the Airport Authority of India, Western Railways, RailTel, Municipal Corporation of Greater Mumbai, Military Engineer Services etc in the last few years. Notwithstanding the reduction in concentration, the revenue and profitability are still susceptible to associated risks.
Working capital Intensity :
The company’s operations are capital-intensive due to the high cost of construction materials, high labour costs, advances to suppliers, and delays in getting payments from government departments, among others. Additionally, delays in receivables and high retention money with the Government departments also lead to working capital intensity and reliance on bank borrowings and financial institutions. The Company executes work orders mostly for state govt and Central govt. NHAI etc and has been able to maintain receivable days at moderate level of ~50 days for past few years. Nonetheless, the liquidity of the company remained vulnerable to the timely realisation of bills.

ANALYTICAL APPROACH - Standalone

For arriving at its ratings, Brickwork Ratings has adopted a standalone approach and applied its rating methodology as detailed in the Rating criteria below. The company has 5 subsidiaries as on 31 Mar 2023 i.e. Ahmednagar Bypass Road Projects Private Limited (SPV), Ahmednagar Ghogargaon Road Projects Private Limited (SPV), Ujjain Garoth Road Project Private Limited (SPV), Blue Ocean Hospitality & Infrastructure LLC and Karmala Road Project Private Limited. Except for GHV, the operations of the other entities are not meaningful on a consolidated basis. However, BWR takes note of the Corporate Guarantee given to the four of its subsidiaries.

RATING SENSITIVITIES

The ability of the company to ensure timely execution of the ongoing projects, improve order book and fresh order accretion, achieve geographical/segment/client diversification, ensure effective and timely realization of receivables and manage its working capital efficiently would remain the key rating sensitivities. GHV has offered its Corporate Guarantees amounting to ~Rs.1037 crs (PY Rs. 747.81 Crs) to secure borrowing of its subsidiaries. Any invocation of such guarantees and the impact of the same on the financial risk profile of the company, if any, would be the key rating sensitivity factor.

Upward:

Significant diversification in order book with healthy order accretion.
Substantial and sustained growth in revenue while maintaining operating margin

Downward:

Significant delays in the completion of sizeable ongoing projects.
Further contraction in the unexecuted order book with low new order accretion.
Deterioration in financial risk profile on account of stretch in the working capital cycle, mainly due to delay in realization of receivables or Larger-than-expected debt funded capex.

LIQUIDITY INDICATORS - Adequate

The company’s liquidity position is considered adequate marked by adequate EBITDA, moderate utilisation of WC and adequate cash and cash equivalents. The EBITDA stood at Rs 303.14 Crs as on 31 Mar 2023 which was sufficient to cover the interest cost of Rs 55.62 Crs for FY23. The EBITDA has been sufficiently covering the interest costs for the past three years. The average utilization of working capital limits has remained ~60% over the past six months. The Cash and cash equivalents stood adequate at Rs.172.47 Crs with the unencumbered portion of Rs 50.67 crs as on 31 Mar 2023. The current ratio remained moderate at 1.21 times as on 31 Mar 2023 (PY 1.31 times). The company has adequate net cash accrual of Rs 202.23 Crs as on 31 Mar 2023 and Rs 204.86 Crs as on 31 Mar 2024(Proj) to cover the annual debt obligations of approximately Rs.60-70 Crs. The company's cash and cash equivalent position as on 16 Nov 2023 stood at Rs 164.80 Crs with an unencumbered portion of Rs 64.80 Crs.

ABOUT THE ENTITY

Macro Economic Indicator	Sector	Industry	Basic Industry
Industrials	Construction	Construction	Civil Construction

GHV India Pvt. Ltd. (GHV) was established as a partnership firm in 1965 under the name “G H Vijapura & Company”, by Mr. G Vijapura and was incorporated as GHV (India) Pvt. Ltd. in 2009.

The Company is an Engineering, Procurement and Construction (EPC) contractor having a presence for nearly five decades and has undertaken construction projects in the area of roads, urban development, airports runway / parking construction / reconstruction for the State and Central Government as well as private players. The Company has its registered office in Mumbai and having its Branch in Gujarat and having projects in Maharashtra, Kerala, Madhya Pradesh, Gujarat, Rajasthan, Karnataka, Himachal Pradesh , Assam and Bihar.

The Company is promoted by Mr. Jahid Vijapura and his brothers (second generation) – Mr Mustakali H. Vijapura, Mr. Farook Vijapura, Mr Shafi Mohammadbhai Vijapura and Mr. Huzefa Vijapura.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 21 - 22 (Audited)	FY 22 - 23 (Audited)	FY 23 - 24 (Unaudited - Midterm-H1)
Operating Revenue	Rs.Crs.	1610.76	3093.13	1350.21
EBITDA	Rs.Crs.	186.00	303.14	153.39
PAT	Rs.Crs.	89.86	157.35	77.07
Tangible Net Worth	Rs.Crs.	400.38	553.12	Not Available
Total Debt / Tangible Net Worth	Times	0.95	0.69	Not Available
Current Ratio	Times	1.31	1.21	Not Available

KEY COVENANTS OF THE FACILITY RATED

The terms of sanction include standard covenants normally stipulated for such facilities.

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)

Facilities	Current Rating (2023)			2023 (History)		2022		2021		2020
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	180.00	BWR A+/Stable (removal from ISSUER NOT COOPERATING* category/Upgraded)	05Jul2023	BWR BBB+ Stable (ISSUER NOT COOPERATING*/Downgraded)	29Jun2022	BWR A+ Stable (Reaffirmation)	07May2021	BWR A+Stable (Reaffirmation)	04May2020	BWR A+Stable (Reaffirmation)
Non Fund Based	ST	820.00	BWR A1 (removal from ISSUER NOT COOPERATING* category/Upgraded)	05Jul2023	BWR A3+ (ISSUER NOT COOPERATING*/Downgraded)	29Jun2022	BWR A1 (Reaffirmation)	07May2021	BWR A1 (Reaffirmation)	04May2020	BWR A1 (Reaffirmation)
Grand Total		1000.00	(Rupees One Thousand Crores Only)

COMPLEXITY LEVELS OF THE INSTRUMENTS - Simple

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.

Hyperlink/Reference to applicable Criteria

Analytical Contacts
Revathy Thamizharasu Rating Analyst revathy.t@brickworkratings.com	Saakshi Kanwar Associate Director - Ratings saakshi.k@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

GHV (India) Pvt. Ltd.

ANNEXURE-I

Details of Bank Facilities rated by BWR

SL.No.	Name of the Bank/Lender	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)
1	Bank of Baroda	Cash Credit - Sanctioned	58.00	_	58.00
2	Bank of Baroda	Bank Guarantee - Sanctioned	_	245.00	245.00
3	Bank of Maharashtra	Cash Credit - Sanctioned	12.00	_	12.00
4	Bank of Maharashtra	Bank Guarantee - Sanctioned	_	39.00	39.00
5	Canara Bank	Bank Guarantee - Sanctioned	_	95.00	95.00
6	Canara Bank	Cash Credit - Sanctioned	20.00	_	20.00
7	Indian Bank	Cash Credit - Sanctioned	12.00	_	12.00
8	Indian Bank	Bank Guarantee - Sanctioned	_	39.00	39.00
9	Others	Bank Guarantee - Proposed	_	_	0.00
10	Others	Cash Credit - Proposed	_	_	0.00
11	Punjab National Bank	Cash Credit - Sanctioned	33.00	_	33.00
12	Punjab National Bank	Bank Guarantee - Sanctioned	_	227.00	227.00
13	State Bank Of India (SBI)	Cash Credit - Sanctioned	20.00	_	20.00
14	State Bank Of India (SBI)	Bank Guarantee - Sanctioned	_	64.00	64.00
15	Union Bank of India	Bank Guarantee - Sanctioned	_	111.00	111.00
16	Union Bank of India	Cash Credit - Sanctioned	25.00	_	25.00
Total			180.00	820.00	1000.00
TOTAL (Rupees One Thousand Crores Only)

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