| Metalkraft Forming Industries Private Limited | ||||||
| Rated amount enhanced | ||||||
| Rating Action | ||||||
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| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has reaffirmed its 'CRISIL BBB/Stable/CRISIL A3+' ratings on the bank facilities of Metalkraft Forming Industries Private Limited (MFIPL).
CRISIL Ratings had on July 07, 2021, revised its outlook on the long-term bank facilities of MFIPL to 'Stable' from 'Negative' while reaffirming the rating at 'CRISIL BBB'. The short term rating has been reaffirmed at 'CRISIL A3+'.
Revenue grew by over 10% year-on-year in fiscal 2021, despite the pandemic-led disruptions in the first half of the fiscal. Operations may improve in fiscal 2022, as the second wave of the pandemic did not have a significant impact (in comparison to the first wave), given the milder restrictions and intermittent lockdowns. Capital structure remains moderate, marked by an estimated gearing of 1.09 times as on March 31, 2021. Liquidity is aided by sufficient cash accrual against the maturing debt, though high bank limit utilisation remains a key monitorable.
The ratings reflects the established market position of MFIPL in the cold-roll formed sections (CRFS) business, and its moderate financial risk profile. These strengths are partially offset by exposure to risks arising from intense competition, fluctuations in raw material prices and customer concentration. |
Key Rating Drivers & Detailed Description Strengths
Benefits from the two-decade-long experience of the promoters, their strong understanding of local market dynamics, and healthy relationships with suppliers and customers should continue to support the business. These factors have helped MFIPL to establish its market position in the CRFS business.
Financial risk profile is marked by a modest networth of Rs 56 crore, and low gearing and total outside liabilities to adjusted networth ratios, estimated around 1.09 times and 1.38 times, respectively, as on March 31, 2021. Debt protection metrics were comfortable, with interest coverage and net cash accrual to total debt ratios estimated at 3.85 times and 0.22 time, respectively, in fiscal 2021.
Weaknesses
Intense competition may continue to constrain scalability, pricing power and profitability. Further, as the cost of procuring the major raw material accounts for a bulk of total production cost, even a slight variation in rates may drastically impact the margin. Thus, the operating margin was volatile between 5.6% and 8.1 % over the four fiscals ending March 31, 2020.
The company derives almost 50% of its revenue from Saint Gobain India Pvt Ltd, a healthy relationship with, and continuous receipt of orders from, this client is critical for business growth in the longer run. |
Liquidity: Adequate Liquidity remains adequate, marked by healthy cash flow from operations. Expected accrual of over Rs 13 crore should suffice to cover the term debt obligation of Rs 2.39 crore in fiscal 2022. However bank limit utilisation was high, averaging around 92% for the 12 months ended May 31, 2021. This was mainly because the company held large inventory to mitigate price risk. Current ratio was moderate at 1.35 times on March 31, 2020. |
Outlook: Stable CRISIL Ratings believes MFIPL will continue to benefit from its established market position and extensive experience of its promoters in the CRFS industry. |
Upward factors
Downward factors
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About the Company MFIPL, incorporated in 2002, is a Hyderabad-based company that manufactures high-precision CRFS for construction (of buildings), solar, automobile, furniture, and general engineering industries. Mr Ravi Varma, Mr G Sreedhar Raju, Mr G .A.V.D Prathap Raju and Mrs B Sudharani are the promoters. |
Key Financial Indicators
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Status of non cooperation with previous CRA MFIPL has not cooperated with Brickwork Ratings India Private Limited, which has classified it as issuer not cooperative vide release dated May 26, 2021. The reason provided by Brickwork Ratings India Private Limited is that the company has not provided the adequate information for monitoring the ratings. |
Any other information: Not applicable |
| Note on complexity levels of the rated instrument: CRISIL Ratings' complexity levels are assigned to various types of financial instruments. The CRISIL Ratings' complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL Ratings' 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)
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| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of various bank facilities | ||||||||||||||||||||||||||||||||||||||||||
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Criteria Details
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