CRISIL has assigned its ‘B+/Stable/P4’ ratings to Sekhar Deepak Constructions Ltd’s (SDCL’s) bank facilities. The ratings reflect SDCL’s, working capital intensive operations, exposure to risks relating to small scale of operations and geographically concentrated revenue profile, and below-average financial risk profile. These weaknesses are partially offset by the benefits that the company derives from its comfortable order book position and promoters experience in executing water supply projects.

Outlook: Stable
CRISIL believes that SDCL will maintain its business risk profile over the medium term on back of its comfortable order book. The outlook may be revised to ‘Positive’, if SDCL diversifies its revenue profile and increases its scale of operations and operating margins significantly. Conversely, the outlook may be revised to ‘Negative’, if the company undertakes any significant debt-funded capital expenditure or fails to execute its projects on time, or bids aggressively leading to pressure on margins.

About the Company
Set up in 1994 as a proprietorship concern by Mr. Sekhar, Chennai-based SDCL was reconstituted as a private limited company and got its current name in 2002. SDCL is a civil construction company that undertakes underground drainage and treatment plant projects primarily for Tamil Nadu Water Supply and Drainage Board and Chennai Metropolitan Water Supply and Sewerage Board.

SDCL reported a provisional profit after tax (PAT) of Rs.4 million on net sales of Rs.155 million for 2009-10 (refers to financial year, April 1 to March 31) against a PAT of Rs.4 million on net sales of Rs.151 million for 2008-09.