| Konstelec Engineers Limited | ||||||
| Ratings downgraded to 'Crisil BB+ / Stable / Crisil A4+ ' | ||||||
| Rating Action | ||||||
| ||||||
| Note: None of the Directors on Crisil Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||||
| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale Crisil Ratings has downgraded its ratings on the bank loan facilities of Konstelec Engineers Limited (KEL) to ‘Crisil BB+/Stable/Crisil A4+’ from ‘Crisil BBB-/Stable/Crisil A3’.
The downgrade reflects moderation in KEL’s business risk profile on account of the dip in operating margins and stagnation in revenues in the last fiscal, and a continued moderation in the business risk profile in H1 of fiscal 2026. Amid moderation in scale and operating profitability, the working capital cycle of the company remains stretched as reflected in 371 Gross Current Asset (GCA) Days as on March 31,2025 as against 291 GCA Days as on March 31,2024. High GCA days are a result of high debtor days which stood at 126 days as on March 31,2025 and 101 days as on September 30, 2025.
Decline in operating profitability along with decline in scale of operations has led to pressure on the debt protection metrics of the company with interest coverage ratio moderating to 1.80 times for H1 of fiscal 2026. Stretch in working capital cycle has also impacted on the liquidity position of the company wherein the bank utilization limit has averaged over 95% for the past twelve months. While the company has a sizeable orderbook, successful execution of orders and its impact on the business risk profile remains to be seen.
The ratings continue to reflect extensive experience of the promoters and reputed clientele and moderate capital structure. These strengths are partially offset by working capital intensive nature of operations and susceptibility of performance of the company to delays in erection and commissioning work. |
Analytical Approach Crisil Ratings has analyzed the standalone business and financial risk profile of KEL |
Key Rating Drivers - Strengths Extensive experience of promoters and reputed clientele: Promoters of the company have technical qualifications and have experience of over two decades in the engineering services industry. This has led to a deep understanding of industry dynamics and established market position and long standing relationships with key stakeholders.
Experience of the promoters has resulted in to long standing relationships with reputed clients like SW Steel Limited, Indian Oil Corporation Limited, Hindustan Petroleum Corporation Ltd and Bharat Petroleum Corporation Limited, Reliance Industries Limited and National Aluminium Company Limited among others. This has led to a healthy unexecuted order book of Rs 420-430 Cr as on November 30,2025. Steady execution of order book leading to sustained growth in scale will remain monitorable.
Moderate capital structure: Financial risk profile of the company remains moderate marked by networth of Rs 100 Cr as on September 30,2025 as against moderate reliance on external debt reflected in gearing of 0.82 times as on September 30,2025 as against 0.81 time as on March 31,2025 and 0.59 time March 31,2024. |
Key Rating Drivers - Weaknesses Working Capital intensive nature of operations: Operations of the company are working capital intensive reflected in GCA of 371 days as on March 31,2025 as against 291 days as on March 31, 2024. High GCA days were a result of high debtor and inventory days consisting of unbilled revenue.
Debtor days have remained high at 101 days as on September 30,2025 as against 120 days as on March 31,2025. Inventory days have increased to 251 days as on September 30,2025 as against 235 days as on March 31, 2025. These working capital requirements are financed through creditor and bank lines.
Susceptibility to delay in erection and commissioning work: KEL does not undertake any civil construction activities and is responsible for installing and commissioning of electromechanical equipment at the customer's site. This makes KEL’s business susceptible to completion of civil engineering activities despite having a healthy book order position. Delay in execution of orders or cancellation of orders can adversely affect the scale and operating profitability of company as reflected in moderation of revenue and margins. |
Liquidity Stretched Liquidity position of the company remains stretched marked by a bank limit utilization which averaged at 96% for fund-based limits and 90% for non-fund based limits for the past twelve months ended November 2025. Net cash accruals are estimated to be over Rs 8-8.5 Cr for fiscal year 2026 as against repayment obligations of Rs 2-2.5 Cr. Company does not have any major debt fund capex plans over the medium term. Cash and cash equivalents as on September 30, 2025 stood at Rs 24.5 Cr however majority of it is lien marked. |
Outlook Stable Crisil Ratings’ believes KEL's business risk profile will remain supported by the promoter’s experience and healthy order book with improved business risk profile. |
Rating sensitivity factors Upward factors:
Downward factors:
|
About the Company Incorporated by Mr Biharilal Ravilal Shah in 1989, Konstelec is based in Mumbai. It executes contracts for installing, testing, commissioning, and maintaining electrical equipment for industries such as petrochemicals, chemicals, cement, and textiles. |
Key Financial Indicators
|
Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
|
| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Criteria Details
|