ICRA has reaffirmed the long-term rating of 'BBB+' and the short-term rating of 'A2' assigned to the fund based and non-fund based facilities of BGR Energy Systems aggregating to Rs 125.18 billion. The outlook on the long-term rating is negative. 

The reaffirmation of ratings takes into account the company's demonstrated track record in the completion of BOP projects, an established position as an EPC player in the power projects business, and the favourable business potential in the long term given the large capacity addition requirements in the country. The ratings also favourably factor the company's healthy order book position of about Rs. 120 billion as on December 2013 which provides revenue visibility for the near to medium term. The ratings also take into account the in-house engineering and manufacturing capabilities of the company for most BOP systems. 

The reaffirmation of ratings takes into account the company's demonstrated track record in the completion of BOP projects, an established position as an EPC player in the power projects business, and the favourable business potential in the long term given the large capacity addition requirements in the country. The ratings also favourably factor the company's healthy order book position of about Rs 120 billion as on December 2013 which provides revenue visibility for the near to medium term. The ratings also take into account the in-house engineering and manufacturing capabilities of the company for most BOP systems. 

The ratings further remain constrained by the inherent high working capital intensity in the business, execution risks in the on-going projects, vulnerability of profitability to any unfavorable fluctuations in raw material prices for the projects that are ‘fixed price' in nature and intense competitive pressures in all the business segments.

ICRA notes that, going forward, the company's ability to bag large-size EPC orders in an increasingly competitive environment and also improve its cash flow position through improved collection cycle would remain key challenges for the company. 

Shares of the company gained Rs 0.5, or 0.36%, to trade at Rs 139.15. The total volume of shares traded was 66,734 at the BSE (1.44 p.m., Wednesday).