Case Study 3: Engineering Equipment Manufacturer

  • Company Profile: Mid-sized engineering equipment maker, ₹500 crore turnover.
  • Initial Shadow Rating: Direct A– rating due to scale & reputation.
  • Enhanced disclosures, MIS, and data presentation.
Company turnover
₹ 0 Cr
Initial EBITDA margin
0 %

Background

A mid-sized engineering equipment manufacturer with ₹500 crore turnover considered itself a market leader in specialized machinery. Believing its reputation and scale alone would guarantee an investment-grade rating, the company directly approached a CRA. The promoters expected a solid A– rating.

Challenge – CRA Outcome

The rating process highlighted concentration risks:

  • Revenue was heavily skewed towards three clients.
  • Market position was regional, not pan-India, as claimed.
  • Profitability margins were moderate at 9%.


The CRA assigned BBB–, two notches lower than expected. The promoters were shocked. They felt the CRA had “undervalued” their strengths, when in reality they had overestimated their positioning and failed to present data-backed evidence.

The promoters engaged us for a shadow rating to diagnose the gap. Our exercise replicated CRA methodology and revealed the exact disconnect: perceived leadership vs. documented market standing

  • Preparing a comprehensive industry benchmarking report product wise to show true market share.
  • Highlighting export orders that were previously not projected effectively.
  • Highlighting synergies of backward integration which would result in change in profit Dynamix which were not highlighted
  • Improving disclosures and MIS, ensuring financial and operational data matched CRA expectations.

We completely coached management on narrative communication of business strengths (execution track record, technological edge, repeat orders).

Outcome – Desired Rating Achieved

When the company went for a second formal rating, the groundwork was solid:

Industry benchmarking demonstrated competitive positioning credibly and backward integration supported improvement in margins in sustained manner.

The CRA upgraded the company to A–, the rating the promoters had originally expected. This led to cheaper term loans and renewed confidence with suppliers.

Key Takeaway

Shadow rating helped bridge the gap between perception and CRA methodology. By aligning business presentation with evidence and addressing concentration risks, the company moved from a borderline BBB– to its desired A–.

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