Rating Rationale

Rating Rationale

April 28, 2023 | Mumbai

Motherson Molds and Diecasting Limited

Ratings Reaffirmed

Rating Action

Total Bank Loan Facilities Rated	Rs.15.25 Crore (Reduced from Rs.26.85 Crore)
Long Term Rating	CRISIL AA+/Stable (Reaffirmed)
Short Term Rating	CRISIL A1+ (Reaffirmed)

Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings.

1 crore = 10 million

Refer to Annexure for Details of Instruments & Bank Facilities

Detailed Rationale

CRISIL Ratings has reaffirmed its rating on bank facilities of Motherson Molds and Diecasting Limited (MMDL) at 'CRISIL AA+/Stable/CRISIL A1+’. The rating on Term Loan facility of Rs 11.6 crore, has been withdrawn at company's request and confirmation on No Dues from the banker. The rating action is in line with CRISIL Ratings' policy on withdrawal of bank loan ratings.

In fiscal 2023, revenues are expected to remain at around Rs 24-25 crore, similar to fiscal 2022, backed by booked orders from existing customers. Operating margins are also expected to remain above 20% in fiscal 2023 backed by efficient cost management, though MMDL is exposed to commodity price risk.

Debt levels are expected to remain stable in fiscal 2023 i.e. at similar levels to fiscal 2022. Majority of the debt is currently in the form of promoter loans. Debt levels are not expected to increase in the medium term with cash accruals expected to be sufficient for capex requirements.

The ratings reflect support from the parent, Samvardhana Motherson International Ltd (SAMIL; rated CRISIL AA+/Stable/CRISIL A1+), and moderate financial risk profile. These strengths are partially offset by the moderate scale and working capital-intensive operations.

Analytical Approach

For arriving at MMDL’s ratings, CRISIL Ratings has taken a standalone approach and factored in support from the parent SAMIL.

Key Rating Drivers & Detailed Description

Strengths:
Strong support from the parent (SAMIL), with MMDL being a critical part of the overall business:
MMDL receives strong operational and technical support from the parent, and CTM India Ltd (CTM; a Samvardhana Motherson group company). Key management personnel from the group are on the board of directors. MMDL is a critical part of the group’s polymers division. As moulds are manufactured based on confidential design information from OEMs, the group carries out the activity in-house, and exercises higher operational control. Strong parentage has helped forge a steady relationship with key automotive OEMs, including Maruti Suzuki India Ltd (rated 'CRISIL AAA/Stable/CRISIL A1+').

Moderate financial risk profile

Debt stood at Rs 8.8 crore as on December 31, 2022, primarily consisting of inter-company debt of Rs 8 crore. Overall debt levels may remain low in the near future, in the absence of any large capital expenditure (capex) plans. Debt obligations for fiscal 2023 is modest and can be met through internal accruals. NCA/adjusted debt is expected to improve and remain above 0.5 times in the medium term. Capital structure is also expected to improve over the medium term, with improvement in gearing to around 0.7 times in FY22 from 0.8 times in FY21.

Weaknesses:
Modest scale of operations

Revenue is likely to be in the range of Rs 25- 35 crore in the medium term and remains modest for the rating category. However, revenues are expected to improve backed by healthy demand in EV segment.

Working capital-intensive operations

The long lead time for manufacturing moulds leads to sizeable inventory of around 200 days, while receivable continue to be high over 80 days in FY2022. Gross current asset days are also expected to remain high at around 250 days over the medium term. Hence, working capital cycle may remain stretched over the medium term.

Liquidity: Strong

Liquidity remains strong, marked by sufficient cash accruals and moderate bank limit utilisation. On an average 47% of the fund-based bank limit of Rs 6 crore was utilized in the past 6 months, thus providing sufficient cushion for liquidity. The company also has cash and bank balances of around Rs 0.01 crore as of December 31, 2022. In addition, the company has support from the parent in case of exigencies.

Outlook: Stable

CRISIL believes MMDL will continue to benefit from strong linkages with its parent SAMIL

Rating Sensitivity Factors

Upward factors

Upgrade in the rating of the parent by one notch.
Significant growth in revenue and improvement in profitability

Downward factors

Subdued operating profitability resulting and weakening of debt protection metrics due to larger-than-expected capex, for instance interest coverage below 2-2.5 times
Diminution in support from the parent, or a downgrade in its rating.

About the Company

MMDL is a Samvardhana Motherson group company and was subsidiary of SAMIL. Effective 22 January, 2022, MMDL has now become subsidiary of the merged entity. Incorporated in 2006, MMDL a Manesar (Haryana)-based company, manufactures moulds and dies, used in the polymers division by automotive OEMs.

Key Financial Indicators

As of period ended March 31	Unit	2022	2021
Revenue	Rs crore	24	23
Profit after tax (PAT)	Rs crore	1	0.8
PAT margin	%	4.1	3.5
Adjusted debt/adjusted networth	Times	0.72	0.76
Interest coverage	Times	11.46	7.13

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 and are included (where applicable) in the 'Annexure - Details of Instrument' in this Rating Rationale.

CRISIL Ratings will disclose complexity level for all securities - including those that are yet to be placed - based on available information. The complexity level for instruments may be updated, where required, in the rating rationale published subsequent to the issuance of the instrument when details on such features are available.

For more details on the CRISIL Ratings` complexity levels please visit www.crisilratings.com. 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)	Complexity Level	Rating Assigned with Outlook
NA	Cash Credit	NA	NA	NA	6.0	NA	CRISIL AA+/Stable
NA	Letter of Credit	NA	NA	NA	2.0	NA	CRISIL A1+
NA	Bank Guarantee	NA	NA	NA	7.0	NA	CRISIL A1+
NA	Term Loan	17-Jun-17	8.75%	31-Mar-22	11.6	NA	Withdrawn
NA	Foreign Exchange Forward	NA	NA	NA	0.25	NA	CRISIL A1+

Annexure - Rating History for last 3 Years

	Current			2023 (History)		2022		2021		2020		Start of 2020
Instrument	Type	Outstanding Amount	Rating	Date	Rating	Date	Rating	Date	Rating	Date	Rating	Rating
Fund Based Facilities	ST/LT	17.85	CRISIL AA+/Stable / CRISIL A1+		--	02-02-22	CRISIL AA+/Stable / CRISIL A1+	29-11-21	CRISIL AA/Watch Positive / CRISIL A1+	06-10-20	CRISIL A1+ / CRISIL AA-/Watch Positive	CRISIL A1+ / CRISIL AA-/Stable
			--		--		--	25-08-21	CRISIL AA/Watch Positive / CRISIL A1+	10-07-20	CRISIL A1+ / CRISIL AA-/Watch Positive	--
			--		--		--	27-05-21	CRISIL AA/Watch Positive / CRISIL A1+	15-05-20	CRISIL A1+ / CRISIL AA-/Stable	--
			--		--		--	26-02-21	CRISIL AA/Watch Positive / CRISIL A1+	23-03-20	CRISIL A1+/Watch Developing / CRISIL AA-/Watch Developing	--
			--		--		--		--	05-02-20	CRISIL A1+ / CRISIL AA-/Stable	--
Non-Fund Based Facilities	ST	9.0	CRISIL A1+		--	02-02-22	CRISIL A1+	29-11-21	CRISIL A1+	06-10-20	CRISIL A1+	CRISIL A1+
			--		--		--	25-08-21	CRISIL A1+	10-07-20	CRISIL A1+	--
			--		--		--	27-05-21	CRISIL A1+	15-05-20	CRISIL A1+	--
			--		--		--	26-02-21	CRISIL A1+	23-03-20	CRISIL A1+/Watch Developing	--
			--		--		--		--	05-02-20	CRISIL A1+	--

All amounts are in Rs.Cr.

Annexure - Details of Bank Lenders & Facilities

Facility	Amount (Rs.Crore)	Rating
Bank Guarantee	7	CRISIL A1+
Cash Credit	6	CRISIL AA+/Stable
Foreign Exchange Forward	0.25	CRISIL A1+
Letter of Credit	2	CRISIL A1+
Term Loan	11.6	Withdrawn

Criteria Details

Links to related criteria

Rating criteria for manufaturing and service sector companies

Rating Criteria for Auto Component Suppliers

Criteria for Notching up Stand Alone Ratings of Companies based on Parent Support

Media Relations	Analytical Contacts	Customer Service Helpdesk
Aveek Datta Media Relations CRISIL Limited M: +91 99204 93912 B: +91 22 3342 3000 AVEEK.DATTA@crisil.com Prakruti Jani Media Relations CRISIL Limited M: +91 98678 68976 B: +91 22 3342 3000 PRAKRUTI.JANI@crisil.com Rutuja Gaikwad Media Relations CRISIL Limited B: +91 22 3342 3000 Rutuja.Gaikwad@ext-crisil.com	Mohit Makhija Senior Director CRISIL Ratings Limited B:+91 124 672 2000 mohit.makhija@crisil.com Gautam Shahi Director CRISIL Ratings Limited B:+91 124 672 2000 gautam.shahi@crisil.com SUMAN ROY Manager CRISIL Ratings Limited B:+91 22 3342 3000 SUMAN.ROY@crisil.com	Timings: 10.00 am to 7.00 pm Toll free Number:1800 267 1301 For a copy of Rationales / Rating Reports: CRISILratingdesk@crisil.com For Analytical queries: ratingsinvestordesk@crisil.com

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 Ratings. However, CRISIL Ratings alone has the sole right of distribution (whether directly or indirectly) of its rationales for consideration or otherwise through any media including websites and portals.

About CRISIL Ratings Limited (A subsidiary of CRISIL Limited, an S&P Global Company)

CRISIL Ratings pioneered the concept of credit rating in India in 1987. With a tradition of independence, analytical rigour and innovation, we set 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 33,000 large and mid-scale corporates and financial institutions. We have also instituted several innovations in India in the rating business, including ratings for municipal bonds, partially guaranteed instruments and infrastructure investment trusts (InvITs).

CRISIL Ratings Limited ('CRISIL Ratings') is a wholly-owned subsidiary of CRISIL Limited ('CRISIL'). CRISIL Ratings Limited is registered in India as a credit rating agency with the Securities and Exchange Board of India ("SEBI").

For more information, visit www.crisilratings.com

About CRISIL Limited

CRISIL is a leading, agile and innovative global analytics company driven by its mission of making markets function better.

It is India’s foremost provider of ratings, data, research, analytics and solutions with a strong track record of growth, culture of innovation, and global footprint.

It has delivered independent opinions, actionable insights, and efficient solutions to over 100,000 customers through businesses that operate from India, the US, the UK, Argentina, Poland, China, Hong Kong and Singapore.

It is 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

Connect with us: TWITTER | LINKEDIN | YOUTUBE | FACEBOOK

CRISIL PRIVACY NOTICE

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.

DISCLAIMER

This disclaimer is part of and applies to each credit rating report and/or credit rating rationale ('report') that is provided by CRISIL Ratings Limited ('CRISIL Ratings'). To avoid 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 Ratings providing or intending to provide any services in jurisdictions where CRISIL Ratings 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 Ratings 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 to 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 Ratings 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 Ratings assumes no obligation to update its opinions following publication in any form or format although CRISIL Ratings may disseminate its opinions and analysis. The 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 Ratings or its associates may have other commercial transactions with the entity to which the report pertains.

Neither CRISIL Ratings nor its affiliates, third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively, 'CRISIL Ratings Parties') guarantee the accuracy, completeness or adequacy of the report, and no CRISIL Ratings 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 RATINGS 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 Ratings 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. Public ratings and analysis by CRISIL Ratings, 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 website, www.crisilratings.com (free of charge). Reports with more detail and additional information may be available for subscription at a fee - more details about ratings by CRISIL Ratings are available here: www.crisilratings.com.

CRISIL Ratings and its affiliates do not act as a fiduciary. While CRISIL Ratings has obtained information from sources it believes to be reliable, CRISIL Ratings does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives and/or relies on in its reports. CRISIL Ratings has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with each analytical process. CRISIL Ratings has in place a ratings code of conduct and policies for managing conflict of interest. For details please refer to: https://www.crisil.com/en/home/our-businesses/ratings/regulatory-disclosures/highlighted-policies.html.

Rating criteria by CRISIL Ratings are generally available without charge to the public on the CRISIL Ratings public website, www.crisilratings.com. For latest rating information on any instrument of any company rated by CRISIL Ratings, you may contact the CRISIL Ratings 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 prior written consent from CRISIL Ratings.

All rights reserved @ CRISIL Ratings Limited. CRISIL Ratings is a wholly owned subsidiary of CRISIL Limited.

CRISIL Ratings uses the prefix 'PP-MLD' for the ratings of principal-protected market-linked debentures (PPMLD) with effect from November 1, 2011, to comply with the SEBI circular, "Guidelines for Issue and Listing of Structured Products/Market Linked Debentures". The revision in rating symbols for PPMLDs should not be construed as a change in the rating of the subject instrument. For details on CRISIL Ratings' use of 'PP-MLD' please refer to the notes to Rating scale for Debt Instruments and Structured Finance Instruments at the following link: https://www.crisil.com/en/home/our-businesses/ratings/credit-ratings-scale.html