CRISIL has assigned its ‘BB+/Positive/P4+’ ratings to Maharashtra Metal Powders Ltd’s (MMPL’s) bank facilities. The ratings reflect MMPL’s modest scale of operations and vulnerability to volatility in input costs. These rating weaknesses are partially offset by MMPL’s promoters’ experience, its established market position in the aluminium powder industry, and established clientele.

Outlook: Positive
CRISIL believes that MMPL will continue to benefit from its promoter’s experience in the aluminium powder industry. The ratings may be upgraded if MMPL generates significantly more-than-expected cash accruals, maintains its debt protection indicators, and demonstrates a significant and sustainable improvement in liquidity, either by improving working capital management or infusing long term funds to augment the net working capital. Conversely, the outlook may be revised to ‘Stable’ if the company faces a further lengthening of its working capital cycle leading to pressure on its liquidity or the company undertakes a debt funded capital expenditure programme thus impacting its financial risk profile.

About the Company
MMPL was set up in 1984 by Mr. Arun Bhandari and his father-in-law Mr. P M Lodha (both first-generation entrepreneurs). The company is based in Nagpur and manufactures aluminium-based products - aluminium powder, aluminium paste, and pyro and flake powder. These are used in the explosives, paints, textile, and printing industries. MMPL is currently managed by Mr. Bhandari and Mr. Lodha, and has two manufacturing units in Nagpur, with a combined installed capacity of about 875 tonnes per month.

MMPL reported a profit after tax (PAT) of Rs.11.0 million on net sales of Rs.448.9 million for 2009-10 (refers to financial year, April 1 to March 31), against a PAT of Rs.11.2 million on net sales of Rs.363.2 million for 2008-09.