Rating Advisory

November 06, 2020 | Mumbai Adarsh BirmechaOriginal Template1 23

O. G. Enterprises
Advisory as on November 06, 2020

This rating advisory is provided in relation to the rating of O. G. Enterprises

The key rating sensitivity factors for the rating include:

Upward factors
 Sustenance of operating profitability at over 10.1% combined with improvement in the working
capital cycle
 Diversification of customer and geographical base

Downward factors
 Delays in execution of orders leading to gross current assets (GCAs) increasing to over 180
days
 Stretch in receivables
 Debt-funded capital expenditure leading to significant deterioration in debt protection metrics

CRISIL Ratings has a policy of keeping its accepted ratings under constant and ongoing
monitoring and review. Accordingly, it seeks regular updates from companies on business and
financial performance. CRISIL is yet to receive adequate information from O. G. Enterprises
(OGE) to enable it to undertake a rating review. CRISIL is taking all possible efforts to get the
rated entity to cooperate with its rating process for enabling it to carry out the rating review.

CRISIL views information availability risk as a key factor in its assessment of credit risk. (Please
refer to CRISIL Ratings publication dated April 30, 2012 - 'Information Availability - a key risk
factor in credit ratings')

If XXX continues to delay the provisioning of information required by CRISIL to undertake a rating
review then, in accordance with circulars SEBI/HO/MIRSD/MIRSD4/CIR/P/2016/119 dt.Nov 1,
2016, SEBI/HO/MIRSD/ MIRSD4/CIR/P/2017/71dt.June 30,2017 and
SEBI/HO/MIRSD/CRADT/CIR/P/2020/2 dt January 3, 2020 issued by Securities and Exchange
Board of India, CRISIL will carry out the review based on best available information and issue a
press release.

About the Firm

Established in 2015 in Arunachal Pradesh as a proprietorship concern of Mr Obang Gao, OGE
undertakes civil construction projects related to roads, bridges, and buildings for the Arunachal
Pradesh government.

Please note: This advisory should not be construed as a rating reaffirmation.

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 Rating Rationale
August 27, 2019 | Mumbai

O. G. Enterprises
'CRISIL BB-/Stable' assigned to bank debt

Rating Action
Total Bank Loan Facilities Rated Rs.6 Crore
Long Term Rating CRISIL BB-/Stable (Assigned)
1 crore = 10 million
Refer to annexure for Details of Instruments & Bank Facilities

Detailed Rationale
CRISIL has assigned its 'CRISIL BB-/Stable' rating to the long-term bank facilities of O. G. Enterprises (OGE).

The rating reflects the extensive experience of the proprietor in the civil construction industry. These strengths are
partially offset by modest scale of operations and large working capital requirement.

Key Rating Drivers & Detailed Description

Strengths:
* Extensive industry experience of the proprietor: The proprietor's experience of about a decade, strong
understanding of the local market dynamics, and healthy relationships with customers and suppliers should continue
to support the business.

Weakness:
* Small scale of operations: The firm's scale remains small, even as revenue increased to Rs 8.20 crore in fiscal
2019 because of execution of older orders from government departments.

* Large working capital requirement: The working capital-intensive operations are reflected in gross current assets
of 179 days as on March 31, 2019 (173 days a year earlier) driven by sizeable receivables.

Liquidity: Stretched
OGE has stretched liquidity marked by cash and cash equivalents of Rs. 0.16 crore as on March 31, 2019 and cash
accrual is expected at Rs 0.47 crore and will be sufficient to meet term loan obligation of Rs 0.12 crore annually over
the medium term.
Outlook: Stable
CRISIL believes OGE's business risk profile will improve over the medium term backed by the extensive experience
of the proprietor.

Rating sensitivities factors

Upward factors
* Sustenance of operating profitability of over 10.1% combined with improvement in working capital position.
* Diversification of customer and geographical base.

Downward factors
* Delays in execution of orders leading to GCA days increasing over 180 days.
* Stretch in receivables.
* Debt funded capital expenditure leading to significant deterioration in debt protection metrics

About the Firm

Established in 2015 in Arunachal Pradesh as a proprietorship concern of Mr Obang Gao, OGE undertakes civil
construction projects related to roads, bridges, and buildings for the Arunachal Pradesh government.

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Key Financial Indicators
As on / for the period ended March 31 Units 2019* 2018
Operating income Rs crore 8.20 7.46
Reported profit after tax (PAT) Rs crore 0.37 0.32
PAT margin % 4.5 4.3
Adjusted Debt/Adjusted Networth Times 0.69 0.80
Interest coverage Times 4.3 4.2
*Provisional

Any other information: Not applicable

Note on complexity levels of the rated instrument:

CRISIL complexity levels are assigned to various types of financial instruments. The CRISIL complexity levels are
available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL complexity levels for instruments that
they consider for investment. Users may also call the Customer Service Helpdesk with queries on specific
instruments.

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3
Annexure - Details of Instrument(s)
Date of Coupon Maturity Issue Rating Assigned
ISIN Name of Instrument
Allotment Rate (%) Date Size (Rs Cr) with Outlook
NA Cash Credit NA NA NA 1.84 CRISIL BB-/Stable
Proposed Fund Based
NA NA NA NA 4.16 CRISIL BB-/Stable
Bank Limits

Annexure - Rating History for last 3 Years

Start of
Current 2019 (History) 2018 2017 2016
2016

Outstanding
Instrument Type Rating Date Rating Date Rating Date Rating Date Rating Rating
Amount

CRISIL
Fund-based Bank LT/S
6.00 BB- -- -- -- -- --
Facilities T
/Stable
All amounts are in Rs.Cr.

Annexure - Details of various bank facilities

Current facilities Previous facilities
Amount Amount
Facility Rating Facility Rating
(Rs.Crore) (Rs.Crore)
CRISIL BB-
Cash Credit 1.84 -- 0 --
/Stable
Proposed Fund-Based CRISIL BB-
4.16 -- 0 --
Bank Limits /Stable
Total 6 -- Total 0 --

Links to related criteria

CRISILs Approach to Financial Ratios
CRISILs Bank Loan Ratings - process, scale and default recognition
Rating criteria for manufaturing and service sector companies

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We are not aware that any user intends to rely on the Report or of the manner in which a user intends to use the Report. In preparing our Report we have not taken into
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Ratings from CRISIL Rating are statements of opinion as of the date they are expressed and not statements of fact or recommendations to purchase, hold, or sell any
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of the stated date of their issue. CRISIL assumes no obligation to update its opinions following publication in any form or format although CRISIL may disseminate its
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CRISIL Ratings may receive compensation for its ratings and certain credit-related analyses, normally from issuers or underwriters of the instruments, facilities, securities

5
or from obligors. CRISIL’s public ratings and analysis as are required to be disclosed under the regulations of the Securities and Exchange Board of India (and other
applicable regulations, if any) are made available on its web sites, www.crisil.com (free of charge). Reports with more detail and additional information may be available
for subscription at a fee – more details about CRISIL ratings are available here: www.crisilratings.com.

CRISIL and its affiliates do not act as a fiduciary. While CRISIL has obtained information from sources it believes to be reliable, CRISIL does not perform an audit and
undertakes no duty of due diligence or independent verification of any information it receives and / or relies in its Reports. CRISIL keeps certain activities of its business
units separate from each other in order to preserve the independence and objectivity of the respective activity. As a result, certain business units of CRISIL may have
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information received in connection with each analytical process. CRISIL has in place a ratings code of conduct and policies for analytical firewalls and for managing
conflict of interest. For details please refer to: https://www.crisil.com/en/home/our-businesses/ratings/regulatory-disclosures/highlighted-policies.html

CRISIL’s rating criteria are generally available without charge to the public on the CRISIL public web site, www.crisil.com. For latest rating information on any instrument
of any company rated by CRISIL you may contact CRISIL RATING DESK at [email protected], or at (0091) 1800 267 1301.

This Report should not be reproduced or redistributed to any other person or in any form without a prior written consent of CRISIL.

All rights reserved @ CRISIL