Press Release

HMM Infra Limited (Revised)

April 04, 2023

Facilities/Instruments Amount (₹ crore) Rating1 Rating Action

52.37
Long Term Bank Facilities CARE BBB; Stable Reaffirmed
(Enhanced from 48.84)
80.00
Long Term / Short Term Bank Facilities CARE BBB; Stable / CARE A3+ Reaffirmed
(Enhanced from 55.35)
Details of instruments/facilities in Annexure-1.

Rationale and key rating drivers

The reaffirmation in the ratings assigned to the bank facilities of HMM Infra Limited (HMM) derive strength from the long track
record of operations of the company, experienced promoters, healthy profitability margins, healthy & growing order book, and
satisfactory financial performance. Further, the ratings also take cognizance of recent orders received from Northern railways as
contractor for civil construction in Punjab and Himachal Pradesh which is expected to reduce their dependency on other
contractors for the same and will grow its scale of operation. The ratings, however, are constrained by the customer concentration
risk, elongated operating cycle and fragmented & competitive nature of the industry coupled with susceptibility of profitability
margins to raw material price variability.

Rating sensitivities: Factors likely to lead to rating actions

Positive factors
• Increase in TOI above Rs. 300 crores while maintaining PBILDT margins above 12.00 % on a sustained basis
• Significant improvement in the liquidity position of the company with reduced reliance on external working capital and
shortening of the Gross Current asset days to ~150 days.
Negative factors
• Decline in operating income to less than Rs. 150 Cr along with PBILDT margins below 9% on a sustained basis.
• Any major deterioration in the capital structure arising from debt funded capex, increased working capital borrowings
leading to an above 1.25x overall gearing ratio.
• Deterioration in the liquidity profile with operating cycle elongating further to above 150 days and remaining there on a
consistent basis.

Analytical approach: Standalone

Outlook: Stable
The Stable outlook reflets that the entity is likely to sustain its operational and financial performance in the medium term backed
by its healthy and growing order book position and experienced promoters of the company.

Key strengths
Satisfactory financial risk profile
HMM has achieved a total operating income (TOI) of Rs. 224.90 Cr which exhibits a growth of ~24% over the previous year TOI
of Rs 181.48 Cr in FY21.The company has been growing consistently over the past 3 years at the CAGR of 15.34% on account of
better orders executed in terms of ticket size as well as profitability. The PBILDT margins of the company have remained
comfortable and improved to 12.76% in FY22 from 12.09% in FY21. The PAT margins also followed the similar trajectory and
improved to 6.94% from 5.92% in FY21 due to reduced interest cost. The capital structure of the company moderated and stood
at a satisfactory level of 0.95x as on March 31, 2022 against 0.92x as on March 31,2021. The moderation is on count of GECL
loans taken and increase mobilisation advances. The coverage indicators of the company improved as marked by interest coverage
ratios and TD/GCA of 5.07x and 2.71x as on March 31, 2022 as against 3.81x and 3.06x respectively.

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Complete definition of the ratings assigned are available at www.careedge.in and other CARE Ratings Ltd.’s publications

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Reputed client base with a healthy order book position

The client profile of HMM remains strong and includes some of the reputed players like Larsen & Toubro Limited, Afcons
Infrastructure Limited, Oriental Structural Engineers Private Limited, etc. As on February 28, 2023, the company had a healthy
order book position of Rs. 1121.06 crore, providing medium-term revenue visibility

Long track record of operations of the company and experienced promoters

HMM has been engaged in the engineering industry for more than two decades. HMM is led by Mr. Bhupinder Goel (Managing
Director), Mr. Ajay Mittal (Director; cousin of Mr. Bhupinder Goel), Mr. Mannan Goel (Director; Son of Mr. Bhupinder Goel), Mrs.
Alka Goel (Director; Wife of Mr. Bhupinder Goel), Mr. Lokesh Bansal (Independent Director) and Mr. Vineet Aggarwal (Independent
Director) who have experience ranging from ~15 years to ~45 years in the industry. The day-to-day operations of company are
mainly handled by Mr. Bhupinder Goel (handling the finance function), Mr. Ajay Mittal (handling the administration) and Mr.
Mannan Goel (handling the marketing function). The directors of the company are ably supported by a well-qualified team of
professionals who are highly experienced in their respective domains.

Key weaknesses
Customer concentration risk:
HMM faces customer concentration risk with the top-5 and top-10 clients accounting for ~40% and ~55%, respectively, of the
total income in FY22 [PY: ~55% from top-5 customers and ~78% from top 10 customers. The risk, however, is mitigated to
some extent as the top revenue contributors are well established players and enjoy a strong position in the industry. Furthermore,
the revenue concentration has been consistently going down over the past three years as the company adds new clients to its
portfolio every year. Going forward, management intends to increase their focus on Civil construction as well. The new order from
Northern Railways have civil work associated along with bridge installation. This will reduce company’s dependency on other
contractors to finish prior civil work for installation of any bridge.

Competitive nature of the industry coupled with tender based operations:

The construction industry in India is highly fragmented with a large number of small and mid-sized players. This, coupled with
tendering process in order procurement results into intense competition within the industry, which constrains the scale and
profitability of companies operating in the industry.

Susceptibility of margins to fluctuations in raw material prices and foreign exchange fluctuations:
The operations of HMM are highly raw material intensive in nature with the raw material cost constituting as the major cost of
production. The prices of the key raw materials (steel) are fluctuating in nature as they depend on the demand and supply
scenario. This exposes the margins of the company to any adverse movement in the raw material prices. However, in some of
the contracts, wherein the duration of the project extends to more than 6 months, there exists an escalation clause to mitigate
the company’s risk of raw material price volatility.

Liquidity: Adequate
The Liquidity profile of the company is adequate as marked by repayment obligation of Rs. 5.10 Cr against projected gross cash
accruals Rs. 20.66 crores in FY23. The company had free cash and bank balance of ~Rs.2.00 Cr as on March 22, 2023. Further,
the CC utilisation of the company over the past 12 months ending December 22 is 76.13% which provide sufficient cushion to
the liquidity profile.

Applicable criteria
Policy on default recognition
Financial Ratios – Non financial Sector
Liquidity Analysis of Non-financial sector entities
Rating Outlook and Credit Watch
Manufacturing Companies
Short Term Instruments
Construction

About the company and industry

Industry Classification

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Macro Economic Sector Industry Basic Industry

Indicator
Industrials Capital Goods Industrial Products Iron & Steel Products

HMM Infra Limited (HMM; earlier known as HMM Coaches Limited) was incorporated in 1996. The company is led by Mr. Bhupinder
Goel (Managing Director), Mr. Ajay Mittal (Director; Cousin of Mr. Bhupinder Goel), Mr. Mannan Goel (Director; Son of Mr.
Bhupinder Goel), Mrs. Alka Goel (Director; Wife of Mr. Bhupinder Goel), Mr. Lokesh Bansal (Independent Director) and Mr. Vineet
Aggarwal (Independent Director) who have experience ranging from ~15 years to ~45 years in the industry. The company is
mainly engaged into manufacturing and fabricating Box & H Beams, Crane Girders, Composite Steel Plate Girders for ROB (Railway
Over Bridges), Built up Beams, Bolted Pipe structures, Galvanized Structures for Solar Power plants, etc. The company has a
single manufacturing facility in Ambala, Haryana with an installed capacity of 3000 Metric Tonnes per month, as on March 31,
2020.

Brief Financials (₹ crore) March 31, 2021 (A) March 31, 2022 (A) 9MFY23 (UA)

Total operating income 181.47 224.91 161.41

PBILDT 21.94 28.70 22.44

PAT 10.74 15.61 12.01

Overall gearing (times) 0.92 0.95 0.54*

Interest coverage (times) 3.81 5.63 5.57

A: Audited; UA: Unaudited; Note: the above results are latest financial results available
*Overall gearing of the company does not include Mobilisation advances, due to which the gearing significantly improved

Status of non-cooperation with previous CRA: NA

Any other information: NA

Rating history for the last three years: Please refer Annexure-2

Covenants of the rated instruments/facilities: Detailed explanation of the covenants of the rated instruments/facilities is
given in Annexure-3

Complexity level of the various instruments rated: Annexure-4

Lender details: Annexure-5

Annexure-1: Details of instruments/facilities

Rating
Date of
Maturity Size of the Assigned
Name of the Issuance Coupon
ISIN Date (DD- Issue along with
Instrument (DD-MM- Rate (%)
MM-YYYY) (₹ crore) Rating
YYYY)
Outlook
Fund-based - CARE BBB;
- - - 45.00
LT-Cash Credit Stable

Fund-based - CARE BBB;

- - Oct 2026 7.37
LT-Term Loan Stable
CARE BBB;
Non-fund-
- - - 80.00 Stable / CARE
based - LT/ ST-
A3+

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Bank
Guarantee

Annexure-2: Rating history for the last three years

Current Ratings Rating History

Date(s) Date(s) Date(s) Date(s)

Name of the
and and and and
Sr. No. Instrument/Bank Amount
Rating(s) Rating(s) Rating(s) Rating(s)
Facilities Type Outstanding Rating
assigned assigned assigned assigned
(₹ crore)
in 2022- in 2021- in 2020- in 2019-
2023 2022 2021 2020
1)CARE 1)CARE
CARE BBB; BBB;
Fund-based - LT-
1 LT 45.00 BBB; - Stable Stable -
Cash Credit
Stable (29-Mar- (23-Mar-
22) 21)
1)CARE 1)CARE
CARE
BBB; BBB;
Non-fund-based - BBB;
Stable / Stable /
2 LT/ ST-Bank LT/ST* 80.00 Stable / - -
CARE A3+ CARE A3+
Guarantee CARE
(29-Mar- (23-Mar-
A3+
22) 21)
1)CARE
CARE BBB;
Fund-based - LT-
3 LT 7.37 BBB; - Stable - -
Term Loan
Stable (29-Mar-
22)
*Long term/Short term.

Annexure-3: Detailed explanation of the covenants of the rated instruments/facilities: NA

Annexure-4: Complexity level of the various instruments rated

Sr. No. Name of the Instrument Complexity Level

1 Fund-based - LT-Cash Credit Simple

2 Fund-based - LT-Term Loan Simple

Non-fund-based - LT/ ST-Bank

3 Simple
Guarantee

Annexure-5: Lender details

To view the lender wise details of bank facilities please click here

Note on the complexity levels of the rated instruments: CARE Ratings has classified instruments rated by it on the basis
of complexity. Investors/market intermediaries/regulators or others are welcome to write to care@careedge.in for any
clarifications.

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About us:
Established in 1993, CARE Ratings is one of the leading credit rating agencies in India. Registered under the Securities and
Exchange Board of India, it has been acknowledged as an External Credit Assessment Institution by the RBI. With an equitable
position in the Indian capital market, CARE Ratings provides a wide array of credit rating services that help corporates raise capital
and enable investors to make informed decisions. With an established track record of rating companies over almost three decades,
CARE Ratings follows a robust and transparent rating process that leverages its domain and analytical expertise, backed by the
methodologies congruent with the international best practices. CARE Ratings has played a pivotal role in developing bank debt
and capital market instruments, including commercial papers, corporate bonds and debentures, and structured credit.

Disclaimer:
The ratings issued by CARE Ratings are opinions on the likelihood of timely payment of the obligations under the rated instrument and are not recommendations to
sanction, renew, disburse, or recall the concerned bank facilities or to buy, sell, or hold any security. These ratings do not convey suitability or price for the investor.
The agency does not constitute an audit on the rated entity. CARE Ratings has based its ratings/outlook based on information obtained from reliable and credible
sources. CARE Ratings does not, however, guarantee the accuracy, adequacy, or completeness of any information and is not responsible for any errors or omissions
and the results obtained from the use of such information. Most entities whose bank facilities/instruments are rated by CARE Ratings have paid a credit rating fee,
based on the amount and type of bank facilities/instruments. CARE Ratings or its subsidiaries/associates may also be involved with other commercial transactions with
the entity. In case of partnership/proprietary concerns, the rating/outlook assigned by CARE Ratings is, inter-alia, based on the capital deployed by the
partners/proprietors and the current financial strength of the firm. The ratings/outlook may change in case of withdrawal of capital, or the unsecured loans brought
in by the partners/proprietors in addition to the financial performance and other relevant factors. CARE Ratings is not responsible for any errors and states that it has
no financial liability whatsoever to the users of the ratings of CARE Ratings. The ratings of CARE Ratings do not factor in any rating-related trigger clauses as per the
terms of the facilities/instruments, which may involve acceleration of payments in case of rating downgrades. However, if any such clauses are introduced and
triggered, the ratings may see volatility and sharp downgrades.

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please visit www.careedge.in

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