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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 100.00 | ACUITE A | Reaffirmed & Withdrawn | - |
| Bank Loan Ratings | 35.90 | Not Applicable | Withdrawn | - |
| Bank Loan Ratings | 43.00 | - | ACUITE A1 | Reaffirmed & Withdrawn |
| Total Outstanding | 0.00 | - | - |
| Total Withdrawn | 178.90 | - | - |
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Rating Rationale |
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Acuite has reaffirmed and withdrawn its long-term rating to ‘ACUITE A‘ (read as ACUITE A) and short-term rating to 'ACUITE A1' (read as ACUITE A one) on bank facilities of Rs.143 Cr. of Maan Steel and Power Limited.
Acuite has also withdrawn the proposed long-term loan of Rs.35.90 Cr. without assigning any rating as it is a proposed long term loan of Maan steel and power limited. The rating has been withdrawn as per Acuite's policy of withdrawal of ratings as applicable to the respective instrument/facility. The rating has been withdrawn on account of the request received from the company and NOCs (No Objection Certificates) received from the respective bankers. Rating Rationale for reaffirmation The rating factors steady business risk profile marked by decline in revenue due to low price realizations for finished products but partially offset by increase in sales volume. The rating also draws comfort from the moderate financial risk profile, efficient working capital management and adequate liquidity. These strengths are however constrained by the inherent cyclicality in the steel business and the intense competition in the industry, which makes margins and cash flows vulnerable to fluctuations in prices and demand. |
| About the Company |
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Maan Steel and Power Limited was incorporated in 2003 by Kolkata based Binod Kumar Agarwal and is engaged in the manufacturing of sponge iron, billet and TMT. The Company has installed capacity of 177,000 MT per annum for sponge iron, 192,000 MT per annum for MS billet, 150,000 MT per annum of rolling mill and 12 MW captive power plant. Company sells TMT bar under its brands i.e. ‘Durgapur star TMT’ and ‘Maan Shakti’. The manufacturing facility is located at Jamuria, West Bengal.
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| About the Group |
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Nageshwar Vintrade Private Limited
Incorporated in 2011, Nageshwar Vintrade Private Limited is engaged in wholesale variety of goods. The directors of the company are Mr. Sandeep Agarwal and Mr. Amit Agarwal. The registered office is located at Kolkata. Jagdish Commotrade Private Limited Incorporated in 2010, Jagdish Commotrade Private Limited is engaged in wholesale variety of goods. The Directors of the company are Mr. Sandeep Agarwal and Mr. Amit Agarwal. The registered office is located at Kolkata. Maan Metaliks Private Limited Incorporated in 2005, Maan Metaliks rivate Limited is engaged in Manufacturing of Basic Iron & Steel. The Directors of the company are Mr. Amit Agarwal and Mr. Shyam Sunder Agarwal. The registered office is located at West Bengal. It is a non-operational unit. |
| Unsupported Rating |
| Not Applicable |
| Analytical Approach |
| Extent of Consolidation |
| •Full Consolidation |
| Rationale for Consolidation or Parent / Group / Govt. Support |
| Acuite has taken a consolidated view of Maan Steel and Power Limited, Nageshwar Vintrade Private Limited (NVPL), Jagdish Commotrade Private Limited (JCPL) and Maan Metaliks Private Limited (MMPL) as all the 4 companies have a common management. Nageshwar Vintrade Private Limited & Jagdish Commotrade Private Limited holds 50 percent stake in MSPL. NVPL and JCPL have extended corporate guarantee to MSPL. Besides, the management is planning to merge all three entities with MSPL, on receipt of No Objection Certificate (NOC)from the existing lenders. The entities being consolidated are currently non-operational. The group herein is referred to as Maan Group.
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| Key Rating Drivers |
| Strengths |
| Moderate Financial Risk Profile
The Company has a moderate financial risk profile marked by its healthy net worth, gearing below unity, and comfortable debt protection metrics. The tangible net worth of the Company increased to Rs.250.72 Cr. as on March 31, 2024, from Rs.217.97 Cr. as on March 31, 2023, due to accretion of reserves. Gearing of the Company stood at 0.37 times as on March 31, 2024, as against 0.22 times as on March 31, 2023. The debt protection metrics remained comfortable with Interest Coverage Ratio (ICR) at 10.37 times and Debt Service Coverage Ratio at 7.96 times, as on March 31, 2024. Acuite believes that the financial risk profile of the Company will remain similar over the medium term. Efficient working capital management The Company has a working capital cycle as reflected from 73 days of GCA days in FY24 as against 60 days in FY23. The Company has improved its inventory days to 39 days in FY24 from 40 days in FY23. This has mainly been a result of better inventory management policies adopted by the Company. The Company’s debtor days stood comfortable at 9 days during FY24 as Company sell end products against advance payments. The creditor days stood at 7 days in FY24 as against 3 days in FY23. Acuite believes working capital requirement is likely to remain similar in medium term. |
| Weaknesses |
| Steady scale of operations
The company has achieved an operating income of Rs.875.44 Cr. in FY24 as compared to Rs.972.50 Cr. in FY23. The decline in revenue is due to lower price realizations for finished products impacting approximately 4000-5000 tons. However, efficient operations have partially offset the decline through significant increase in capacity utilizations. The company has reported revenues of ~Rs.388 Cr. till September 2024. The EBITDA margin stood at 6.52 percent in FY24 as against 8.55 percent in FY23. The decrease in margin is due to substantial volatility in raw material prices. The PAT margin stood at 3.74 percent in FY24 as against 3.44 percent in FY23. Acuite believes that the scale of operations will improve over the medium term due to capacity additions. Cyclical nature of the industry The group’s performance remains vulnerable to cyclicality in the steel sector as demand for steel depends on performance of end user segments such as construction and real estate. Indian steel sector is highly competitive due to presence of large number of players. The operating margin of the group is exposed to fluctuations in the prices of raw materials (coal and iron ore) as well as realization from finished goods. Limited raw material linkages The group has limited captive linkages for key raw materials, iron ore and coal. The group procures coking coal from both from domestic and international sources. However, group has a fuel supply agreement with Eastern Coalfield Limited for supply 27600 MT of coal per annum which is around 24 percent of total coal requirement. The group procures iron ores from domestic market. Hence, the profitability margins of the group is exposed towards any volatility in raw material prices. |
| Rating Sensitivities |
| Not Applicable |
| Liquidity Position |
| Adequate |
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The liquidity profile of the Company remained adequate reflected by steady cash accruals, moderate bank limit utilisation and comfortable current ratio. The average working capital limit utilisation remained at ~68 percent during last 12 months ended June 2024. Furthermore, the net cash accrual stood at Rs 43.78 Cr. in FY24 vis-à-vis debt repayments of Rs. 0.43 Cr. during that period. The current ratio stood comfortable at 1.37 times and Cash & Bank balance stood at Rs.0.99 Cr. as on March 31, 2024. Acuite expects liquidity profile of the Company to remain adequate due to sufficient accruals, improved current ratio and absence of any debt funded capex plan.
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| Outlook: Not Applicable |
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 24 (Actual) | FY 23 (Actual) |
| Operating Income | Rs. Cr. | 875.44 | 972.50 |
| PAT | Rs. Cr. | 32.74 | 33.45 |
| PAT Margin | (%) | 3.74 | 3.44 |
| Total Debt/Tangible Net Worth | Times | 0.37 | 0.22 |
| PBDIT/Interest | Times | 10.37 | 12.77 |
| Status of non-cooperation with previous CRA (if applicable) |
| Not Applicable |
| Any Other Information |
| None |
| Applicable Criteria |
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• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm • Consolidation Of Companies: https://www.acuite.in/view-rating-criteria-60.htm • Default Recognition: https://www.acuite.in/view-rating-criteria-52.htm • Manufacturing Entities: https://www.acuite.in/view-rating-criteria-59.htm |
| Note on complexity levels of the rated instrument |
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| *Annexure 2 - List of Entities (applicable for Consolidation or Parent / Group / Govt. Support) | ||||||||||
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