Rationale

The ratings factor in Ratan Projects & Engineering Co. Pvt. Ltd’s (RPECPL’s) established presence in galvanised engineering products, supported by a diversified product portfolio and the long-standing relationships with reputed EPC players in the power, infrastructure and industrial sectors. In addition, the presence of five manufacturing units in West Bengal, along with healthy capacity utilisation across key product categories, supports its business volumes. A comfortable order book provides near‑term revenue visibility, while the price variation clause mitigates the impact of raw material volatility to an extent. The ratings also consider the comfortable credit metrics, characterised by comfortable leverage (TD/OPBDITA) of 1.7 times (including project loan) and interest coverage of 7.9 times expected in FY2026. Also, the company’s liquidity position has been adequate, marked by healthy undrawn working capital lines. While assigning the ratings, ICRA has also considered RPECPL’s plan to diversify into renewable energy through the development of a 15‑MW solar project in Rajasthan under the PM-KUSUM scheme. The project is expected to provide stable revenues over the medium term, supported by multiple long-term power purchase agreements (PPA) of 25 years with the state utility. The project will be commissioned in phases; the first phase of ~10 MW is expected to be completed by March 2026. A timely commissioning and ramp-up of the facilities as per the defined operating parameters would remain the key rating monitorable. The ratings are, however, constrained by the moderate scale of current operations with an expected revenue of ~Rs. 380 crore in FY2026. Notwithstanding the improvement expected going forward, the scale of operation is expected to remain modest in the near to medium term. While the order book provides revenue visibility in the near term, the ability to ramp up the scale of operation, along with an improvement in the margins would remain the key rating sensitivity, going forward. The ratings are also constrained by the susceptibility of margins to fluctuations in raw material prices along with intense competition, given the highly fragmented nature of the industry. Additionally, the company remains exposed to customer and supplier concentration as the top 10 customers and suppliers contributed 50% and 82%, respectively, to the revenues in FY2025. Also, the trend in working capital remains monitorable, particularly with respect to the collection of receivables from the large project‑based clients. The Stable outlook on the long-term rating of RPECPL factors in ICRA’s opinion that the profitability from the current scale of operations is likely to remain comfortable relative to the debt servicing obligations in the near to medium term.