Rating Rationale
December 10, 2018 | Mumbai
Man Industries India Limited
Ratings upgraded to 'CRISIL A-/Stable/CRISIL A2+'
Rating Action
Total Bank Loan Facilities Rated Rs.2490 Crore
Long Term Rating CRISIL A-/Stable (Upgraded from 'CRISIL BBB+/Stable')
Short Term Rating CRISIL A2+ (Upgraded from 'CRISIL A2')
1 crore = 10 million
Refer to annexure for Details of Instruments & Bank Facilities
Detailed Rationale

CRISIL has upgraded its rating on the bank loan facilities of Man Industries India Limited (MIIL, part of the Man Group) to 'CRISIL A-/Stable/CRISIL A2+' from 'CRISIL BBB+/Stable/CRISIL A2'.

The upgrade reflects CRISIL's belief that the MIIL's credit risk profile will improve over the medium term driven by higher-than-expected cash accruals in fiscal 2019 and improving financial risk profile. Revenues increased by more than 100% in first half of fiscal 2019 driven by healthy order execution and increased order inflows while operating profit before depreciation, interest and taxes (OPBDIT) margins improved to 10.2% from 6.6% a year ago due to execution of higher margin orders and better fixed cost absorption. MIIL had an order book of about Rs 1,300 crore in November 2018, which provides sufficient revenue visibility over the medium term. Order book is expected to remain healthy driven by capex in the oil and gas industry which will further benefit the business risk profile. 

Improved operating performance has benefitted MIIL's financial risk profile. Debt protection metrics have improved with interest coverage ratio and net cash accrual to total debt ratio at 4.08 times and 0.19 time, respectively, as on September 30, 2018 (2.05 times and 0.12 time, respectively, as on September 30, 2017). 

Analytical Approach

For arriving at its ratings, CRISIL has consolidated MIIL and its wholly owned subsidiaries - Man USA INC, and Man Overseas Metal DMCC as there are financial fungibility between the companies. The entities are collectively referred to as the Man group. CRISIL considers these entities as being strategic to MIIL in view of their strong integration with MIIL's operations. CRISIL has not consolidated Merino Sheltors Pvt Ltd (MSPL), given that no further infusion is expected by MIIL and corporate guarantee of MIIL for facilities of MSPL has ceased to exist. CRISIL has written-off the investments and loans to MSPL from its networth to calculate adjusted networth.

Please refer Annexure - Details of Consolidation, which captures the list of entities considered and their analytical treatment of consolidation. 

Key Rating Drivers & Detailed Description
* Established position in the submersible arc welded (SAW) pipes industry:
The domestic pipes industry is consolidated, with the top four players accounting for 80% of capacity. Man Industries is amongst the largest SAW pipe players in India, and produces both Helically Submerged Arc Welded (HSAW) and Longitudinal Submerged Arc Welded (LSAW) pipes. It has been manufacturing SAW pipes, branch pipes, and coatings since 1995. 

* Improving financial risk profile: Company's financial risk profile is expected to improve with sizable adjusted networth of Rs 571 crore and gearing of 0.59 times as on September 30, 2018. Liquidity is also expected to improve with no further support to MSPL and improved accruals. Operations are working capital intensive, indicated by gross current assets of 200-300 days in the past, therefore, company's ability to manage working capital and maintain comfortable gearing remains a key monitorable.

* Susceptibility to cyclicality in end-user industries and to volatility in raw material prices and foreign exchange rates:
Oil and gas, and water and irrigation sectors are the major users of SAW pipes. Consequently, the Man group's order inflow and operating performance are highly linked to the demand prospects for these sectors. Moreover, there is a 2-4 month lead time between application for, and the final award of, a tender. Because these contracts are of a fixed-priced nature, the Man group cannot pass on increase in input costs to its customers after applying for the tender.

* Working capital intensive operations: Gross current assets were more than 200 days as on September 30, 2018, driven by debtors of 108 days. Over the medium term, the working capital requirement is expected to rise with increase in the order book. Also, concentration in receivables renders Man Industries susceptible to further increase in working capital cycle, and remains a key monitorable.

Outlook: Stable

CRISIL believes that group's credit profile will improve in the medium-term driven by healthy order book and improving margins which will lead to an improvement liquidity position. The outlook may be revised to 'Positive' in case of significant improvement in order book and execution position combined with healthy financial risk profile, or in case of significant recovery of the investment made in the real estate business. The outlook may be revised to 'Negative' in case of weaker than estimated operational performance, stretch in working capital or in case of support to the real-estate business leading to weakening of liquidity.

MIIL has adequate liquidity driven by expected cash accruals of more than Rs 140 crore per annum in fiscal 2019 and fiscal 2020 and cash and cash equivalents of Rs 70 crore as on September 30, 2018. MIIL also has access to fund based limits of Rs 205 crore, utilized to the tune of 75% on an average over the 12 months ended September 2018. The company has long term repayment obligations around Rs 104 crore (Rs 74 crore paid till November 2018) and Rs 42 crore along with moderate capex plans of Rs 20 and Rs 80 crore in fiscal 2019 and fiscal 2020 respectively. CRISIL expects internal accruals, cash & cash equivalents and unutilized bank lines to be sufficient to meet its repayment obligations, as well as incremental capex requirements.

About the Company

Man Industries is one of the largest SAW pipe players in India with a combined capacity of 10 lakh tonne per annum, distributed equally between HSAW and LSAW. Incorporated in 1988, it commenced operations with the production of aluminum extrusion products. In 1995, it diversified into manufacturing SAW pipes. In March 2008, Man Industries bought 55% stake in Man Infraprojects Pvt Ltd (Man Infraprojects), which undertook real estate development, and increased stake to 100% after acquiring the promoter shareholding in September 2011. In September 2013, Man Industries announced a restructuring of its businesses. As a part of the arrangement, with effect from April 1, 2013, Man Infraprojects was hived off from Man Industries.

For the 6 months ended September 2018, the company reported a PAT of Rs 40.3 crore on operating income of Rs 1,435 crore, as against a PAT of Rs 19.4 crore on operating income of Rs 602 crore for the same period of previous fiscal.

Key Financial Indicators
As on/for the period ended March 31 2018 2017
Revenue Rs Crore 1584 1066
Profit After Tax (PAT) Rs Crore 63 43
PAT Margins % 4.0 4.0
Adjusted Debt/Adjusted Networth Times 0.77 1.14
Interest Coverage Times 4.19 3.29

Any other information: Not applicable

Note on complexity levels of the rated instrument:
CRISIL complexity levels are assigned to various types of financial instruments. The CRISIL complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL complexity levels for instruments that they consider for investment. Users may also call the Customer Service Helpdesk with queries on specific instruments.
Annexure - Details of Instrument(s)
ISIN Name of Instrument Date of Allotment Coupon rate (%) Maturity Date Issue size (Rs.Cr) Rating Assigned with Outlook
NA Cash Credit* NA NA NA 110.00 CRISIL A-/Stable
NA External Commercial Borrowings NA NA May-2019 310.00 CRISIL A-/Stable
NA Letter of Credit & Bank Guarantee** NA NA NA 1495.00 CRISIL A2+
NA Proposed Long Term Bank Loan Facility NA NA NA 100.00 CRISIL A-/Stable
NA Proposed Short Term Bank Loan Facility NA NA NA 475.00 CRISIL A2+
*Interchangeable with other fund-based and non-fund-based facilities
**Includes sub-limits for buyer's credit

Annexure - Details of Consolidation
Fully consolidated entities: Man USA INC, and Man Overseas Metal DMCC
Annexure - Rating History for last 3 Years
  Current 2018 (History) 2017  2016  2015  Start of 2015
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Fund-based Bank Facilities  LT/ST  995.00  CRISIL A-/Stable/ CRISIL A2+  01-08-18  CRISIL BBB+/Stable/ CRISIL A2  14-11-17  CRISIL BBB/Stable/ CRISIL A3+  06-06-16  CRISIL A-/Negative/ CRISIL A2+  07-07-15  CRISIL A-/Stable/ CRISIL A2+  CRISIL BBB+/Stable/ CRISIL A2 
            18-05-17  CRISIL BBB/Negative/ CRISIL A3+           
            10-02-17  CRISIL BBB+/Negative/ CRISIL A2           
Non Fund-based Bank Facilities  LT/ST  1495.00  CRISIL A2+  01-08-18  CRISIL A2  14-11-17  CRISIL A3+  06-06-16  CRISIL A2+  07-07-15  CRISIL A2+  CRISIL A2 
            18-05-17  CRISIL A3+           
            10-02-17  CRISIL A2           
All amounts are in Rs.Cr.
Annexure - Details of various bank facilities
Current facilities Previous facilities
Facility Amount (Rs.Crore) Rating Facility Amount (Rs.Crore) Rating
Cash Credit* 110 CRISIL A-/Stable Cash Credit* 110 CRISIL BBB+/Stable
External Commercial Borrowings 310 CRISIL A-/Stable External Commercial Borrowings 310 CRISIL BBB+/Stable
Letter of credit & Bank Guarantee** 1495 CRISIL A2+ Letter of credit & Bank Guarantee** 1495 CRISIL A2
Proposed Long Term Bank Loan Facility 100 CRISIL A-/Stable Proposed Long Term Bank Loan Facility 100 CRISIL BBB+/Stable
Proposed Short Term Bank Loan Facility 475 CRISIL A2+ Proposed Short Term Bank Loan Facility 475 CRISIL A2
Total 2490 -- Total 2490 --
*Interchangeable with other fund-based and non-fund-based facilities
**Includes sub-limits for buyer's credit
Links to related criteria
CRISILs Approach to Financial Ratios
CRISILs Bank Loan Ratings - process, scale and default recognition
Rating criteria for manufaturing and service sector companies
CRISILs Criteria for Consolidation
CRISILs Criteria for rating short term debt

For further information contact:
Media Relations
Analytical Contacts
Customer Service Helpdesk
Saman Khan
Media Relations
CRISIL Limited
D: +91 22 3342 3895
B: +91 22 3342 3000

Naireen Ahmed
Media Relations
CRISIL Limited
D: +91 22 3342 1818
B: +91 22 3342 3000

Vinay Rajani
Media Relations
CRISIL Limited
D: +91 22 3342 1835
M: +91 91 676 42913
B: +91 22 3342 3000

Sachin Gupta
Senior Director - CRISIL Ratings
CRISIL Limited
D:+91 22 3342 3023

Nitesh Jain
Director - CRISIL Ratings
CRISIL Limited
D:+91 22 3342 3329

Ankit Jain
Rating Analyst - CRISIL Ratings
CRISIL Limited
D:+91 22 3342 3259
Timings: 10.00 am to 7.00 pm
Toll free Number:1800 267 1301

For a copy of Rationales / Rating Reports:
For Analytical queries:


Note for Media:
This rating rationale is transmitted to you for the sole purpose of dissemination through your newspaper / magazine / agency. The rating rationale may be used by you in full or in part without changing the meaning or context thereof but with due credit to CRISIL. However, CRISIL alone has the sole right of distribution (whether directly or indirectly) of its rationales for consideration or otherwise through any media including websites, portals etc.

About CRISIL Limited

CRISIL is a leading agile and innovative, global analytics company driven by its mission of making markets function better. We are India’s foremost provider of ratings, data, research, analytics and solutions. A strong track record of growth, culture of innovation and global footprint sets us apart. We have delivered independent opinions, actionable insights, and efficient solutions to over 1,00,000 customers.
We are majority owned by S&P Global Inc., a leading provider of transparent and independent ratings, benchmarks, analytics and data to the capital and commodity markets worldwide.
For more information, visit www.crisil.com 


About CRISIL Ratings
CRISIL Ratings is part of CRISIL Limited (“CRISIL”). We pioneered the concept of credit rating in India in 1987. CRISIL is registered in India as a credit rating agency with the Securities and Exchange Board of India (“SEBI”). With a tradition of independence, analytical rigour and innovation, CRISIL sets the standards in the credit rating business. We rate the entire range of debt instruments, such as, bank loans, certificates of deposit, commercial paper, non-convertible / convertible / partially convertible bonds and debentures, perpetual bonds, bank hybrid capital instruments, asset-backed and mortgage-backed securities, partial guarantees and other structured debt instruments. We have rated over 24,500 large and mid-scale corporates and financial institutions. CRISIL has also instituted several innovations in India in the rating business, including rating municipal bonds, partially guaranteed instruments and microfinance institutions. We also pioneered a globally unique rating service for Micro, Small and Medium Enterprises (MSMEs) and significantly extended the accessibility to rating services to a wider market. Over 1,10,000 MSMEs have been rated by us.

CRISIL respects your privacy. We may use your contact information, such as your name, address, and email id to fulfil your request and service your account and to provide you with additional information from CRISIL.For further information on CRISIL’s privacy policy please visit www.crisil.com.


This disclaimer forms part of and applies to each credit rating report and/or credit rating rationale that we provide (each a “Report”). For the avoidance of doubt, the term “Report” includes the information, ratings and other content forming part of the Report. The Report is intended for the jurisdiction of India only. This Report does not constitute an offer of services. Without limiting the generality of the foregoing, nothing in the Report is to be construed as CRISIL providing or intending to provide any services in jurisdictions where CRISIL does not have the necessary licenses and/or registration to carry out its business activities referred to above. Access or use of this Report does not create a client relationship between CRISIL and the user.

We are not aware that any user intends to rely on the Report or of the manner in which a user intends to use the Report. In preparing our Report we have not taken into consideration the objectives or particular needs of any particular user. It is made abundantly clear that the Report is not intended to and does not constitute an investment advice. The Report is not an offer to sell or an offer to purchase or subscribe for any investment in any securities, instruments, facilities or solicitation of any kind or otherwise enter into any deal or transaction with the entity to which the Report pertains. The Report should not be the sole or primary basis for any investment decision within the meaning of any law or regulation (including the laws and regulations applicable in the US).

Ratings from CRISIL Rating are statements of opinion as of the date they are expressed and not statements of fact or recommendations to purchase, hold, or sell any securities / instruments or to make any investment decisions. Any opinions expressed here are in good faith, are subject to change without notice, and are only current as of the stated date of their issue. CRISIL assumes no obligation to update its opinions following publication in any form or format although CRISIL may disseminate its opinions and analysis. CRISIL rating contained in the Report is not a substitute for the skill, judgment and experience of the user, its management, employees, advisors and/or clients when making investment or other business decisions. The recipients of the Report should rely on their own judgment and take their own professional advice before acting on the Report in any way.CRISIL or its associates may have other commercial transactions with the company/entity.

Neither CRISIL nor its affiliates, third party providers, as well as their directors, officers, shareholders, employees or agents (collectively, “CRISIL Parties”) guarantee the accuracy, completeness or adequacy of the Report, and no CRISIL Party shall have any liability for any errors, omissions, or interruptions therein, regardless of the cause, or for the results obtained from the use of any part of the Report. EACH CRISIL PARTY DISCLAIMS ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE. In no event shall any CRISIL Party be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of any part of the Report even if advised of the possibility of such damages.

CRISIL Ratings may receive compensation for its ratings and certain credit-related analyses, normally from issuers or underwriters of the instruments, facilities, securities or from obligors. CRISIL’s public ratings and analysis as are required to be disclosed under the regulations of the Securities and Exchange Board of India (and other applicable regulations, if any) are made available on its web sites, www.crisil.com (free of charge). Reports with more detail and additional information may be available for subscription at a fee – more details about CRISIL ratings are available here: www.crisilratings.com.

CRISIL and its affiliates do not act as a fiduciary. While CRISIL has obtained information from sources it believes to be reliable, CRISIL does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives and / or relies in its Reports. CRISIL keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of the respective activity. As a result, certain business units of CRISIL may have information that is not available to other CRISIL business units. CRISIL has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with each analytical process. CRISIL has in place a ratings code of conduct and policies for analytical firewalls and for managing conflict of interest. For details please refer to: https://www.crisil.com/en/home/our-businesses/ratings/regulatory-disclosures/highlighted-policies.html

CRISIL’s rating criteria are generally available without charge to the public on the CRISIL public web site, www.crisil.com. For latest rating information on any instrument of any company rated by CRISIL you may contact CRISIL RATING DESK at CRISILratingdesk@crisil.com, or at (0091) 1800 267 1301.

This Report should not be reproduced or redistributed to any other person or in any form without a prior written consent of CRISIL.

All rights reserved @ CRISIL