Marks Engineering Works

Brickwork Ratings reaffirms the long-term ratings at BWR BBB - with Stable Outlook and short-term ratings at BWR A3, removes the ratings from the Issuer Not Cooperating category for the Bank Loan Facilities of Rs. 102.80 Crs. of Marks Engineering Works.

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
	Previous	Present		Previous (26 Feb 2026)	Present
Fund Based	83.46	51.30	Long Term	BWR BBB- /Stable ISSUER NOT COOPERATING* /Reaffirmation	BWR BBB - /Stable removal from ISSUER NOT COOPERATING* category/Reaffirmed
	(20.00)	(6.42)
	(6.50)	(0.00)
	35.50	45.50	Short Term	BWR A3 ISSUER NOT COOPERATING* /Reaffirmation	BWR A3 removal from ISSUER NOT COOPERATING* category/Reaffirmed
	(29.50)	(39.50)
	(29.50)	(39.50)
	(29.50)	(39.50)
Non Fund Based	6.00	6.00	Short Term	BWR A3 ISSUER NOT COOPERATING* /Reaffirmation	BWR A3 removal from ISSUER NOT COOPERATING* category/Reaffirmed
Grand Total	124.96	102.80	(Rupees One Hundred Two Crores and Eighty lakhs Only)

#Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank Loan facilities,consolidation or instruments are provided in Annexure

RATING ACTION / OUTLOOK

Brickwork Ratings (BWR) reaffirms the long-term ratings at BWR BBB- with a Stable outlook and short-term ratings at BWR A3 and removes the ratings from the Issuer Not Cooperating category for the bank loan facilities worth Rs. 102.80 crore of Marks Engineering Works.

The ratings consider the firm's established operational track record, supported by the partners' combined four decades of industry experience, long-standing relationships of over 20 years with reputed international and domestic clients like Bosch Rexroth and Danfoss. The firm holds regulatory certifications such as IATF 16949:2016, ISO 9001:2015, ISO 14001:2015, and ISO 45001:2018. The ratings also factor in the firm's stable revenue, improving projections, upcoming capex project and satisfactory banker feedback from Federal Bank, HDFC Bank, and Indian Overseas Bank.

However, the ratings are constrained by the constitution risk associated with partnership firms, evidenced by a significant partner capital withdrawal in FY26 that reduced the Tangible Net Worth from Rs. 89.54 Crs to Rs. 66.41 Crs. The ratings also reflect exposure to foreign exchange risk and export demand fluctuations, given that exports account for 64% of revenue.

The Stable outlook indicates the firm's moderate risk profile, expected to be maintained over the medium term, backed by steady profit generation, strong domestic demand, and comfortable debt coverage metrics. The firm is expected to adequately manage its debt levels despite its upcoming capacity expansion. BWR notes that achieving the FY27 projected revenue of Rs. 240.00 Crs, along with no capital withdrawals and improved capital structure with recovering profit margins, could lead to a positive rating action. However, significant underperformance in revenue, deteriorating profitability, or liquidity challenges could result in a revision to a negative outlook.

KEY RATING DRIVERS

Credit Strengths:

• Long Track Record of Operations and Experienced Management : :

  The firm was established in 1999 and is led by experienced partners K. Veluswami, K. Chellamuthu, V. Dinesh Kumar and C. Subash. Its long-standing management provides deep domain expertise and stability. This long track record has allowed it to navigate multiple business cycles and secure deep, reliable relationships with raw-material suppliers and customers 

• Diversified Portfolio : :

  The company offers a diversified product portfolio serving hydraulics & transmission, automotive, agriculture, pumps and general engineering segments. Its extended track record has helped it navigate multiple business cycles and build strong relationships with raw-material suppliers and reputed customers such as Poclain Hydraulics (USA), Danfoss Power Solutions (Denmark) and TRW Automotive (USA). The firm is in line with stringent industry standards, which acts as a significant barrier to entry. The company holds critical certifications such as ISO 45001:2018, IATF 16949:2016, ISO 9001:2015 & ISO 14001:2015. These are considered prerequisites for being a trusted Tier-1 supplier.

• Moderate Risk Profile : :

  The financial risk profile of Marks Engineering Works remains moderate, supported by its improving operating income and consistent profit generation. The entity’s total operating income has grown from Rs. 196.49 Crs in FY25 to Rs. 212.40 Crs in provisional FY26 and is projected to grow by 13% to reach Rs. 240.00 Crs in FY27, driven by strong domestic demand and a recovery in export orders. While the leverage ratio Total Debt to Tangible Net Worth has increased from 1.15 times in FY24 to 1.47 times in FY26, it remains at a manageable level despite a temporary reduction in the firm's Tangible Net Worth base from Rs. 89.54 Crs in FY25 to Rs. 66.41 Crs in FY26, which was primarily driven by partner capital withdrawals. The debt protection metrics also remain in a comfortable range, with an ISCR of 3.87 times and DSCR of 1.75 times in FY26, adequately supporting the firm's debt servicing capabilities

Credit Risks:

• Foreign Exchange Risk : :

  The firm generates 64% of its revenue from exports as per FY26 provisionals. The revenue and profitability margins are susceptible to foreign exchange fluctuations. However, the firm avails forward contract limits to mitigate the associated risks to a certain extent.

• Constitution Risk : :

  The company is inherently exposed to the risk of capital withdrawal by its partners. If the partners withdraw the capital for any personal contingency would adversely affect the capital structure of the firm.

ANALYTICAL APPROACH - Standalone

RATING SENSITIVITIES

Upward Factors:

• Increase in the scale of operations achieving FY27 projected revenue of Rs. 240.00 Crs and beyond.
• Improvement in liquidity profile by maintaining current ratio at existing level of 1.5 times or higher.
• Maintaining Tangible Net Worth at existing levels with Total Debt to TNW ratio of 1.5 times from the FY26 level of 1.47 times.
• Debt protection metrics of ISCR and DSCR to be maintained at present level or higher.
• Operating profit margins & net margins to be maintained at projected levels of 19.43% & 5.43% respectively.

Downward Factors:

• Decline in scale of operation & profitability, leading to compression profit margins and lower cash accruals.
• Material withdrawal of capital by the partners adversely affecting the firm's capital structure and reduction in the Tangible Net Worth, leading to increase in Total Debt/ TNW above 2.5 times.
• Deterioration in coverage ratios leading to ISCR below 2 times & DSCR to fall below 1.4 times.

LIQUIDITY INDICATORS - Adequate

Adequate liquidity is characterized by sufficient cushion in accruals vis-a-vis repayment obligations and moderate cash balance of Rs. 6.48 Crs in FY26 (Prov.). Its capex requirements are modular and expected to be funded using debt of Rs. 85.00 Crs for which it has sufficient headroom. The bank funded working capital limits have been utilised to an average extent of 70% for the past 6 months. The current ratio of 1.37 times in FY26 (Prov.) indicates a healthy state of affairs. During FY26 the company has generated net cash accruals of Rs.23.17 Crs adequately covers the CPLTD of Rs.19.97 Crs. The company projects a cash accruals of Rs.32.03 Crs in FY27 which is sufficient to cover upcoming term loan obligations of Rs 19.03 thus indicating adequate liquidity.

ABOUT THE ENTITY

Marks Engineering Works is partnership firm which was established in 1999 and is headquartered in Coimbatore, Tamil Nadu. Mr. K Velusamy and his brother Mr. K Chellamuthu and their sons Mr. V. Dinesh and Mr. C. Subhash are the partners of the firm. The firm is engaged in the manufacturing of precision machine components and sub-assemblies for various industrial segments. The firm's products are used in different industries like Hydraulics, Automotive, Agriculture, Transmission, and General Engineering. The firm's products include bearing support, housing valve, Housing motor, endcap tandem, E-02, and S-05 covers amongst others for the hydraulics industry, valve housing, side cover, gear housing for automotive, side shift housing, manifold, timing cover, etc for the agricultural industry. The firm also produces Brake pistons, gear boxes, spindles, serve control, pump housing etc.  

They also provide third-party logistics support to their customers such as bonded warehouses, local transportation, etc. They also operate VMI warehouses in Chicago, Ankeny (Lowa), Savanna (South Carolina, USA,) and Senec (Slovakia). CMI type warehousing at Rogersville (Tennessee, USA) and Pamplona (Spain). Through constant developments in manufacturing technology and with the help of experienced staff, they stand out from its competitors. They have a world-class manufacturing facility with a systematic workflow being carried out right from procuring castings from leading countries to finish machining to customer print requirements. Their state-of-the-art floor is 80,000 Sq Ft in size and equipped with CMC labs, Washing and debugging facilities, and an in-house warehouse.

ESG Profile

NA

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 23 - 24 (Audited - Annual)	FY 24 - 25 (Provisional - Annual)	FY 25 - 26 (Provisional - Annual)
Operating Revenue	Rs.Crs.	204.87	196.49	212.40
EBITDA	Rs.Crs.	40.35	37.13	30.49
PAT	Rs.Crs.	20.28	6.61	7.67
Tangible Net Worth	Rs.Crs.	85.17	89.54	66.41
Total Debt / Tangible Net Worth	Times	1.15	1.17	1.47
Current Ratio	Times	1.53	1.43	1.37

KEY COVENANTS OF THE FACILITY RATED

The terms of sanction of the rated facilities include standard covenants normally stipulated for such facilities.

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

Not Applicable

ANY OTHER INFORMATION

None.

RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)

Facilities	Current Rating (2026)			2026 (History)		2025		2024		2023
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	51.30	BWR BBB-/Stable (removal from ISSUER NOT COOPERATING* category/Reaffirmed)	26Feb2026	BWR BBB- Stable (ISSUER NOT COOPERATING* /Reaffirmation)	NA	NA	18Dec2024	BWR BBB-Stable (removal from ISSUER NOT COOPERATING* category/Upgraded)	30Nov2023	BWR BBStable (Continues to be in ISSUER NOT COOPERATING* category/Downgraded)
FB SubLimit	LT	(6.42)	BWR BBB-/Stable (removal from ISSUER NOT COOPERATING* category/Reaffirmed)	NA	NA	NA	NA	NA	NA	NA	NA
Fund Based	ST	45.50	BWR A3 (removal from ISSUER NOT COOPERATING* category/Reaffirmed)	26Feb2026	BWR A3 (ISSUER NOT COOPERATING* /Reaffirmation)	NA	NA	18Dec2024	BWR A3 (removal from ISSUER NOT COOPERATING* category/Upgraded)	30Nov2023	BWR A4 (Continues to be in ISSUER NOT COOPERATING* category/Downgraded)
FB SubLimit	ST	(39.50)	BWR A3 (removal from ISSUER NOT COOPERATING* category/Reaffirmed)	NA	NA	NA	NA	NA	NA	NA	NA
		(39.50)	BWR A3 (removal from ISSUER NOT COOPERATING* category/Reaffirmed)	NA	NA	NA	NA	NA	NA	NA	NA
		(39.50)	BWR A3 (removal from ISSUER NOT COOPERATING* category/Reaffirmed)	NA	NA	NA	NA	NA	NA	NA	NA
Non Fund Based	ST	6.00	BWR A3 (removal from ISSUER NOT COOPERATING* category/Reaffirmed)	26Feb2026	BWR A3 (ISSUER NOT COOPERATING* /Reaffirmation)	NA	NA	18Dec2024	BWR A3 (Assignment)	NA	NA
Grand Total		102.80	(Rupees One Hundred Two Crores and Eighty lakhs Only)

Hyperlink/Reference to applicable Criteria

• General Criteria
• Manufacturing Companies
• Approach to Financial Ratios
• Short Term Debt

Analytical Contacts
Santosh S K Ratings Analyst santosh.sk@brickworkratings.com	Suryanarayan N Associate Director - Ratings suryanarayan.n@brickworkratings.com
Media Contact | media@brickworkratings.com	Client Support | clientsupport@brickworkratings.com

SL.No.	Name of the Bank/Lender	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)	Complexity of the Instrument
1	Federal Bank	Term Loan - Out-standing	2.82	_	2.82	Simple##
2	Federal Bank	Term Loan - Out-standing	15.92	_	15.92	Simple##
3	Federal Bank	Cash Credit - Sanctioned	0.75	_	0.75	Simple##
4	Federal Bank	Packing Credit (PC) - Sanctioned	_	39.50	39.50	Simple##
	Sub-Limit (EBRD) - Sanctioned		(39.50)
	Sub-Limit (FD/UBP (LC/Order)) - Sanctioned		(39.50)
	Sub-Limit (PCFC) - Sanctioned		(39.50)
5	Federal Bank	Forward Contract - Sanctioned	_	6.00	6.00	Simple##
6	Federal Bank		_	_	0.00	Simple##
	Sub-Limit (NEI Foreign Currency LoaN) - Sanctioned	(6.42)
7	HDFC Bank	PC/PCFC - Out-standing	_	6.00	6.00	Simple##
8	HDFC Bank	Cash Credit - Sanctioned	0.60	_	0.60	Simple##
9	HDFC Bank	Term Loan - Out-standing	3.46	_	3.46	Simple##
10	Indian Overseas Bank	Term Loan - Out-standing	7.91	_	7.91	Simple##
11	Indian Overseas Bank	Term Loan - Out-standing	16.84	_	16.84	Simple##
12	Indian Overseas Bank	Cash Credit - Sanctioned	3.00	_	3.00	Simple##
13	Indian Overseas Bank		_	_	0.00	Simple##
	Sub-Limit (Letter of Credit) - Sanctioned	(0.00)
Total			51.30	51.50	102.80
TOTAL (Rupees One Hundred Two Crores and Eighty lakhs Only)

## BWR complexity levels are meant for educating investors. The BWR complexity levels are available at www.brickworkratings.com / download / ComplexityLevels.pdf. Investors queries can be sent to info@brickworkratings.com.