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
Acuite has upgraded its long-term rating to 'ACUITE B' (read as ACUITE B) from 'ACUITE D' (read as ACUITE D) and short-term rating to 'ACUITE A4' (read as ACUITE A four) from 'ACUITE D' (read as ACUITE D) on the bank facilities of Rs.495.75 Cr. of Bhilai Engineering Corporation Limited (BECL). The outlook is 'Stable'.
Rationale for rating The rating upgrade factors curing period attained for past defaults observed in the long-term and short-term bank facilities of the Company. The rating is further supported by steady scale of operations, marked by a marginal improvement in revenues and the reporting of positive operating profitability in FY26. BECL has divested its Engineering Unit assets at Bilaspur and Fertiliser Unit at Pulgaon and expect to monetise the same by Q3FY27. The same had been loss making units for the company in the past leading to negative EBDITA. The company is expected to have steady scale of operations provided the healthy order book in project division which is the larger contributor to the topline. The profitability witnessed a decline in FY25, primarily on account of losses incurred in the engineering division due to high fixed costs and Weakness in other segments, particularly the project segment due to stage of project milestones. Acuite notes the company’s proposed demerger into five resulting entities due to generational shift, which is expected to be completed by the end of FY27. This aims to segregate the diversified business operations into focused entities, enabling improved managerial oversight and operational efficiency. The timely execution and outcome of the demerger remain key monitorable factor. The financial risk profile remains average supported by moderate net worth, gearing below unity albeit weak debt protection metrics. The rating, is constrained by an intensive working capital cycle due to inherent nature of the company’s operations. Liquidity remained stretched in FY25, characterised by negative cash accruals against scheduled debt repayments, high utilisation of bank limits albeit comfortable current ratio. Despite this, the company has prepaid loans of Rs. 23.86 crore during FY25 through the infusion of unsecured loans by promoters. Further, the expected proceeds from asset sales of Rs.106 Cr. over FY27 are proposed to be utilised towards the reduction of working capital borrowings, which is expected to provide additional liquidity cushion.
About the Company
Bhilai Engineering Corporation Limited (BECL), incorporated on 3rd December 1960, is a Bhilai-based, family-owned and was into diversified engineering and manufacturing group. BECL has integrated manufacturing and turnkey EPC execution capabilities serving steel, power, railways, mining, and infrastructure sectors across India. The company is headed by Mr. Veenu Jain, Mr. Arvind Kumar Jain, Mr. Ashish Jain, and Ms. Geetika Jain.
Unsupported Rating
Not Applicable
Analytical Approach
Acuité has considered the standalone business and financial risk profile of BECL to arrive at the rating.
Key Rating Drivers
Strengths
Moderate scale of operations The operating income moderated marginally to Rs.736.06 Cr. in FY25 from Rs.749.46 Cr. in FY24. Further, the company has achieved Rs.786.30 Cr. in FY26 supported by steady execution in the project-based segment and contributions from the company’s diversified business operations. The EBITDA margin declined sharply to (1.17) % in FY25 from 6.88% in FY24. The EBITDA loss in FY25 was on account of higher employee costs and manufacturing expenses in the engineering segment and losses in other segments like fertiliser and project execution. With closure of the engineering division, the EBITDA margin has improved to 5.84% in FY26. The PAT margin stood at (3.56) % in FY25 as against 0.39% in FY24 due to high interest costs. Further, PAT improved to 1.38% in FY26 based on operating performance. Acuite expects an improvement in the scale of operations, largely on account of increased execution in the project segment.
Average financial risk profile The financial risk profile of the company was average marked by moderate but declining net worth due to losses, gearing below unity but weak debt protection metrics. The tangible net worth of the company declined to Rs.223.39 Cr. as on 31st March FY25 from Rs.247.31 Cr. as on 31st March 2024 primarily on account of losses during the year. The gearing stood comfortable at 0.68 times as on 31st March 2025 as against 0.73 times as on 31st March 2024. The interest coverage ratio and DSCR stood below unity at 0.22 times and 0.47 times respectively for FY2025 due to weak operating profitability and high interest costs. Acuite believes that the financial risk profile of the company is expected to remain average over the medium term.
Weaknesses
Intensive working capital cycle
The working capital cycle of the company remained intensive inherent to its project-based and manufacturing-oriented business model, marked by Gross Current Assets (GCA) of 270 days in FY25 as against 243 days in FY24. The debtor days stood at 119 days in FY25 as against 105 days in FY2024 primarily due to higher month-end billings and milestone-based collections in projects-based division. Further, the inventory days stood at 87 days for FY25 and FY24 largely comprising semi-finished goods for ongoing projects and manufacturing operations. A significant portion of inventory is backed by confirmed orders, mitigating obsolescence and price volatility risks. As against, the creditor days stood at 162 days in FY25 as against 106 days in FY24. Acuite believes the working capital cycle will remain intensive over the medium term due to inherent nature of the business.
Execution and regulatory risk
Acuite notes that, pursuant to the order of the Hon’ble Orissa High Court dated 17th February 2026, SAIL has banned the company (and its subsidiaries) from participating in new tenders until April 2028. As of April 2026, nearly 72% of the outstanding order book from SAIL are running smoothly. The company’s ability to execute its existing orders and diversify its customer profile will remain key monitorable. At the same time, the current order book provides comfortable revenue visibility over the medium term.
Rating Sensitivities
Potential triggers (individual or collective) for an upward rating action:
EBITDA margins above 6% with positive cash accruals.
Receipt and effective utilization of sale proceeds from engineering and Pulgaon fertilizer unit towards debt reduction, leading to lower interest burden and improved coverage metrics.
Potential triggers (individual or collective) for a downward rating action:
Any delays or irregularities in debt servicing
Decline in profitability of the company
Elongation in working capital cycle
Liquidity Position
Stretched
The liquidity is stretched marked by negative cash accruals of Rs. (17.66) Cr. against debt repayment of Rs.2.94 Cr. during FY25. However, the company has prepaid its outstanding term loans of Rs. 23.86 Cr. in FY25 through infusion of unsecured loans by promoters. The USL has increased to Rs.40.39 Cr. in FY25 from Rs.19.67 Cr. in FY24. The cash and bank balances stood at Rs.1.72 Cr. in FY25 as against Rs. 3.03 Cr. in FY24. The average bank limit utilization stood at 100% of fund-based limits over the last 12 months ended March 2026 (with instances of over utilisation), and at 64% of non-fund-based limits over the last ten months ended March 2026. Further, there were instances of devolvement and delays in servicing interest obligations in cash credit limits in FY26, though these were regularized within 30 days. The working capital cycle of the company remained intensive marked by Gross Current Assets (GCA) of 270 days in FY25 against 243 days in FY24. The current ratio stood at 1.43 times in FY25 as against 1.42 times in FY24. Acuite believes that the company is expected to generate positive cash accruals against minor debt repayment, receipt of proceeds from proposed asset sales is expected to provide liquidity support and reduction in working capital borrowings over the medium term.
Outlook: Stable
Other Factors affecting Rating
None
Particulars
Unit
FY 25 (Actual)
FY 24 (Actual)
Operating Income
Rs. Cr.
736.06
749.46
PAT
Rs. Cr.
(26.17)
2.94
PAT Margin
(%)
(3.56)
0.39
Total Debt/Tangible Net Worth
Times
0.68
0.73
PBDIT/Interest
Times
0.22
1.42
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.
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List of instruments and names of regulators of the instruments
