Engineering consultancy: Crowded space – 12 Aug 2021

The engineering consultancy space in India is very crowded indeed.

Here is a consultancy with very strong foreign parentage and despite the fact that it has acquired many projects, with an order book of near Rs 300 crore, the operating margins in the range of 2.5% - 5.2% during the past four years

In particular segment, its debtor outstanding is as high as 52%, requiring higher working capital as a result

Then again, provisions have been made for doubtful debt as well

Clearly, a haphazard expansion can cause much heart burn for an engineering company in India