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 assigned the long-term rating of 'ACUITE BBB-'(read asACUITE triple B minus) and the short-term rating of 'ACUITE A3'(read as ACUITE A three) on Rs.50.00 Cr. bank facilities of Gyan Construction Co (GCC). The outlook is ‘Stable’.
Rationale for rating The rating factors in the firm’s established presence in the civil infrastructure sector, experienced management, and long operational track record. The rating also draws comfort from improved scale of operations, healthy debt protection metrics, and adequate liquidity, supported by revenue visibility from the firm’s moderate order book. These strengths are partly offset by moderately intensive working capital cycle, geographic concentration, exposure to input price volatility in an intensely competitive construction sector. The rating also remains susceptible to capital withdrawal risk, given the firm’s partnership constitution.
About the Company
Gyan Construction Co (GCC) is a Mumbai-based partnership firm established in 1980, with over four decades of experience in the civil infrastructure sector. Promoted by the Madhani family and now managed across three generations, the firm has built a strong presence in executing large-scale government and semi government projects across Maharashtra, including roads, bridges, water supply systems, and structural works. Registered as a Class I-A contractor with MCGM.
Unsupported Rating
Not Applicable
Analytical Approach
Acuité has considered the standalone financial and business risk profile of Gyan Construction Co (GCC) to arrive at the rating.
Key Rating Drivers
Strengths
Long operational track record and experienced Management Gyan Construction Co. benefits from a long and established operational track record of the firm over 45 years in the civil infrastructure sector, reflecting its ability to sustain growth across business cycles and execute diverse projects for government and semi-government clients. The firm’s continuity across three generations of the Madhani family has ensured stability in leadership, with the current management bringing a blend of legacy experience and modern professional practices. The partners possess strong financial, technical, and project execution expertise, supported by a qualified team of engineers and skilled personnel, enabling efficient project delivery, adherence to quality standards, and strong client relationships built over decades.
Improving operating scale couple with moderate order book position The operating income of the firm improved to Rs. 222.22 Cr. in FY26 (prov.), marking a 24.48 per cent growth from Rs. 178.52 Cr. in FY25 and Rs. 119.90 Cr. in FY24. The operating profit margin of the company stood at 6.18 per cent in FY26 (prov.) as compared to 7.36 per cent in FY25. The moderation in profitability is mainly due to increase in the other manufacturing cost. The PAT margins of the firm stood stable at 8.63 per cent in FY26 (prov.) as compared to 8.18 per cent in FY25. The improvement in PAT margins is mainly on account of increase in other income that comprises of shares of profits from joint ventures. The current order book position of the company stood at ~Rs. 700.98 Cr. as on 26th June 2026, of which the share of GCC is ~Rs. 547.31 Cr. which provides a medium term revenue visibility.
Moderate financial risk profile The financial risk profile of the firm is moderate marked by moderate net worth, moderate gearing and comfortable debt protection metrics. The tangible net worth of the firm is modest however increased to Rs. 54.60 Cr. as on March 31, 2026(prov.) from 35.92 Cr. as on March 31, 2025 due to retention of profits to an extent. The total debt of the firm stood at Rs. 41.12 Cr. as on March 31, 2026 (prov.) as against Rs. 48.15 Cr. as on March 31, 2025. The debt profile of the firm comprises of Rs. 0.23 Cr. of long-term debt, Rs.23.95 Cr. of USL from friends and relatives and the Rs.16.6 Cr. short term borrowings as on March 31, 2026 (prov.). The capital structure of the entity remains comfortable with the gearing of 0.75 times in FY26 (prov.) as against 1.34 times in FY25. The TOL/TNW stood high at 3.15 times in FY26 (prov.) as against 3.99 times in FY25. The debt protection metrics stood healthy as reflected by debt service coverage ratio (DSCR) and interest service coverage ratio(ICR) which stood at 5.94 times and 6.37 times in FY26 (prov.) compared to 5.35 times and 5.35 times in FY25 respectively. Further, Debt/EBITDA stood at 1.76 times in FY26 (prov.) as compared to 2.61 times in FY25. The team believes that the financial risk profile of the firm will continue to remain moderate over the near to medium term, supported by improved capital structure and healthy debt protection metrics.
Weaknesses
Moderately intensive working capital management The operations of the firm are moderately working capital intensive marked by gross current assets (GCA) of 205 days and 161 days during FY26 (prov.) and FY25 respectively. The high GCA days are on account of other current assets which mainly includes balances with government authorities. The inventory days stood at 38 days in FY26 (prov.) and 49 days in FY25. Further, the debtor days stood at around 61 days in FY26 (prov.) against 72 days in FY25. The creditor days of the firm stood at 108 days for FY26 (prov.) compared against 148 days for FY25. The bank limit utilisation stood high at ~70.20 per cent for six months ending May 2026. Acuite believes that the working capital cycle of the firm is expected to remain moderately intensive over the near term, on account of its exposure to elongated receivable cycles inherent in the industry, albeit supported by stable inventory levels.
Capital withdrawal risk associated with partnership firm Being a partnership firm, firm is exposed to the capital withdrawal risk. Any significant withdrawal from the partner’s capital will have a negative bearing on the financial risk profile of the firm.
Susceptibility of operating margin to volatility in input prices, labour charges in a highly competitive tender based nature of business The basic input materials for execution of construction projects and works contracts are steel, cement, aggregates, bitumen and other construction materials, the prices of which are highly volatile. Further, the firm’s profitability remains exposed to fluctuations in labour cost given the labour-intensive nature of the infrastructure contracting business. Although a majority of government contracts incorporate price escalation clauses, these mechanisms generally operate with a time lag and may not fully offset the impact of sudden increases in input costs. Further, being largely dependent on tender-based project awards, the firm’s revenue growth remains contingent upon its ability to secure new orders on a timely basis. RKMAC primarily undertakes execution of roads, bridges, water supply pipelines and other urban infrastructure projects for government and semi-government authorities. The firm faces competition from established regional and national players as well as local contractors in the bidding process, which may exert pressure on profitability. Additionally, the firm’s operations remain geographically concentrated in Maharashtra, exposing it to region-specific economic and policy developments. However, the risk is partially mitigated by the firm’s long-standing presence in the state, established relationships with the key government departments and its diversified order book across multiple infrastructure segments and executing authorities.
Rating Sensitivities
Potential triggers (individual or collective) for an upward rating action:
Significant growth in revenues while maintaining healthy profitability
Successful execution of existing orders without any delays while securing new work orders
Improvement in working capital management with GCA below 140 days on a sustained basis
Potential triggers (individual or collective) for a downward rating action:
Significant decline in revenues and profitability
Deterioration in financial risk profile due to unexpected borrowings with TOL/TNW above 4 times
Further, elongation in working capital cycle exerting pressure on liquidity
Liquidity Position
Adequate
The liquidity position of the firm is adequate with net cash accruals (NCAs) of Rs. 19.67 Cr. in FY 26 (prov.) against repayment obligation of Rs.0.26 Cr. The company had a cash balance of Rs. 0.63 Cr. as on March 31, 2026 (prov.). The current ratio stood at 0.96 times in FY26 (prov.) as against 0.87 times in FY25. Besides, the bank limit utilisation stood moderate at ~70.20 per cent for six months ending May 2026. Further, the NCA are expected to be in the range of Rs.23 Cr – Rs.26 Cr. against the repayment obligation of Rs. 0.23 Cr. Acuite believes that the liquidity position of the firm is expected to remain adequate supported by healthy cash accruals against minimal repayment obligations.
Outlook: Stable
Other Factors affecting Rating
None
Particulars
Unit
FY 26 (Provisional)
FY 25 (Actual)
Operating Income
Rs. Cr.
222.22
178.52
PAT
Rs. Cr.
19.18
14.60
PAT Margin
(%)
8.63
8.18
Total Debt/Tangible Net Worth
Times
0.75
1.34
PBDIT/Interest
Times
6.37
5.35
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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