Press Release

YFC Projects Private Limited

November 11, 2019

Rating Reaffirmed

Total Bank Facilities Rated* Rs.515.66 Cr.

(Enhanced from Rs.428.46 Cr.)
Long Term Rating ACUITE A- / Outlook: Stable
Short Term Rating ACUITE A2+
* Refer Annexure for details
Rating Rationale

Acuité has reaffirmed its long-term rating of ‘ACUITE A-’ (read as ACUITE A minus) and short-term rating
of 'ACUITE A2+' (read as ACUITE A two plus) on the Rs.428.46 crore bank facilities of YFC Projects Private
Limited. The outlook is 'Stable'.

Acuité has withdrawn its long term rating of ‘ACUITE A-‘ (read as ACUITE A minus) on the Rs.12.00 Cr.
bank facilities of YFC Projects Private Limited. The rating is being withdrawn on account of request
received from the company and No due certificate from the bankers.

Further, Acuité has assigned long-term rating of ‘ACUITE A-’ (read as ACUITE A minus) and short-term
rating of 'ACUITE A2+' (read as ACUITE A two plus) on the Rs.87.20 crore bank facilities of YFC Projects
Private Limited. The outlook is 'Stable'.
Gurgaon-based, YFC Projects Private Limited (YPPL) was incorporated in 1986 and is a civil contractor
engaged in Engineering, Procurement and Construction (EPC) projects (Roads & Highways, High-Rise
Buildings, Metro-Rail projects and Sewerage Networking & Treatments Plants) for the State and Central
government. YPPL has entered into joint ventures with reputed players such as Chongquing International
Construction Corporation (CICO), State Construction Integrated Works (SCIW) and Zhejiang Teams
International (ZTI) to help bid for high value projects. The company has a healthy customer base with
reputed clients such as Delhi Metro Rail Corporation (DMRC) which accounts for 44 per cent of its current
order book position, Rajasthan Urban Drinking Water with 24 per cent, Army Welfare Housing Society (AWHO)
with 5 per cent, NBCC (India) Ltd with 18 per cent, among others.

Analytical Approach
Acuité has considered the standalone business and financial risk profiles of the YPPL to arrive at this
rating.

Key Rating Drivers

Strengths
• Established track record of operations and experienced management
YPPL is a part of the YFC Group that is engaged in infrastructure development for around four decades
with its major operations spread over Haryana, Delhi (NCR), Rajasthan, Jharkhand, Madhya Pradesh,
Odisha, Jharkhand and Meghalaya. The company is being promoted by Mr. Rajinder Yadav, Mr.
Davinder Kumar Yadav, Mr. Yoginder Yadav and Mr. Manish Yadav. Founders of the company, Mr.
Rajinder Yadav and Mr. Davinder Yadav, have a vast experience of over 35 years in the
aforementioned industry. The management is ably supported by a well-qualified and experienced
team of professionals. The extensive experience of the promoters in the industry has helped the
company build its market presence and its efficient working capital management. Although, risk
associated with delayed payment exists in the industry, with promoters’ extensive experience and
established track record, YPPL has managed to collect payments within 45-65 days. The company
generates bills on a monthly basis and receives payment within a period of 45 days from the date of
approval of the bill. Projects funded by Multilateral Development Institutions (MDIs) and Central
Government of India are only undertaken by the company, which minimizes the counterparty risk.

Acuité Ratings & Research Limited (erstwhile SMERA Ratings Limited) www.acuite.in
• Improving revenue backed by healthy order book position
YPPL has registered growth in operating income of around 16 per cent in FY2019 over FY2018. The
operating income in FY2019 stood at Rs.530.23 crore as against Rs.457.96 crore in the previous year.
The revenues are expected to remain in the range of Rs. 580 crore – Rs. 600 crore for 2019-20 on
account of moderate order book position. The orders in hand include nine projects across the
country. Further, the company’s margins have slightly improved in FY2019 to 9.68 per cent from 9.62
per cent in FY2018. Acuité believes that YPPL will benefit from its healthy executable order book
position of around Rs.975 as on 31 March, 2019 that gives revenue visibility in near and medium term.
• Healthy financial risk profile
YPPL’s financial risk profile is healthy, marked by a healthy net worth, low gearing and healthy debt
protection metrics. The company’s net worth has subsequently improved to around Rs.102.98 crore
as on March 31, 2019 as against Rs.69.13 crore as on March 31, 2017 on account of healthy accretion
to reserves during the same period.
The company has followed a conservative financial policy in the past, the same is reflected through
its peak gearing level. The gearing level (debt-equity) improved to 0.62 times as on March 31, 2019
from 0.99 times as on March 31, 2018 (Debt to EBITDA stood at 1.14 times in FY2019 as against 1.79
times in FY2018). The gearing of the company is expected to remain low over the medium term on
account of absence of any debt funded capex plans and moderate accretion to reserves. The total
debt of Rs.63.61 crore as on March 31, 2019 consists of long-term debt of Rs.22.87 crore, unsecured
loans of Rs.2.47 crore and working capital borrowings of Rs.38.27 crore.
Operating income has increased by ~16 per cent in FY2019 over FY2018 and operating margins have
also improved slightly to 9.68 per cent in FY2019 as against 9.62 in the previous year leading to healthy
coverage indicators. The interest coverage (ICR) ratio stood healthy at around 3.40 times to 4.00 times
over the last three years. NCA/TD (Net Cash Accruals to Total Debt) ratio stood at 0.46 times in FY2019
and 0.30 times in FY2018.
Acuité believes that the financial risk profile of the company is expected to remain healthy backed
by above average net cash accruals and in absence of any major debt funded capex in near to
medium term.

Weaknesses
• Competitive and fragmented industry
YPPL is engaged as an EPC contractor. The company faces intense competition from the presence
of several mid to large sized players in the said industry. The risk becomes more pronounced as
tendering is based on minimum amount of bidding on contracts and susceptibility to inherent
cyclicality in the road sector. The recent relaxation of qualification norms by the Central Government
for undertaking road projects is further expected to intensify the competitive scenario in the industry.
However, in face of such competitive pressures, Acuité believes that YPPL is well positioned on
account of its longstanding relationship with well-established international players in the infrastructure
industry and the long track-record and experience of its promoters spanning nearing three decades.

• Susceptibility timely execution of the projects and customer concentration risk

Operating cash flow are susceptible to the ability to complete projects in a timely manner and to
maintain healthy order book position by securing new projects from time to time. The company is
experiencing delay in the completion of projects on account of change in scope and delays in
regulatory and environmental approvals. This may in turn result in significant cost escalations leading
to lower than expected operating profitability. Further company faces customer concentration as
around 45-50 per cent of the revenue comes from DMRC.

Liquidity Profile
The company has strong liquidity marked by healthy net cash accruals to its maturing debt
obligations. YPPL generated cash accruals of Rs.29.55 crore in FY2019 against debt obligations of
Rs.15.25 crore for the same period. The cash accruals of the company are estimated to remain in the
range of around Rs.35.59 crore to Rs.45.30 crore during FY2020-22 against repayment obligations
ranging from Rs.15.51 crore to Rs.5.01 crore for the same period. The company’s working capital
operations are intensive marked by gross current asset (GCA) days of 149 days in FY2019. The
company maintains unencumbered cash and bank balances of Rs. 0.93 crore as on 31 March, 2019.
The current ratio stood at 1.40 times as on 31 March, 2019. Acuité believes that the liquidity of the
company is likely to remain strong over the medium term on account of healthy cash accruals
against no major debt repayments over the medium term.

Acuité Ratings & Research Limited (erstwhile SMERA Ratings Limited) www.acuite.in
Outlook: Stable
Acuite believes that YPPL will continue to benefit over the medium term due to its experienced
management, moderate revenue visibility and comfortable debt protection metrics. The outlook may
be revised to ‘Positive’, if the company demonstrates substantial and sustained growth in its revenues
from the current levels while maintaining its capital structure. Conversely, the outlook may be revised
to ‘Negative’, in case of increased deterioration in liquidity position of the company most likely as a
result of substantial increase in receivable collection period or in case of higher-than-expected
leverage indicators

About the Rated Entity - Key Financials

Unit FY19 (Actual) FY18 (Actual) FY17 (Actual)
Operating Income Rs. Cr. 530.23 457.96 430.18
EBITDA Rs. Cr. 51.33 44.05 38.89
PAT Rs. Cr. 17.77 15.78 12.76
EBITDA Margin (%) 9.68 9.62 9.04
PAT Margin (%) 3.35 3.45 2.97
ROCE (%) 25.34 24.19 25.38
Total Debt/Tangible Net Worth Times 0.62 0.99 0.89
PBDIT/Interest Times 3.41 3.63 3.96
Total Debt/PBDIT Times 1.14 1.79 1.47
Gross Current Assets (Days) Days 149 160 127

Status of non-cooperation with previous CRA:

Not Applicable

Any other information

Not Applicable

Applicable Criteria.

• Default Recognition - https://www.acuite.in/view-rating-criteria-17.htm

• Financial Ratios And Adjustments - https://www.acuite.in/view-rating-criteria-20.htm
• Infrastructure Entities - https://www.acuite.in/view-rating-criteria-14.htm

Note on complexity levels of the rated instrument

https://www.acuite.in/criteria-complexity-levels.htm

Rating History (Upto last three years)

Name of Instrument/ Amount

Date Term Ratings/Outlook
Facilities (Rs.Crore)
ACUITE A- /Stable
Term Loans Long Term 2.56
(Reaffirmed)
ACUITE A- /Stable
Cash Credit Long Term 38.50
(Reaffirmed)
ACUITE A- /Stable
Dropline Overdraft Long Term 12.00
(Reaffirmed)
Inland/ Foreign Letter of ACUITE A2+
06-Sep-2019 Short Term 20.00
Credit (Reaffirmed)
ACUITE A2+
Bank Guarantee Short Term 225.00
(Reaffirmed)
Bid Bond Bank ACUITE A2+
Short Term 6.00
Guarantee (Reaffirmed)
ACUITE A2+
Bank Guarantee Short Term 14.30
(Reaffirmed)
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 ACUITE A2+
Bank Guarantee Short Term 29.30
(Reaffirmed)
ACUITE A2+
Bank Guarantee Short Term 50.00
(Reaffirmed)
ACUITE A2+
Bank Guarantee Short Term 30.00
(Reaffirmed)
ACUITE A- /Stable
Proposed Bank Facility Long Term 0.80
(Reaffirmed)
ACUITE A- /Stable
Term Loan Long Term 3.36 (Upgraded)
ACUITE A- /Stable
Cash Credit Long Term 38.50 (Upgraded)
ACUITE A- /Stable
Dropline Overdraft Long Term 12.00 (Assigned)
Inland/ Foreign Letter ACUITE A2+
of Credit Short Term 20.00 (Upgraded)
ACUITE A2+
Bank Guarantee Short Term 225.00 (Upgraded)
18-June-2018 Bid Bond Bank ACUITE A2+
Guarantee Short Term 6.00 (Upgraded)
ACUITE A2+
Bank Guarantee Short Term 14.30 (Upgraded)
ACUITE A2+
Bank Guarantee Short Term 29.30 (Assigned)
ACUITE A2+
Bank Guarantee Short Term 50.00 (Assigned)
ACUITE A2+
Bank Guarantee Short Term 30.00 (Assigned)
ACUITE BBB+/ Stable
Term Loan Long Term 4.22 (Upgraded)
ACUITE BBB+/ Stable
Cash Credit Long Term 38.50 (Upgraded)
ACUITE A2
Bank Guarantee Short Term 225.00 (Upgraded)
ACUITE A2
Letter of Credit Short Term 20.00 (Upgraded)
ACUITE A2
Bank Guarantee Short Term 10.00 (Assigned)
15-June-2017
ACUITE A2
Bank Guarantee Short Term 30.00 (Assigned)
ACUITE BBB/ Stable
Cash Credit Long Term 38.50 (Assigned)
ACUITE BBB/ Stable
Term Loan Long Term 4.57 (Assigned)
ACUITE A3+
Bank Guarantee Short Term 150.00 (Assigned)
31-March-2016 ACUITE A3+
Letter of Credit Short Term 20.00 (Assigned)

*Annexure – Details of instruments rated

Date of Coupon Maturity Size of the

Name of the Ratings/Outlook
Issuance Rate Date Issue (Rs. Cr.)
Facilities
Not Not Not ACUITE A- /Stable
Term Loans 2.56
Applicable Applicable Applicable (Reaffirmed)
Not Not Not ACUITE A- /Stable
Cash Credit 38.50
Applicable Applicable Applicable (Reaffirmed)
Not Not Not ACUITE A-
Dropline Overdraft 12.00
Applicable Applicable Applicable (Withdrawn)

Acuité Ratings & Research Limited (erstwhile SMERA Ratings Limited) www.acuite.in
 Not Not Not ACUITE A-/Stable
Cash Credit 20.00
Applicable Applicable Applicable (Assigned)
Inland/ Foreign Not Not Not ACUITE A2+
20.00
Letter of Credit Applicable Applicable Applicable (Reaffirmed)
Not Not Not ACUITE A2+
Bank Guarantee 225.00
Applicable Applicable Applicable (Reaffirmed)
Bid Bond Bank Not Not Not ACUITE A2+
6.00
Guarantee Applicable Applicable Applicable (Reaffirmed)
Not Not Not ACUITE A2+
Bank Guarantee 14.30
Applicable Applicable Applicable (Reaffirmed)
Not Not Not ACUITE A2+
Bank Guarantee 29.30
Applicable Applicable Applicable (Reaffirmed)

Not Not Not 70.00 ACUITE A2+

Bank Guarantee (Enhanced from
Applicable Applicable Applicable (Reaffirmed)
Rs.50.00 Cr.)

Not Not Not 60.00 ACUITE A2+

Bank Guarantee (Enhanced from
Applicable Applicable Applicable (Reaffirmed)
Rs.30.00 Cr.)
Not Not Not ACUITE A2+
Bank Guarantee 30.00
Applicable Applicable Applicable (Assigned)

Acuité Ratings & Research Limited (erstwhile SMERA Ratings Limited) www.acuite.in
Contacts

Analytical Rating Desk

Aditya Gupta Varsha Bist
Head - Corporate and Infrastructure Sector Ratings Manager - Rating Desk
Tel: 022-49294041 Tel: 022-49294011
[email protected] [email protected]

Deepesh Pamnani
Analyst - Rating Operations
Tel: 011-49731315
[email protected]

About Acuité Ratings & Research:

Acuité Ratings & Research Limited (Erstwhile SMERA Ratings Limited) is a full-service Credit Rating
Agency registered with the Securities and Exchange Board of India (SEBI). The company received RBI
Accreditation as an External Credit Assessment Institution (ECAI), for Bank Loan Ratings under BASEL -II
norms in the year 2012. Since then, it has assigned more than 6,000 credit ratin gs to various securities,
debt instruments and bank facilities of entities spread across the country and across a wide cross
section of industries. It has its Registered and Head Office in Mumbai.

Disclaimer: An Acuité rating does not constitute an audit of the rated entity and should not be treated as a
recommendation or opinion that is intended to substitute for a financial adviser's or investor's independent assessment
of whether to buy, sell or hold any security. Acuité ratings are based on the data and information provided by the issuer
and obtained from other reliable sources. Although reasonable care has been taken to ensure that the data and
information is true, Acuité, in particular, makes no representation or warranty, expressed or implied with respect to the
adequacy, accuracy or completeness of the information relied upon. Acuité is not responsible for any errors or omissions
and especially states that it has no financial liability whatsoever for any direct, indirect or consequential loss of any kind
arising from the use of its ratings. Acuité ratings are subject to a process of surveillance which may lead to a revision in
ratings as and when the circumstances so warrant. Please visit our website (www.acuite.in) for the latest information on
any instrument rated by Acuité.

Acuité Ratings & Research Limited (erstwhile SMERA Ratings Limited) www.acuite.in