Rating Rationale
September 03, 2025 | Mumbai
Konstelec Engineers Limited
Rating outlook revised to 'Stable'; Ratings Reaffirmed; Rated amount enhanced for Bank Debt
 
Rating Action
Total Bank Loan Facilities RatedRs.200 Crore (Enhanced from Rs.147 Crore)
Long Term RatingCrisil BBB-/Stable (Outlook revised from 'Positive'; Rating Reaffirmed)
Short Term RatingCrisil A3 (Reaffirmed)
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 revised its outlook on the long-term bank facilities of Konstelec Engineers Limited (KEL) to ‘Stable’ from ‘Positive’ and has reaffirmed the rating at ‘Crisil BBB-’. The short-term rating has been reaffirmed at ‘Crisil A3’.

 

Revision in outlook reflects the moderation in the business risk profile of the company on account of lower-than-expected scale of operation, moderation in operating margin and stretch in working capital cycle. 

 

Revenue of the company degrew by 10% in fiscal 2025 to Rs 194 Cr as against Rs 215 Cr in fiscal 2024 coupled with a moderation in margins to 6.86% as against 8.65% in fiscal 2024. Moderation in business risk profile was driven by project disruptions and delays in client approval for certified work. Profitability will remain key monitorable over the medium term. Delays in certification by client led to an increase in unbilled inventory which thereby increased the Gross Current Asset (GCA) from 291 days as on March 31, 2024, to 371 days as on March 31, 2025. 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 in the engineering services industry leading to reputed clientele and moderate financial risk profile. These strengths are partially offset by working capital intensive nature of operations and susceptibility of KEL’s scale to any delays in erection and commissioning work.

Analytical Approach

Crisil Ratings has analyzed the standalone business and financial risk profile of KEL.

Key Rating Drivers & Detailed Description

Strengths:

  • Extensive experience of promoters and reputed clientele: Strong technical qualifications combined with experience of promoters spanning over two decades in the engineering services industry has led to an established market position.

 

On the back of this experience orders, the company has been able to develop strong relationships with reputed players like JSW 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. which has helped the company to strengthen its order book as indicated by healthy order book over Rs 400 crore as of July 2025.

 

  • Moderate financial risk profile: KEL has a moderate capital structure marked by total outside liabilities to adjusted networth of 0.81 time on a comfortable net worth base of Rs 98.61 as on March 31, 2025. Moderation in operating profitability led to a decline in debt protection metrics, however they remain average as indicated by interest coverage ratio of 2.00 times and net cash accruals to adjusted debt at 0.08 time for fiscal 2025.

 

Weaknesses:

  • Working Capital Intensive Nature of Operations: The operations of the company continue to remain working capital intensive as reflected by GCA of 371 days as on March 31,2025 as against 291 days as on March 31,2024. Increase in working capital cycle to be driven by increase in inventory days.

 

Debtor days of the company remain high between 100-130 days over the past three fiscal years. These working capital requirements are financed through creditors 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 revenue susceptible to completion of civil engineering activities despite having a healthy order book positon. Delay in getting requisite approvals or completion of civil construction work could impact timelines of the erection and commissioning work and restrict the scale of operations.

Liquidity: Adequate

Liquidity of the company remains adequate with net cash accruals expected over Rs 9 Cr which are sufficient against repayment obligations of Rs 2.0-2.05 Cr. KEL has a cash equivalent balance of Rs 25-27 Cr as on March 31, 2025 which is lien marked. Bank limit utilization is average at 85% for the past 12 months ended May 2025. Company does not have any major debt funded capex plans over the medium term.

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:

  • Sustained improvement in revenue or sustenance of operating margins leading to net cash accruals over Rs 10 Cr on a sustained basis
  • Improvement in working capital cycle with improving GCA days or enhancement in bank limits resulting in average bank limit utilization below 85%.
  • Sustained improvement in financial risk profile
  •  

Downward factors:

  • Decline in revenue or dip in operating profitability leading to lower net cash accruals below Rs 5 Cr
  • Stretch in receivables or pile-up of inventory adversely affecting the liquidity.
  • Any major debt-funded capital expenditure or dividend payout, weakening the financial risk profile

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

Particulars

Unit

2025

2024

Revenue

Rs.Crore

193.71

215.42

Profit After Tax (PAT)

Rs.Crore

4.27

9.23

PAT Margin

%

2.18

4.2

Adjusted debt/adjusted networth

Times

0.70

0.48

Interest coverage

Times

2.00

2.89

Any other information: Not applicable

Note on complexity levels of the rated instrument:
Crisil Ratings` complexity levels are assigned to various types of financial instruments and are included (where applicable) in the 'Annexure - Details of Instrument' in this Rating Rationale.

Crisil Ratings will disclose complexity level for all securities - including those that are yet to be placed - based on available information. The complexity level for instruments may be updated, where required, in the rating rationale published subsequent to the issuance of the instrument when details on such features are available.

For more details on the Crisil Ratings` complexity levels please visit www.crisilratings.com. Users may also call the Customer Service Helpdesk with queries on specific instruments.

Annexure - Details of Instrument(s)

ISIN Name Of Instrument Date Of Allotment Coupon Rate (%) Maturity Date Issue Size (Rs. Crore) Complexity Levels Rating Outstanding with Outlook
NA Bank Guarantee NA NA NA 98.55 NA Crisil A3
NA Cash Credit NA NA NA 42.10 NA Crisil BBB-/Stable
NA Letter of Credit NA NA NA 38.65 NA Crisil A3
NA Non-Fund Based Limit NA NA NA 0.20 NA Crisil A3
NA Proposed Fund-Based Bank Limits NA NA NA 20.50 NA Crisil BBB-/Stable
Annexure - Rating History for last 3 Years
  Current 2025 (History) 2024  2023  2022  Start of 2022
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Fund Based Facilities LT 62.6 Crisil BBB-/Stable   -- 22-08-24 Crisil BBB-/Positive / Crisil A3 18-07-23 Crisil BBB-/Stable 31-03-22 Crisil BBB-/Stable Crisil BBB-/Stable
      --   --   -- 07-07-23 Crisil BBB-/Stable   -- --
      --   --   -- 28-06-23 Crisil BBB-/Stable   -- --
Non-Fund Based Facilities ST 137.4 Crisil A3   -- 22-08-24 Crisil A3 18-07-23 Crisil A3 31-03-22 Crisil A3 Crisil A3
      --   --   -- 07-07-23 Crisil A3 / Crisil BBB-/Stable   -- --
      --   --   -- 28-06-23 Crisil A3   -- --
All amounts are in Rs.Cr.
Annexure - Details of Bank Lenders & Facilities
Facility Amount (Rs.Crore) Name of Lender Rating
Bank Guarantee 7.5 ICICI Bank Limited Crisil A3
Bank Guarantee 10 YES Bank Limited Crisil A3
Bank Guarantee 53 Bank of Baroda Crisil A3
Bank Guarantee 17.55 ICICI Bank Limited Crisil A3
Bank Guarantee 10.5 HDFC Bank Limited Crisil A3
Cash Credit 5 YES Bank Limited Crisil BBB-/Stable
Cash Credit 13 Bank of Baroda Crisil BBB-/Stable
Cash Credit 10 ICICI Bank Limited Crisil BBB-/Stable
Cash Credit 14.1 HDFC Bank Limited Crisil BBB-/Stable
Letter of Credit 10 YES Bank Limited Crisil A3
Letter of Credit 14 Bank of Baroda Crisil A3
Letter of Credit 9.75 ICICI Bank Limited Crisil A3
Letter of Credit 4.9 HDFC Bank Limited Crisil A3
Non-Fund Based Limit 0.2 Bank of Baroda Crisil A3
Proposed Fund-Based Bank Limits 20.5 Not Applicable Crisil BBB-/Stable
Criteria Details
Links to related criteria
Basics of Ratings (including default recognition, assessing information adequacy)
Criteria for manufacturing, trading and corporate services sector (including approach for financial ratios)

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