Vikran Engineering Limited's Credit Ratings Withdrawn by CARE Ratings
Vikran Engineering Limited's bank facility credit ratings from CARE Ratings have been withdrawn at the company's request. Previously rated 'CARE BB-; Stable / CARE A4', the withdrawal follows lender no-objection. Stretched working capital and negative cash flow were noted concerns, offset by a ₹2,412 crore diversified order book.
The withdrawal of credit ratings by CARE Ratings, while a disclosure, is unlikely to have a significant immediate impact on Vikran Engineering Limited's operations or its ability to secure financing, especially since it was a voluntary request and the company has a substantial order book. The market typically reacts more to new rating actions or significant downgrades.
The withdrawal of credit ratings is a procedural event. While it removes existing ratings, it is based on the company's request and lender consent, and the underlying business strengths like a strong order book remain. The sentiment is neutral as it doesn't inherently signal a positive or negative change in the company's financial health, but rather a change in its reporting status.
Vikran Engineering Limited (VEL) has announced the withdrawal of its credit ratings for bank facilities by CARE Ratings Limited. This withdrawal, effective immediately, was initiated at the request of VEL and with the 'No Objection Certificate' received from the lenders. CARE Ratings has reaffirmed the ratings as 'CARE BB-; Stable / CARE A4' under the 'Issuer Not Cooperating' category before withdrawing them.
The rating action follows CARE's policy on withdrawal. The rationale for the ratings, prior to withdrawal, considered constraints related to the company's stretched working capital cycle, evidenced by high gross current asset days and significant utilization of working capital limits in the 12 months ending June 2025. For FY25, gross current asset days were stretched at 517 days (FY24: 430 days), with fund-based and non-fund-based limit utilization at 97.54% and 83.3% respectively. Cash flow from operations remained negative, deteriorating to ₹147.79 crore in FY25 from ₹57.81 crore in FY24. Unencumbered cash and cash equivalents were ₹2.5 crore at FY25.
However, the ratings also drew comfort from the experienced management, a long track record of operations, and a well-diversified order book of ₹2,412 crore, providing medium-term revenue visibility equivalent to 2.63x of FY25's total operating income. The order book is diversified across power infrastructure and distribution (43.87%), water infrastructure (31.02%), and electric high-voltage projects (23.18%). The company has 44 orders in hand. Geographical diversification includes significant orders in Uttar Pradesh (29.02%) and Madhya Pradesh (22.63%). The company's promoters possess decades of experience in the power transmission and distribution sector.
What to do with a filing like this
Vikran Engineering Limited filed this with the NSE as a statutory disclosure, categorised under other regulatory filings. It is a primary document, not a recommendation, and the desk marks it low impact, the band that almost never moves a portfolio on its own.
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See the model portfoliosA plain-language summary of a public exchange filing by Vikran Engineering Limited. Read the original for the full detail.