Rating Rationale

Brickwork Ratings (BWR) has upgraded the long-term ratings to "BWR BB/Stable" and reaffirmed the short-term ratings at "BWR A4" and removed the ratings from Issuer Not Cooperating* category for the bank loan facilities of Rs 100.80 crores of Om Sakthi Constructions.
The rating has factored, inter alia, extensive experience of the promoters along with a reputed client base. The rating also considers the company’s healthy financial risk profile with healthy debt coverage metrics on as 31 March 2026 (Provisional) with interest coverage and debt service coverage of  7.18 and 1.00 times (which also includes debt prepayments made during the year) and gearing which has been maintained at 0.24 times over the past financial year. However, the rating is constrained by risks associated with the company’s working capital-intensive nature of operations, intense competition from established market players, susceptibility to tender-based operations, volatility in raw material prices and constitutional risks associated with partnership firms.

The Stable outlook on the BWR BB rating reflects BWR opinion that the financial risk profile of  Om Sakthi Constructions is expected to be maintained over the medium term, given steady revenues backed by the healthy order book position and that it will continue to maintain its comfortable capital structure and healthy debt coverage indicators. Going forward, the company's ability to win high value NHAI / State Government Road contracts in excess of Rs. 500 Crs and its successful execution would be the key monitorable.

The terms of sanction of the rated facilities include standard covenants normally stipulated for such facilities. The bankers have stipulated certain special covenants as listed below:

Federal Bank Covenants

1. Current Ratio shall be 1.33X  
2. DER to be maintained at 2x and TOL/ ATNW to be maintained at 3x. 

HDFC Bank Covenants

1. For FY 26: Turnover > 372 crores
2. EBITDA % > 4.45%
3. EBITDA > 16.57 crores
4. Adj TNW > 83 crores
5. TD/EBITDA < 1.88
    

• Experienced Management and established track record :

  The promoters have more than three decades of experience in executing civil contract work such as the construction of roads, bridges, canals, and other contract work for various local government departments of Tamil Nadu and central government departments. The firm benefits from the management’s understanding of the dynamics of the industry and established relationships with customers.

• Minimal Counterparty Risk :

   The clientele primarily includes various departments of the Tamil Nadu Government and Central Government offering low counterparty risks. Some of its key clients include NHAI (National Highway Authority of India), PWD etc. The company has a good track record of executing orders in the past.

• Susceptibility to risks inherent in tender based business :

  The firm's business growth depends on its ability to bid for contracts successfully. Revenue and profitability are expected to remain susceptible to risks inherent in contract-based operations. Tender-based operations limit pricing flexibility in an intensely competitive industry.

• Industry specific risks :

  The firm, like any other construction entity, is exposed to the risks inherent in the construction sector including a slowdown in new order inflows, risks of delays in execution, and vulnerability of margins to adverse variation in the raw material, labor, and other input costs. The profitability is exposed to volatility in raw material prices. However, the price escalation clauses in certain contracts provide comfort to some extent. The firm is also exposed to project execution risk of the pending order book, owing to the uncertainties  from delay in land acquisition amongst other things. 

• Constitution of the entity as Partnership firm :

  The firm is a family-owned business. As it operates as a partnership firm, any withdrawal of capital by the partners for personal contingencies could adversely impact the firm’s capital structure. Further, the partnership structure limits access to institutional funding, as lenders typically assess creditworthiness based on the individual financial strength of the partners rather than that of the entity. This constraint may reduce financial flexibility, particularly during periods of expansion or financial stress.However, the firm’s net worth has been improving in recent years, which partially mitigates these risks

• Geographical concentration risk :

  The firm's outstanding order book of civil infrastructure is exposed to client concentration risks as the order book is derived from the agencies of the Central government and Governments of Tamil Nadu exposing it to region-specific economic and political risks. Any decline in the economic scenario or changes in political scenario in these states is likely to constrain operating performance. Acquiring and establishing relationships with clients across various states would mitigate this risk to a certain extent.

• Limited Revenue Visibility :

  The company has an oderbook of Rs 176 crores to be executed in this finacial year, of which already 60 crores is executed. While the existing order book gives revenue visibility for FY 27, further revenue will primarily be driven through fresh contracts (NHAI / State Government Road contracts) secured through competitive bidding.

The firm’s ability to increase its scale of operations significantly, improve profitability, efficiently manage its working capital requirements and strengthen its liquidity will be the key rating sensitivities

Positive Factors

• Achievement of FY27 financial projections across topline revenue, EBITDA and EBIT within a maximum variance of 10% against projections.
• TOL/TNW to be under 1.00x while DSCR and ISCR to be at current levels of above 3.00x respectively.

Negative Factors

• Dip in revenue 15% from FY 26 (P).
• Adjusted current ratio to be maintained above unity.

The company reported an EBITDA of Rs. 13.43 crore in FY26 (Provisional) and net cash accruals of Rs. 10.85 crore, which were sufficient to cover interest and finance charges of Rs. 2.21 crore and the current portion of long-term debt (CPLTD) obligations of Rs. 10.92 crore (inclusive of prepayments made during FY26(P)). For additional liquidity comfort, the company has maintained an average working capital utilization of 60% over the past 6 months, with the unutilized portion of these limits serving as an additional buffer to meet short-term cash flow mismatches. The company has an unencumbered FD of Rs 23.00 crores, which can also be used for any short-term cash flow mismatches.  As per the projected financials, the company is expected to report an EBITDA of Rs. 14.74 crore in FY27 and Rs. 25.67 crore in FY28 against interest expenses of Rs. 2.21 crore in FY27 and Rs. 3.49 crore in FY28. Net cash accruals are expected to be Rs. 12.24 crore in FY27 and Rs. 19.43 crore in FY28, which will be sufficient to cover debt obligations of Rs. 2.60 crores in FY27 and Rs.3.25 crore in FY28. Based on these factors, the company’s liquidity position is assessed as Adequate.

NA

Om Sakthi Constructions (OSC) was set up in 2011 as a partnership firm at Puducherry.  OSC undertakes civil construction in the roads segment in Tamil Nadu and Puducherry. The firm is promoted by Mr. V Kannan along with his family members. The firm is engaged in the construction and improvement of roads, bridges, state highways, and the maintenance of dams, tunnels, etc.

The firm is a class one contractor approved by the Tamil Nadu Government and Public Works Department. The firm has been executing the tenders allotted by agencies of the Tamil Nadu Government and the Central Government. Mr. V Kannan, Mr. S. Jeevarathinam, Mr. S. Sathish Kumar, and Mr. K. Velmurugan are the partners of this firm.

Core Capabilities and Project Highlights

• Government Partnerships: The company predominantly executes large-scale public infrastructure projects for the National Highways Authority of India (NHAI) and the Tamil Nadu Highways Department.
• Execution Capability: The organization is supported by a skilled workforce of approximately 250 employees, enabling the successful management of high-value contracts. Its highest-value executed project is approximately ₹330 Crore for NHAI.At present the company is eligible to participate in tenders upto 1000 crs.
• Major Corridors: Key project experience includes NH-83 (Thanjavur–Nagapanam), the CKICP Project, NH-532 EPC works, NH-45 (Guduvanchery–Maraimalai Nagar), and NH-45C (Vikravandi–Kumbakonam–Thanjavur).
• Operational Discipline: The company operates on a framework of strict technical compliance, structured tendering, quality management, and timely project delivery.

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
CRISIL	In November 2025, CRISIL Ratings noted that despite repeated follow ups, including telephonic communications and a formal letter and email dated October 16, 2025, Om Sakthi Constructions (OSC) failed to provide the required information and remained non-cooperative.	21Nov2025
CRISIL	In September 2024, CRISIL Ratings noted that despite repeated follow ups, including telephonic communications and a formal letter and email dated August 12, 2024, Om Sakthi Constructions (OSC) failed to provide the required information and remained non-cooperative.	16Sep2024
CRISIL	In July 2023, CRISIL Ratings noted that despite repeated follow ups, including telephonic communications and a formal letter and email dated June, 15, 2023, Om Sakthi Constructions (OSC) failed to provide the required information and remained non-cooperative.	19Jul2023
CRISIL	In May 2022, CRISIL Ratings noted that despite repeated follow ups, including telephonic communications and formal letters and emails dated February 08, 2022 and April 18, 2022, Om Sakthi Constructions (OSC) failed to provide the required information and remained non-cooperative..	10May2022

Nil

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