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BIL INFRATECH LIMITED

Ratings
Facilities Amount
(Rs. crore)
Ratings
1
Remarks
Long-term Bank
Facilities
10 CARE BB+
[Double B plus]
Revised from CARE BBB- (SO)
[Triple B minus (structured obligation)]
Long/
Short Term Bank
Facilities
100 CARE BB+/CARE A4+
[Double B plus/ A Four Plus]
Revised from CARE BBB- (SO)/CARE A3 (SO)
[Triple B minus (structured obligation)]/
A Three (structured obligation)]
Long/Short Term Bank
Facilities
36 CARE BB+/CARE A4+
[Double B plus/ A Four Plus]
Revised from In-principle CARE BBB-(SO)/
CARE A3 (SO) [Triple B minus(structured
obligation)/ A Three (structured obligation)]
Total facilities* 146
* Backed by Letter of Comfort provided/to be provided by Binani Industries Ltd.
Rating Rationale
The ratings assigned to the bank facilities of Binani Infratech Ltd (BILIL) were based on credit enhancement in the form of Letter
of Comfort by Binani Industries Ltd (BIL). BILs rating, however, has been revised from CARE BBB- to CARE BB due to
significant weakening of the financial risk profile of its key subsidiary, Binani Cement Ltd. (BCL), on account of attachment of
BCLs bank accounts by the Sales Tax Department, Rajasthan, on non-payment of dues as well as significant underperformance of
BCL during 9MFY14 (refers to the period April 1 to December 31). Since the credit enhancement of BIL does not provide much
enhancement to the credit profile of BILIL, a view on the standalone credit profile of BILIL has been taken.
The ratings assigned to BILIL are constrained by the short track record of execution of orders, low profitability margins, high
average collection period, weakened credit profile of the promoter group, intense competition from the existing established
players, volatile input prices and risk associated with the delay in project or receipt in payments. The ratings, however, draw
strength from the experience of the promoters, satisfactory order book position, tie up with reputed technical collaborators and
comfortable capital structure. The ratings also factor in the improvement in the financial performance of the company in FY13
(refers to the period April 1 to March 31) and 10MFY14. The steady flow of orders and their timely execution, effective
management of working capital, containment of operating cost and improvement in profitability would remain the key rating
sensitivities.
Background
BILIL was promoted by the Braj Binani group in July, 2010. The company is a wholly owned subsidiary of BIL, the holding
company of the group (rated CARE BB). The group has a presence in cement, zinc, glass fibre and downstream composite
products with in-house engineering & construction expertise as well.
BILIL is engaged in executing turnkey projects for cement plants, power plants, bulk & powder material handling systems,
mineral beneficiation and infrastructure development projects (both civil & structural) and commenced commercial operation
from October, 2010.
Credit Risk Assessment
Long track record and experience of the group
The Braj Binani group is a well-diversified industrial house with a 138 year history behind it. The group is actively working in the
core sectors of cement, zinc, glass fibre and downstream composite products. It has an established track record and has also been
involved in design engineering, procurement, project and construction management in cement, zinc, power and glass
manufacturing facilities.
Deterioration in credit profile of the group
During February 2014, the Sales Tax Department, Rajasthan, attached the bank accounts of Binani Cement Ltd, the flagship
company of the group on non-payment of over Rs.185 crore tax dues by the company. As the collection accounts of the company

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Complete definitions of the ratings assigned are available at www.careratings.com and in other CARE publications

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are located in Rajasthan, the company is facing severe liquidity crunch. BIL, the holding company of BILIL, is heavily reliant on
BCL both in terms of revenue (over 80% of standalone revenue of BIL is received from BCL) as well as funding support to meet
its debt obligations. BIL is therefore expected to be adversely impacted by the liquidity issues faced by BCL.
Satisfactory order book position of BILIL
Though BILIL was initially formed to execute orders for the group, it currently has no exposure to group companies in its order
book. As on January 31, 2014, BILIL had an order book of Rs.567.9 crore (4.44x of gross billing for FY13), as against an order
book of Rs.532 crore as on March 1, 2013, from reputed clients both in the public sector and private sector.
Tie up with reputed technical collaborators and sub-contractors
The company has tied up with reputed technical collaborators for basic engineering & design guarantee and supervision of
equipment erection, engineering-project and equipment supply, etc. Furthermore, the company has entered into
subcontracting agreements for the various ongoing projects with experienced sub-contractors.
Low profitability margins
BILIL commenced operation from October, 2010 and as such has a track record of only three and half years. However, the order
book and sales have grown significantly since inception. Accordingly, the profitability margins also improved over the period.
The PBILDT margin was on the lower side on account of payments made to consortium partners for garnering the orders for
which the company cannot qualify on a standalone basis due to small size and short track record. Lower PBILDT margin resulted
in PAT margin remaining low. Interest coverage, however, remained comfortable.
The overall gearing ratio, though deteriorated due to increased bank borrowings to support increased scale of operation,
continued to be satisfactory as on March 31, 2013 at 0.52x.
In 10MFY14, BILIL recorded net profit of Rs.5.85 crore on a total operating income of Rs.227.87 crore as against loss of Rs.4.3
crore on an operating income of Rs.68.5 crore in 9MFY13.
High average collection period
The average collection period remained high at 129 days in FY13 (125 days in FY12) owing to significant amount of execution
happening in the last quarter of the year. Out of the total debtor outstanding of Rs.40.39 crore as on March 31, 2013, BILIL has
recovered Rs.37.70 crore. Furthermore, BILIL has also been able to match payments to its creditors to certain extent which
resulted in improvement in operating cycle to 63 days in FY13 as compared to with 98 days in FY12.
Volatile input prices
Steel and cement are the major input for any construction company, the prices of which are volatile. The company does not have
any long term sourcing arrangement with its suppliers and is exposed to uncertainty with respect to price fluctuation of raw
materials. Out of the total order book of the company aggregating Rs.567.90 crore as on January 31, 2014, contracts aggregating
Rs.329.76 crore (around 60%) have price escalation clause linked to it, the balance are fixed price contract. As such the company
is exposed to volatility in raw material prices. However, given the volatile price scenario, the company is at present selective in
accepting orders and negotiates for supply of materials by the client.
Intense competition from the existing established players
The company being a new player in the market with a limited track record of executing orders and as such faces intense
competition from the big and established players in the industry. However, the group is well known in the industry and their
established presence is likely to help the company in garnering orders.
Prospects
Currently, the scenario in the Indian construction sector appears challenging due to sluggishness in the flow of new orders, slow
execution of the existing order book due to problems related to land acquisition and other issues, obtaining requisite clearances,
labour shortage, etc. Additionally, the sector is also facing problems relating to high interest costs, elongated working capital
cycles (due to delays in realizing payments from clients and piling inventory) and consequent increase in debt levels. However,
the long-term outlook appears satisfactory on the back of major investment expected both from government and private sectors
on infrastructure development.
BILIL within a short span of around three and half years has shown considerable growth in its operation. However, steady flow of
orders & their successful execution, managing working capital requirement, containment of operating cost and improvement of
profitability would be crucial.

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Financial Performance
(Rs. Cr)
For the period ended / as at March 31, 2011 2012 2013
12m, A
Working Results

Net Sales 5.42 55.12 124.75
Total operating income 5.50 65.49 127.83
PBILDT 0.003 1.37 4.17
Depreciation 0.03 0.46 1.53
Interest 0.02 0.42 1.37
PAT (after deferred. tax) (0.03) 0.35 0.81
Gross cash accruals (GCA) 0.00 0.79 2.22
Financial Position

Equity share capital 5.00 15.00 15.00
Tangible networth 4.97 14.95 15.60
Total capital employed 4.97 16.79 23.69
Key Ratios

Growth (%)

Growth in Total income (%) - High 95.19
Growth in PAT (after deferred tax) (%) - NM 133.14
Profitability (%)

PBILDT margin 0.06 2.09 3.26
PAT margin (0.57) 0.53 0.63
ROCE

Solvency

Debt equity ratio (times) 0.00 0.00 0.00
Overall gearing ratio (times) 0.00 0.12 0.52
Interest coverage (times) 0.16 3.24 3.04
Term Debt/ GCA (times) 0.00 0.00 0.00
Liquidity

Current ratio (times) 9.66 1.29 1.13
Quick ratio (times) 9.41 1.25 1.13
Turnover

Average collection period (days) 98 125 129
Average inventory period (days) 6 6 4
Average creditors period (days) 0 34 70
Operating cycle (days) 104 98 63
NM~ Not meaningful
Analyst Contact
Name: Mamta Muklania
Tel # 033-4018 1600
Mobile # 98304 07120
Email: mamta.khemka@careratings.com
(This follows our brief rationale for entity published on 12 March, 2014)


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DISCLAIMER
CAREs ratings are opinions on credit quality and are not recommendations to sanction, renew, disburse or recall the concerned bank facilities or to buy, sell or
hold any security. CARE has based its ratings on information obtained from sources believed by it to be accurate and reliable. CARE does not, however,
guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of
such information. Most entities whose bank facilities/instruments are rated by CARE have paid a credit rating fee, based on the amount and type of bank
facilities/instruments.


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