Rating Rationale

Brickwork Ratings (BWR) has downgraded the ratings of RMN Infrastructures Limited from BWR BBB+/Stable/BWR A2 to BWR D/BWR D.

The bank loan rating downgrade of RMN Infrastructures Limited (RMN or the company) factors in lenders' feedback regarding delay in debt servicing by the company.

BWR takes into account the experience of the promoters in the civil construction industry, operational track record and demonstrated execution capabilities and revenue visibility through orders in hand with all the orders received from the government entities resulting in low counterparty risk. BWR also considers the constraints posed by geographical concentration risk, customer concentration risk, project execution risk, uncertainty inherent in the tender-based EPC business, and vulnerability of profitability to margin-based competitive bidding and fluctuation in construction material prices.

The terms of sanction include standard covenants normally stipulated for such facilities. Some of the key covenants of the rated facilities are:

1. Any liabilities or obligations under the facilities shall not at any time, rank postponed in point and security to any other obligation or liabilities to other lending institution or banks or creditors unless expressly agreed or permitted by the bank.
2. The company not to create or permit to subsist any mortgage, charge (whether floating or specific), pledge, lien or other security interest on any of your understandings, properties or assets without prior consent in writing from the bank.
3. Without bank's prior approval, the company should not affect any change in the borrower's capital structure where the shareholding of the existing promoters (a) gets diluted below current level or (b) leads to dilution in controlling stake for any reason (whichever is lower).
4. To intimate the bank for taking up of a new business activity or setting up/ investing in a subsidiary/ associate whether in the same business line or unrelated business.

• Experienced management and track record of operations :

  The company is managed by Mr. R Maheshwara Naidu and his family members. The company’s directors are qualified and experienced in the field of business. They are supported by a team of qualified professionals in the acquisition, planning and execution of projects. The company specialises in the execution of road, railway, and irrigation projects. It has established its presence in the market and has a track record of more than two decades of project execution.

• Healthy order book position providing adequate revenue visibility :

  The company has reported an unexecuted order book position of ~Rs. 3673 Crs as of 31 Mar 2026 (PY: Rs. 4228 Crs.), which is ~5.00 times the FY26 provisional revenue. The order book position provides the company’s revenue visibility in the near to medium term. All the current orders of the company are from various central and state government departments and their agencies, resulting in low counterparty risk. The majority of the contracts contain the price variation clause, which enables the company to transfer the increase in input cost to the employers, thus protecting the margin from the volatility in the construction material prices.

• Delay in debt servicing :

  The company’s bank account with one lender has currently been reported as SMA 1. Another lender has reported intermittent defaults in debt servicing by the company in the past 12 months, with the latest regularisation date being 28 Aug 2026. BWR rated overdraft account was overdrawn for more than 30 consecutive days between Nov’25 and Feb’26. One bank guarantee, invoked in Jan'26, was repaid after more than 30 days in Mar'26.

• Decline in scale of operations for three consecutive fiscals :

  In FY23, the company registered revenue, EBITDA, and PAT of Rs. 1018.83 Crs., Rs. 87.63 Crs., and Rs. 51.48 Crs., respectively. After that, the company’s revenue declined to Rs. 839.68 Crs. in FY24 and Rs. 728.06 Crs. in FY25. The company reported revenue of Rs. 690.43 Crs. on a provisional basis for FY26. EBITDA declined over the period to Rs. 63.20 Crs. in FY24 and Rs. 53.23 Crs. in FY25. PAT also declined to Rs. 42.73 Crs. in FY24 and Rs. 26.66 Crs. in FY25. EBITDA and PAT for FY26 were reported at Rs. 53.90 Crs. and Rs. 29.48 Crs., respectively, on a provisional basis. The decline is in the backdrop of the company’s higher projections for FY24 and FY25, and higher provisional figures for FY26. This continuous under-achievement by the company indicates issues with ability to maintain and augment order book, revenue booking and project execution.

• Risks inherent in tender-based business, a fragmented industry, and intense competition :

  The fragmented nature of the infrastructure sector leads to competition among the big and small players for the limited number of government contracts, which sometimes increases the overall bidding cost of players. Since all of the operations are tender-based, the business depends on the ability to bid for tenders successfully. Although the company has a long track record of over two decades, it is exposed to competition and susceptible to risks inherent in tender-based business. Additionally, all orders are from government agencies, resulting in high dependence on timely clearances for tenders and payments. Revenue and profitability are expected to remain susceptible to risks inherent in tender-based operations and a competitive landscape.

• High dependence on subcontracting :

  The company has strategically adopted an asset-light model. It avoids heavy machinery purchases due to the high capital requirements and their subsequent maintenance expenses. This is one of the reasons the company is dependent on subcontractors for the execution of almost half of the projects in its order book. A major portion of the company’s operating expenses goes towards these items. Although the company executes certain specialised portions of the work through machinery purchased in its own books, the overall impact of subcontracting is reflected in its profit margins. The company is investing in machinery on a need basis and is increasing its execution capability to reduce the dependence on subcontractors. In FY26, the company reduced its reliance on subcontractors with sub-contracting expenses coming down from ~55% of total operating expenses in FY25 to ~40% in FY26 (Prov.). However, despite increased execution capacity, the company would maintain a moderate subcontracting exposure to mitigate execution risk and balance the need for investment in heavy machinery.

• Upward:
  • Timely debt servicing.
  • Sustained improvement in the scale of operations and profitability.
  • Geographical, sectoral and client-wise diversification of operations.
• Downward:
  • Not applicable.

The company's liquidity position is poor, marked by delay in debt servicing over the past 12 months. The company occasionally faces short term cash flow mismatch due to delay in acceptance and payment of bills. Fund based working capital utilisation has been ~100% in the past 12 months. Debt repayment obligations for FY27 and FY28 are at ~Rs. 26 Crs. and ~Rs. 11 Crs., respectively. The company's cash & cash equivalents on 31 Mar 2026 (Prov.) were at Rs. 3.47 Crs. The annual capex primarily involves purchase of vehicles and machinery based on project requirements, which will continue to be funded by term loans.

The company demonstrates an evolving ESG profile based on its environmental, social, and governance practices. The company outlines its commitments towards society through its CSR policies. Through its CSR policies, the company supports inclusive growth and equitable development of all its stakeholders. Its CSR activities include identification and impact assessment of its initiatives on marginal and vulnerable sections of society. The company has no Independent Director on its Board.

The company owes its origin to a partnership firm, R Maheshwara Naidu Engineers and Contractors, established in 1995. The firm was reconstituted as a limited company and renamed RMN Infrastructures Limited in July 2007, in Hyderabad. The company was initially engaged only in civil engineering contracts, specializing in irrigation, water supply works, and minor road works within the states of Karnataka, Telangana and Andhra Pradesh. However, over the last few years, the company has diversified its scope of operations and now has a presence in water supply and sewerage system projects, as well as land restoration and road construction projects across India. 

Mr. R. Maheshwara Naidu and Mrs. R. Sailaza are the promoters of the company.

The Complexity Indicator refers to the ease with which the returns associated with the rated instrument could be estimated. It does not indicate the risk related to the timely payments on the instrument, which is rather indicated by the instrument's credit rating. It also does not indicate the complexity associated with analysing an entity's financial, business, industry risks or complexity related to the structural,transactional or legal aspects. Details on the complexity levels of the instruments are available on BWR's website Complexity Levels.

Creadit Rating Agency	Status and Reason for Non-Cooparation	Date of Press Release
IVR	Infomerics Ratings continued the company's bank loan rating under ISSUER NOT COOPERATING category as the company did not submit the requested information for monitoring the rating.	05Sep2025
CARE	CARE Ratings moved the company's bank loan rating to the ISSUER NOT COOPERATING category as the company did not submit the requested information for monitoring the rating.	31Mar2026

NA

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