Note:- For activities or ratings of instruments falling under the purview of Financial Sector Regulators other than SEBI, the grievance / dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available.
Rating Rationale
Acuité has reaffirmed its long-term rating of ‘ACUITE BBB’ (read as ACUITE triple B) on the Rs.14.50 Cr. bank facilities and its short-term rating of 'ACUITE A3+' (read as ACUITE A three plus) on the Rs.33.00 Cr. bank facilities of Arihant Constructions India Private Limited (Erstwhile Arihant Constructions)(ACIPL). The outlook is ‘Stable’.
Acuite has assigned its long-term rating of 'ACUITE BBB' (read as ACUITE triple B) on the Rs.5.00 Cr. bank facilities and its short-term rating of 'ACUITE A3+' (read as ACUITE A three plus) on the Rs.10.25 Cr. bank facilities of Arihant Constructions India Private Limited (Erstwhile Arihant Constructions)(ACIPL). The outlook is ‘Stable’.
Rationale for rating
The reaffirmation factors in ACIPL’s moderate order book providing near- to medium-term revenue visibility, adequate liquidity supported by sufficient internal cash accruals against minimal debt repayments and moderate financial risk profile. The company also benefits from an established presence in infrastructure construction with a long operating track record, experienced management, and execution of water, sewerage, and irrigation projects across multiple states, with ongoing geographical and segmental diversification. However, the rating remains constrained by stagnant and modest scale of operations in recent years and working-capital-intensive operations, marked by high utilisation of bank limits and elongated receivable cycles from government entities, which remain a key monitorable.
About the Company
Based in Pune and established in 1983 as a proprietary firm, Arihant Constructions was converted into a partnership in 1991 and later into a private limited company in August 2025 as Arihant Constructions India Private Limited (ACIPL). It is engaged in infrastructure construction, primarily water supply, sewerage, and irrigation projects, executing contracts for government, semi government, and private entities. The directors are Mr. Richee Pramod Shah, Mr. Pramod Popatlal Shah, Mr. Sagar Abhay Shah, Mr. Abhay Popatlal Shah, and Mr. Sachin Vijay Shah.
Unsupported Rating
Not Applicable
Analytical Approach
Acuité has considered the standalone business and financial risk profiles of ACIPL to arrive at this rating.
Key Rating Drivers
Strengths
Experienced management established track record of operations and long association with Government authorities
ACIPL has presence in the infrastructural construction business for over three decades. ACIPL primarily undertakes projects in the water supply and distribution value chain and has executed projects for state municipal bodies. The company executes projects across Maharashtra, Karnataka, and Madhya Pradesh. Additionally, the company has expanded its operations into Odisha and Chhattisgarh, where it has obtained the necessary registrations and licenses to undertake government projects. It is also planning to enter the road construction segment through a joint venture with senior road contractors. The company has an unexecuted order book position of Rs.566.45 Cr. as on Feb 28, 2026.
Moderate financial risk profile
The company has a moderate financial risk profile marked by modest net worth, moderate gearing and debt protection metrics. The gearing level remain below unity with low dependence on external debt. The interest coverage ratio stood healthy at 7.70 times in FY2025, also debt service coverage ratio stood comfortable at 4.01 times in FY2025. However, the tangible net worth stood low at Rs.24.66 Cr. as on March 31, 2025, as compared against Rs.30.69 Cr. as on March 31, 2024, due to withdrawal of capital by the partners.
Weaknesses
Modest scale of operations
The operating performance of the company stood stagnant over the past three fiscal years. The revenue stood at Rs.105.79 Cr. in FY2025 against Rs.109.52 Cr. in FY2024 and Rs.109.43 Cr. in FY2023. The operating profit margin also stood stagnant at 7.32%-7.92% over the past three fiscal years. The PAT margin stood in the range of 5.82%-5.97% over the past three fiscal years. The estimated FY2026 revenue stood at ~Rs.127 Cr.
Going forward, the operating performance is expected to improve as the company is also entering new states such as Chhattisgarh and Odisha and also entering into road construction segment. The company has already received the registration/license to execute government work in these states.
Intensive working capital operations
The gross current asset days (GCA) stood at 180 days in FY2025 against 146 days in FY2024. The elevated GCA days are primarily attributable to a substantial portion of earnest money deposits (EMD) and security deposits. The inventory days stood at 78 days in FY2025 against 64 days in FY2024. The debtor days stood at 17 days in FY2025 against 22 days in FY2024. The majority of the receivables are from government entities, thereby limiting the risk of recovery. The creditor days stood at 43 days in FY2025 against 34 days in FY2024. The utilization of the working capital limits stood high at ~85.65% in the last 6 months ending Feb 2026.
Competitive and fragmented industry
The infrastructural construction sector is marked by the presence of several mid to big sized players. The company faces intense competition from other players. Risk becomes more pronounced as tenders are based on the minimum amount of bidding of contracts. However, the risk is mitigated to an extent as the management has been operating in the industry for more than three decades.
Rating Sensitivities
Potential triggers (individual or collective) for an upward rating action:
Improvement in operating performance with revenues reaching above ~Rs.300 Cr. at stable profitability margins.
Improvement in the working capital cycle.
Potential triggers (individual or collective) for a downward rating action:
Deterioration in operating performance with revenues falling below ~Rs. 100 Cr. or decline in operating margins.
Significant increase in debt levels or any adverse change in capital structure impacting financial flexibility.
Significant elongation in the working capital.
Liquidity Position
Adequate
The company has an adequate liquidity position marked by sufficient net cash accruals of Rs.6.92 Cr. in FY2025 against minimal maturing debt obligations of Rs.0.95 Cr. during the same period. Going forward, the company is expected to generate sufficient cash accruals in the range of Rs.6-8 Cr. in FY26 & FY27 against very minimal maturing debt obligations of ~Rs.0.23 Cr. during the same period. The company maintained unencumbered cash and bank balances of Rs.0.13 Cr. as on March 31, 2025. The current ratio stood healthy at 2.35 times as on March 31, 2025. The reliance on working capital limit is high with average utilization of ~85.65% over the last 6 months ending Feb 2026.
Outlook: Stable
Other Factors affecting Rating
None
Particulars
Unit
FY 25 (Actual)
FY 24 (Actual)
Operating Income
Rs. Cr.
105.79
109.52
PAT
Rs. Cr.
6.16
6.54
PAT Margin
(%)
5.82
5.97
Total Debt/Tangible Net Worth
Times
0.78
0.29
PBDIT/Interest
Times
7.70
5.51
Status of non-cooperation with previous CRA (if applicable)
Note:- For activities or ratings of instruments falling under the purview of Financial Sector Regulators other than SEBI, the grievance / dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available.
Contacts
List of instruments and names of regulators of the instruments
