Rationale

 The rating reaffirmation takes into account the healthy order book of KSB Limited (KSB) as on September 30, 2020, its established market position leading to long-term revenue visibility, conservative capital structure and ample liquidity in the form of unencumbered cash and bank balances, and unused bank lines. The rating considers the technological support from KSB's parent, KSB SE & Co. KGaA (headquartered in Germany), a leading player in the global pump business, which has enabled it to foray into the domestic manufacturing of pumps for supercritical power plants and flue gas desulfurisation (FGD) units for power plants, among others. ICRA derives comfort from KSB's leadership position in the energy, oil and gas, and nuclear (pumps) sectors in the domestic market, as well as its growing presence in exports markets. The standard pumps segment forms ~45% of the expected CY2020 revenues, while the project business forms ~55% of the expected CY2020 revenues. The rating is also supported by the company's favourable cost structure arising from its backward integration into the castings segment. The company had an outstanding order book of Rs. 1,414.7 crore as on September 30, 2020 that provides healthy nearterm revenue visibility. The closing order book only accounts for engineered pumps and excludes the cash-and-carry orders for submersible and other pumps. In 9M CY2020, the company's order intake and revenue profile were impacted by the pandemic because of deferment of sales, postponements and revaluation of capex cycles by customers and delay in new tenders and enquiries. However, with an expected recovery in industrial demand coupled with a healthy order book, the decline in CY2020 operating income is expected to be limited. KSB's healthy financial profile is characterised by healthy yearly accruals, zero long-term debt, a strong cash and cash equivalents position and sizable, unutilised fundbased limits. The liquidity position of the company is supported by sizable unencumbered cash and bank balances of Rs. 246.5 crore and Rs. 289.6 crore as on December 2019 and June 2020, respectively. Going forward, the company has moderate capex plans for automation and capacity enhancement, which are expected to be funded from internal accruals. The rating is constrained by the company's vulnerability to raw material prices, increasing competition from established local and multinational corporations (MNCs), and the demand cyclicality inherent to its end-user industries. The working capital intensity also remains moderately high with elevated inventory levels because of the large lead time involved in  the manufacturing of engineered pumps. The inventory position is expected to increase, going forward, given the long lead time for the Nuclear Power Corporation of India (NPCIL) order that will be dispatched only in CY2022-CY2023. The Stable outlook reflects ICRA's opinion that KSB will continue to benefit from its established position in the domestic market, growing focus on export markets, technological support from parent entity and its conservative financial policy.