|
|
| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 45.49 | ACUITE B+ | Stable | Reaffirmed | - |
| Total Outstanding | 45.49 | - | - |
| Total Withdrawn | 0.00 | - | - |
|
Rating Rationale |
|
Acuité has reaffirmed its long-term rating of 'ACUITE B+ (read as ACUITE B plus) on the Rs. 45.49 Cr. bank facilities of Ducon Infratechnologies Limited (DIL). The outlook is ‘Stable'.
Rationale for reaffirmation: The rating reaffirmation considers its improving operating performance along with the extensive experience of the promoters of over three decades in executing EPC contracts for setting up industrial pollution control and material handling systems, as well as dealing in the IT hardware business. Further, it also takes into account the company’s moderate financial risk profile, supported by low gearing and moderate debt protection metrics. |
| About Company |
|
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 established in India to take advantage of opportunities in the Indian subcontinent in the fields of air pollution control, bulk material handling, and other related industrial projects. As an EPC (Engineering Procurement & Construction) company, DIL has executed multiple projects over the last 14 years in India.
|
| About the Group |
|
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.
|
| 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 i.n view of the common management, same line of business and financial linkages between the entities.
|
| Key Rating Drivers |
| Strengths |
Ducon, promoted by Mr. Arun Govil (Managing Director), is engaged in undertaking EPC contracts for setting up industrial pollution control and material handling systems, as well as dealing in IT hardware. The company has forayed into FGD systems in thermal power plants, along with bulk material handling services and rural and urban electrification, including the construction of substations. The promoter, Mr. Arun Govil, has gained over three decades of experience from his overseas business in Ducon Technologies Inc. and is ably supported by a well-experienced second line of management. The experience of the promoters and the well-established track record of operations have helped the company build strong relationships with some of the reputed clientele in the country. Acuité believes that the company will sustain its existing business risk profile on the back of an established track record of operations and experienced management over the medium term.
The group has registered steady growth in operating income, which stood at Rs. 450.63 Cr. in FY2025, compared to Rs. 418.76 Cr. in FY2024. The operating margins of the company have improved, standing at 6.59 percent in FY2025, compared to 5.07 percent in FY2024. The growth in revenues is due to the timely execution of the order book of its core business, i.e., FGD systems. This improvement in margin is attributed to enhanced operational efficiency and prudent cost management. Acuité believes that, going forward, the operating income and profitability of the company will improve in the near term.
The financial risk profile of the company is moderate with healthy net worth, gearing and moderate debt protection metrics and high Debt – EBTIDA. The net worth of the company stood at Rs.167.52 Cr and Rs.120.41 Cr as on March 31, 2025 and 2024 respectively. The gearing of the company stood at 0.61 times as on March 31, 2025, as against 0.86 times as on March 31, 2024. Company’s debt protection metrics is moderate – Interest coverage ratio and debt service coverage ratio stood at 2.91 times and 1.88 times as on March 31, 2025, respectively as against 2.21 times and 1.50 times as on March 31, 2024, respectively. TOL/TNW stood at 0.80 times and 1.43 times as on March 31, 2025, and 2024 respectively. The debt to EBITDA of the company stood at 3.23 times as on March 31, 2025, as against 4.69 times as on March 31, 2024. Acuité believes that the financial risk profile of the company will continue to remain moderate on account of no major debt funded capex over the medium term.
|
| Weaknesses |
Group’s working capital operations are intensive in nature, marked by high gross current assets (GCA) at 200 days in FY2025, as against 230 days in FY2024. GCA days are mainly affected by debtor days which stood at 196 days in FY2025 as against 225 days in FY2024. As it goes through three stages (Mechanical completion, Commissioning and Performance guarantee check) and payments are received upon the completion of each stage, contributing to their consistently high receivables. DIL doesn’t have any inventory as the products are customized as per client’s requirement, and it directly stores in the plant of the client. Subsequently, the payable period stood at 22 days in FY2025 , as against 49 days in FY2024 respectively.
|
| Rating Sensitivities |
|
| Liquidity Position: Adequate |
|
The group’s net cash accruals stood at Rs.14.83 Cr. in FY2025 as against its repayment obligation of Rs.2.85 Cr. for the same period. Going forward, the group is expected to generate moderate net cash accruals against maturing repayment obligations. Unencumbered cash and bank balances stood at Rs. 0.05 Cr. as on March 31, 2025. The current ratio stood at 3.17 times as on March 31, 2025. However, the reliance on working capital limits stood high marked by average 97 percent utilization of the fund-based limits used over the past six months ending in Mar 2025. Acuité believes that the group's liquidity is likely to remain adequate on the back of continued expected adequate cash accrual generation
|
| Outlook: Stable |
| |
| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 25 (Actual) | FY 24 (Actual) |
| Operating Income | Rs. Cr. | 450.63 | 418.76 |
| PAT | Rs. Cr. | 13.55 | 7.63 |
| PAT Margin | (%) | 3.01 | 1.82 |
| Total Debt/Tangible Net Worth | Times | 0.61 | 0.86 |
| PBDIT/Interest | Times | 2.91 | 2.21 |
| Status of non-cooperation with previous CRA (if applicable) |
| Not applicable |
| Any Other Information |
| None |
| Applicable Criteria |
|
• 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 |
|
| |
|
|
||||||||||||||||||
|
| *Annexure 2 - List of Entities (applicable for Consolidation or Parent / Group / Govt. Support) | ||||||
|
||||||
|
Contacts |
About Acuité Ratings & Research |
