December 29, 2017

BPR Infrastructure Limited

Summary of rated instruments
Instruments* Amount Rated (Rs. crore) Rating Action
Fund-based Limits 10.00 [ICRA]BBB-(Positive) Reaffirmed,
Non fund-based Limits 60.00 outlook revised from Stable
Unallocated 27.00
*Instrument details are provided in Annexure-1

Rating action
ICRA has reaffirmed the long-term rating at [ICRA]BBB-(pronounced ICRA triple B minus) assigned to
the Rs.10.00 crore1 fund based facilities,Rs.60.00 crore non-fund based limits and Rs.27.00 crore
unallocated limits of BPR Infrastructure Limited (BPRIL)2. The outlook on the long term has been
revised from ‘Stable’ to ‘Positive’.

Rationale
The revision in outlook factors in the healthy revenue growth of 45% in FY2017 to Rs 145.96 crore from
Rs 100.81 crore in FY2016; healthy unexecuted order book of Rs. 420.05 crore as on September 30, 2017
which is 2.88 times the FY2017 OI providing revenue visibility in the medium term; and pre-payment of
term loans in FY2018 given the improved liquidity with revenues from real estate project. ICRA also
positively factors in the long experience of the promoters in the construction business having executed
various projects for reputed government agencies, and comfortable financial profile of the company
characterised with gearing of 0.45 times as on March 31,2017, and interest coverage and NCA/Debt of
4.05 times and 36%, respectively during FY2017.

The rating is constrained by the high geographic and client concentration risk as all the orders are spread
across Telangana and Andhra Pradesh with top five orders accounting for 75% of the order book as on
September 30, 2017. The ratings also consider exposure of revenue growth to political risks which could
lead to delays in execution as witnessed in the past and the susceptibility of profitability to volatility in
raw material prices. The rating also considers the proposed high-scale debt-funded real-estate project term
which could impact the cash-flows in the near term. The rating is also constrained by the highly
competitive business environment characterised by the presence of large number of players along with a
tender based contract awarding system, which keeps operating margins under check.

Going forward, the company’s ability to improve its scale of operations through timely completion of
orders in hand, secure new orders and effectively maintain its working capital requirements and cash flow
position, given higher scale real estate projects planned, will be the key rating sensitivities.

Outlook: Positive
ICRA believes BPRIL will benefit from the substantial growth in order book size, which would support
the revenue growth of the company in the medium term and the extensive experience of its promoters in
the construction industry. The outlook may be revised to 'Stable' if the high scale real-estate project would
lead to cash-flow mismatch and deterioration in the financial indicators. The outlook may be revised to
'Negative' if the expected order book does not move as per the company’s expected schedule and lead to
de-growth in the operating income as evidenced in the past.

1
100 lakh = 1 crore = 10 million
2
For complete rating scale and definitions, please refer to ICRA's website www.icra.in or other ICRA Rating Publications
Key rating drivers

Credit strengths
 Extensive experience of promoters in the civil construction business - The promoters have more
than two decades of experience in the civil construction business through M/s Prabhakar Reddy Co,
which was involved in construction of high rise buildings, roads and real-estate projects. The client
profile is reputed from whom it has been receiving repeat orders, which is a testament to the
execution capabilities of BPRIL.
 Substantial growth in scale of operations – The company’s scale of operations increased
significantly over the last year from Rs.100.81 crore in FY2016 to Rs. 145.96 crore in FY2017 owing
to increased order book execution and order book size.
 Healthy order-book provides revenue visibility in the medium term – The company’s order book
position has improved to Rs. 420.05 crore (2.88 times FY2017 revenues) as on September 30, 2017
which provides revenue visibility in the medium term. The order book size has improved due to
higher works received from Telangana State Medical Services and Infrastructure Development
Corporation (TSMSIDC) as well as Roads and Buildings Department (R&B) amounting to ~Rs.275
crore in FY2018
 Comfortable financial risk profile – BPRIL’s financial profile is comfortable with gearing of 0.45
times as on March 31, 2017 and interest coverage ratio of 4.05 times and NCA/Debt of 36% for
FY2017. The term loans availed by the company towards the real-estate project has been closed
before the actual scheduled repayment in FY2018

Credit weaknesses
 High geographic concentration risk – The entire unexecuted order book of BRIPL as on September
30, 2017 consist of orders to be executed in two states – Telangana and Andhra Pradesh indicating
high geographic concentration risk.
 High client concentration risk – The top five customers account for 75% of the unexecuted order
book which exposure the revenue growth to political risks which could lead to delays in execution as
witnessed in the past; however the risk of higher customer concentration is partly mitigated by
reputed customer base which includes well-funded organizations leading to timely payments.
 Proposed large scale real-estate project could impact cash flows – The company is planning to
undertake a large debt-funded real-estate project, with an estimated project cost of Rs.200 crore,
which could impact the cash-flows in the near term.
 Exposure to margin risks because of volatility in raw material prices – Margins of BRIPL are
exposed to fluctuations in prices of key raw materials such as steel, cement, and sand in the absence
of price escalation clauses in certain contracts. However no such significant movement has been
noticed in the past few years.
 High degree of competition from other players – The construction industry is characterized by the
presence of numerous players involved in competitive bidding keeping the margins under check

Analytical approach
For arriving at the ratings, ICRA has applied its rating methodologies as indicated below:

Links to applicable criteria

Corporate Credit Rating Methodology
Rating Methodology for Construction Entities
About the company
BPR Infrastructure Pvt. Limited (BPRIPL) is a Hyderabad based Construction Company promoted by
Mr.B.Prabhakar Reddy. BPRIL was formed in 2006 after the takeover of the then existing partnership
firm M/s. Prabhakar Reddy Co., a registered entity in the business of construction. The company’s
promoters have over twenty years of operating experience in civil, structural, infrastructural and electrical
engineering services. BPRIPL has till date successfully completed some major projects for UP Rajkiya
Nirman Nigam, AP Housing Board, AP Medical Health Corporation, AP State Wakf board, NG Ranga
Agricultural University and others. The company has significant experience in the construction of high
rise residential buildings, hospitals, commercial spaces. Apart from executing construction works for its
clients, BPRIPL also develops residential real-estate projects.

In FY2017, the company reported a net profit of Rs.6.37 crore on an operating income of Rs.145.96 crore
as against a net profit of Rs.3.86 crore on an operating income of Rs.100.81 crore in FY2016.

Key Financial Indicators (Audited)

Particulars FY2016 FY2017
Audited Audited
Operating Income (Rs. crore) 100.81 145.96
Net Profit (Rs. crore) 3.86 6.37
OPBITDA/OI (%) 9.00% 9.77%
RoCE (%) 13.66% 20.12%

Total Debt / Tangible Net worth (times) 0.34 0.45

Total Debt / OPBITDA (times) 1.63 1.55
Interest coverage (times) 5.54 4.05
NWC/OI (%) 41% 34%
Source: BPRIL; OI: Operating Income; PAT: Profit after Tax; OPBDIT: Operating Profit before
Depreciation, Interest, Taxes and Amortisation; ROCE: PBIT/Avg (Total Debt + Tangible Net-Worth +
Deferred Tax Liability - Capital Work - in Progress); NWC: Net Working Capital

Status of non-cooperation with previous CRA: Not Applicable

Any other information: Not Applicable.

Rating history for last three years
Table
Chronology of Rating History
Current Rating
for the past 3 years
Name of Month – Month Month –
S. Type
Instrument Rated Month - year – year year
No (Long Amount
amount year & & & &
term/ Outstanding
(Rs. rating Rating Rating Rating
Short (Rs. Crore)
Crore) in in in
term)
FY2017 FY2016 FY2015
December June June
-
2017 2016 2014
Long
1 Fund based 10.00 10.00 [ICRA] [ICRA] [ICRA]
term
BBB- BBB- - BBB-
(Positive) (Stable) (Stable)
[ICRA] [ICRA] [ICRA]
Non fund- Long
2 60.00 60.00 BBB- BBB- - BBB-
based term
(Positive) (Stable) (Stable)
[ICRA] [ICRA] [ICRA]
Long
3 Unallocated 27.00 27.00 BBB- BBB- - BBB-
term
(Positive) (Stable) (Stable)

Complexity level of the rated instrument:

ICRA has classified various instruments based on their complexity as "Simple", "Complex" and "Highly
Complex". The classification of instruments according to their complexity levels is available on the
website www.icra.in
Annexure-1
Details of Instruments
Name of the Date of Coupon Maturity Size of the issue Current Rating and
instrument issuance rate Date (Rs. Cr) Outlook
Cash-Credit - - - 10.00 [ICRA]BBB-(Positive)
Bank Guarantee 60.00 [ICRA]BBB-(Positive)
Unallocated 27.00 [ICRA]BBB-(Positive)
Source: BPRIL
 Contact Details

Analyst Contacts

K. Ravichandran Srinivasan R
+91 44 4596 4301 +91 44 4596 4315
[email protected] [email protected]

Nithya Debbadi Prateek Pasari

+91 40 4067 6515 +91 40 4067 6517
[email protected] [email protected]

Relationship Contact

Jayanta Chatterjee
+91 80 4332 6401
[email protected]

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