Press Release: YFC Projects Private Limited
Press Release: YFC Projects Private Limited
Rating Reaffirmed
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Acuité has withdrawn its long term rating of ‘ACUITE A-‘ (read as ACUITE A minus) on the Rs.12.00 Cr.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 The rating is being withdrawn on account of request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.
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.
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
Applicable Criteria.
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)
Acuité Ratings & Research Limited (erstwhile SMERA Ratings Limited) www.acuite.in
Contacts
Deepesh Pamnani
Analyst - Rating Operations
Tel: 011-49731315
[email protected]
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Acuité Ratings & Research Limited (erstwhile SMERA Ratings Limited) www.acuite.in