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 downgraded the long-term rating to 'ACUITE B+' (read as ACUITE B plus) from ‘ACUITE BB-' (read as ACUITE double B minus) on the Rs.11.00 Cr. bank facilities and reaffirmed the short-term rating of ‘ACUITE A4’ (read as ACUITE A four) on the Rs.9.00 Cr. bank facilities of Bharat Construction (BC). The outlook is 'Stable'.
Rationale for rating
The rating downgrade takes into account significantly lowered scale of operations in FY26(Est.) along with modest order book position on account of lower bidding done during the past two years. Further, the operating and profitability margins in FY25 also moderated due to higher sub-contracting expenses and continue to remain susceptible to the type of work and time period of execution. Further, the rating is constrained by average financial risk profile, intensive working capital cycle, inherent limitations of sub-contracting business and partnership nature of the firm. However, the rating also considers the established track record of operations and experienced management. Going ahead, the ability of the firm to sustain its scale of operations in FY27 along with improvement in order book position and timely execution will remain a key rating monitorable.
About the Company
Established in 1978, Bharat Construction is a partnership firm located in Khetwadi, Mumbai. The firm is a civil contractor registered with government authorities like Municipal Corporation of Greater Mumbai (MCGM), Mumbai Metropolitian Region Development Authority (MMRDA) and Maharashtra Housing and Area Development Authority (MHADA) etc. The current partners of the firms are Mr. Mukund Surani, Mr. Premsingh U Purohit and Mr. Maheet M Surani.
Unsupported Rating
Not applicable.
Analytical Approach
Acuité has considered the standalone business and financial risk profiles of Bharat Construction to arrive at the rating.
Key Rating Drivers
Strengths
Established track record of operations and experienced management
Bharat Construction is a partnership firm engaged in business of undertaking government construction contracts. The partners of the firm have an around three decades of experience in the construction activities. Over the past few years, the firm is only engaged in the civil construction for MCGM. The firm executes all its contracts through subcontracting with experienced players.
Weaknesses
Modest scale of operations
The revenue for FY25 stood moderately improved at Rs.37.30 Cr. against Rs.34.82 Cr. in FY24. The improvement is on account of execution of previous work orders. However, the operating margin stood lower at 3.61% in FY25 compared to 4.05% in FY24 due to higher sub-contracting charges incurred. The margins remain susceptible to the type of work or sub-contracting and time period of execution. Further, the PAT margin stood at 3.37% in FY25.
Moreover, in FY26, the revenue has declined significantly to ~Rs.14 Cr. as per FY26(Est.). The same is due to lower tender bidding done during the year on account of non-availability of sufficient banking limits, resulting which, the bottom line remains affected as well. The outstanding order book of the firm stands at Rs.59.65 Cr. as of February 2026 and majorly includes orders from FY23 and FY24. Further, no new order has been received in FY26 till date. The slower order execution of previous orders is attributable to pending clearances from relevant authorities and unavailability of funds from the government authorities.
Average financial risk profile
The financial risk profile of the firm stood average marked by low net worth, high gearing and moderate debt protection metrics. The tangible net worth stood low at Rs.16.54 Cr. as on 31st March 2025 (Rs.14.56 Cr. as on 31st March 2024) along with susceptibility to the risk of any excess withdrawal of partner's capital limiting the growth in net worth. The total debt of the firm for FY25 stood at Rs.21.71 Cr. (Rs.22.17 Cr. in FY24). The major borrowings of company is in the of short-term debt to manage the working capital requirements.
Further, the gearing (debt-equity) stood at 1.31 times as on 31st March 2025 and debt protection metrics stood moderate with interest coverage of 2.52 times and debt service coverage ratio of 1.99 times respectively in FY25.
Acuité believes that going forward, the financial risk profile of the firm may improve slowly, backed by steady cash accruals.
Intensive working capital management
The debtor receivable period for the firm stands high at 197 days in FY25 (177 days in FY24). This includes tender deposits and retention money, and it is receivable within 3-5 years after the completion of the entire work. The firm does not maintain any inventory on its book as everything is on subcontracting basis. However, the working capital limits are highly utilized marked by average utilization of ~92% in the last 06 months ended February 2026.
Rating Sensitivities
Potential triggers (individual or collective) for an upward rating action:
• Improvement in scale of operation with revenue improving above Rs.40.00-45.00 Cr while maintaining the profitability margins.
• Timely execution and receipt of new orders.
Potential triggers (individual or collective) for a downward rating action:
• Significant deterioration in operating performance and financial risk profile.
• Elongation in working capital cycle along with further stretch in limits utilization.
Liquidity Position
Adequate
The firm’s liquidity position is adequate, marked by net cash accruals Rs.1.26 Cr in FY25 against no maturing debt obligations in absence of any long-term borrowings. Going forward, it is expected to generate cash accrual in the range of Rs.0.80-1.00 Cr against the no maturing repayment obligations over the medium term. Additionally, the partners are expected to infuse funds into the business in the form of unsecured loans as and when required. The current ratio stood moderate at 1.29 times in FY25, and the cash and bank balance stood at Rs.0.02 Cr as on 31st March 2025. Further, the working capital limits are highly utilized marked by average utilization of ~92% in the last 06 months ended February 2026.
Outlook: Stable
Other Factors affecting Rating
None.
Particulars
Unit
FY 25 (Actual)
FY 24 (Actual)
Operating Income
Rs. Cr.
37.30
34.82
PAT
Rs. Cr.
1.26
1.30
PAT Margin
(%)
3.37
3.72
Total Debt/Tangible Net Worth
Times
1.31
1.52
PBDIT/Interest
Times
2.52
2.42
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
