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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 57.00 | ACUITE D | Downgraded | - |
| Bank Loan Ratings | 55.00 | - | ACUITE D | Downgraded |
| Total Outstanding | 112.00 | - | - |
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Rating Rationale |
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Acuité has downgraded its long-term rating to 'ACUITE D (read as ACUITE D) from 'ACUITE BB' (read as ACUITE double B) and the short-term rating to 'ACUITE D (read as ACUITE D) from 'ACUITE A4+' (read as ACUITE A four plus) on the Rs.112.00 Cr. bank facilities of Ducon Infratechnologies Limited (DIL).
The rating is downgraded on account of recent delays in servicing of debt obligations by DIL in their term loans and irregular account conduct as per the banker's feedback and other information reports. The account is currently marked SMA-0 by the bank. |
| About Company |
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Incorporated in March 2005, Maharashtra based Ducon Infratechnologies Limited (DIL) is the Indian arm of Ducon Technologies Inc., USA. The company is promoted by Mr Arun Govil, Ducon undertakes turnkey projects for setting up industrial pollution control and material handling systems. Ducon Infratechnologies Limited was setup in India to take advantage of opportunities in the Indian subcontinent in the field of Air Pollution Control, Bulk Material Handling and other related industrial projects. Being an EPC (Engineering Procurement & Construction) company, DIL has executed multiple projects during the last 14 years in India.
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| About the Group |
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The Ducon Group (DG) consist of two companies i.e. Ducon Infratechnologies Limited and its wholly owned subsidiary company Ducon Combustion Equipment Inc. (DCE). In the year 2017, DIL has set up its wholly owned subsidiary company in the name of Ducon Combustion Equipment Inc. (DCE) in New York, USA in order to sell diversified combustion and power products. The products includes steam & power turbines, heat recovery steam generators and cogeneration plants using both gas and biomass fuels.
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| Unsupported Rating |
| Not applicable |
| Analytical Approach |
| Extent of Consolidation |
| •Full Consolidation |
| Rationale for Consolidation or Parent / Group / Govt. Support |
| The team has consolidated the business and financial risk profiles of Ducon Infratechnologies Limited (DIL) and its wholly own subsidiary Ducon Combustion Equipment Inc. (DCE) together referred to as the ‘Ducon Group’ (DG). The consolidation is in view of the common management, same line of business and financial linkages between the entities.
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| Key Rating Drivers |
| Strengths |
Ducon promoted by Mr. Arun Govil (Managing Director), is engaged in undertaking EPC contracts for setting up industrial pollution control, material handling systems and dealing in IT hardware. The company forayed into FGD systems in thermal power plants along with Bulk Material Handling Services and Rural and Urban electrification including construction of substation etc. The promoter Mr. Arun Govil has gained experience of over three decades from overseas business in Ducon Technologies Inc and is ably supported by well experienced second line of management. The experience of promoters and well established track record of operations helped the company to build a strong relationship with some of the reputed clientele in the country such as NTPC Limited, Steel Authority of India,L&T, IOCL to name a few. Acuité believes that the company will sustain its existing business risk profile on back of an established track record of operations and experienced management over the medium term.
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| Weaknesses |
There have been recent instances of delays in servicing of term loan obligations by DIL as confirmed by the banker and as reflected in credit bureau information reports and account statements of the company. As per the banker's feedback, DIL’s account is currently marked SMA-0.
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| Rating Sensitivities |
| Regular servicing of debt obligations |
| Liquidity Position: Poor |
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The liquidity position of the company is marked poor on account of recent past instances of delays in servicing of debt obligation
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| Outlook: Not applicable |
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 23 (Actual) | FY 22 (Actual) |
| Operating Income | Rs. Cr. | 395.59 | 384.36 |
| PAT | Rs. Cr. | 4.10 | 4.43 |
| PAT Margin | (%) | 1.04 | 1.15 |
| Total Debt/Tangible Net Worth | Times | 0.78 | 0.55 |
| PBDIT/Interest | Times | 1.69 | 1.78 |
| Status of non-cooperation with previous CRA (if applicable) |
| Not applicable |
| Any Other Information |
| None |
| Applicable Criteria |
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• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm • Consolidation Of Companies: https://www.acuite.in/view-rating-criteria-60.htm • Default Recognition: https://www.acuite.in/view-rating-criteria-52.htm • Manufacturing Entities: https://www.acuite.in/view-rating-criteria-59.htm |
| Note on Complexity Levels of the Rated Instrument |
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In order to inform the investors about complexity of instruments, Acuité has categorized such instruments in three levels: Simple, Complex and Highly Complex. Acuite’ s categorisation of the instruments across the three categories is based on factors like variability of the returns to the investors, uncertainty in cash flow patterns, number of counterparties and general understanding of the instrument by the market. It has to be understood that complexity is different from credit risk and even an instrument categorized as 'Simple' can carry high levels of risk. For more details, please refer Rating Criteria “Complexity Level Of Financial Instruments” on www.acuite.in.
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| *Annexure 2 - List of Entities (applicable for Consolidation or Parent / Group / Govt. Support) |
| Ducon Combustion Equipment Inc |
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Contacts |
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About Acuité Ratings & Research |
