­Experienced management and established track record of operations
MACL is engaged in manufacturing of aluminium rolled products and caster coils since 2013. Prior to 2013, the operations were under Manaksia Ltd. (ML) which is the flagship company of the Manaksia group. Currently, the company is managed by Mr. Sunil Kumar Agrawal (Managing Director) who possesses an extensive experience of about three decades in the manufacturing of aluminum rolled products. He is further supported by his son Mr. Anirudha Agrawal (CEO) and a team of experienced professionals in managing day to day operations of MACL. The extensive experience of the management has enabled MACL to establish a healthy relationship with its customers and suppliers. In addition to this, the company caters to strong customer base in various end-user industries which includes EPC players, OEM and engineering companies with a diversified geographical presence across domestic and overseas markets such as USA, European and African nations amongst others.

Acuité believes that MACL will continue to benefit from its experienced management and established track record of operations.
 

Moderate financial risk profile
Financial risk profile of MACL is moderate marked by moderate networth,  debt protection metrics and low gearing levels. The tangible networth of the company stood improved at Rs.144.57 Cr. as on 31 March, 2024 as against Rs.139.88 Cr. as on 31 March, 2023 due to accretion of profits to reserves. It also includes the amount of Rs.14.76 Cr. been treated as quasi equity since the unsecured loans from directors infused into the business are subordinated to bank borrowings. The gearing (debt-equity) of the company stood marginally increased at 1.09 times as on 31 March, 2024 as against 0.93 times as on 31 March, 2023.

The interest coverage ratio stood at 1.67 times for FY2024 as against 2.08 times for FY2023, whereas the DSCR stood at 1.06 times for FY2024 as against 1.19 times for FY2023. The Net Cash Accruals to Total debt stood at 0.08 times for FY2024 against 0.12 times for FY2023. The Total outside liabilities to Tangible net worth stood improved at 1.89 times for FY2024 as against 1.71 times for FY2023. The Debt-EBITDA ratio though improved, it however remained high at 4.37 times for FY2024 as against 3.69 times for FY2023. Acuité believes that the financial risk profile of MACL is expected to remain moderate over the medium term due to its moderate debt levels vis-à-vis moderate tangible net worth and debt protection metrics.

Intensive Working Capital Operations
The working capital operations of MACL are highly intensive marked by its Gross Current Assets (GCA) of 236 days in FY2024 against 191 days for FY2023. This is primarily on account of its intensive inventory cycle which stood at 146 days for FY2024 as against 117 days for FY2023. The company maintains an average inventory cycle of around 120 to 140 days due to the lead time involved in importing of raw materials as well as the average time taken of nearly 60 to 80 days towards completing the overall production cycle. On the other hand, the receivables cycle of the company stood at 40 days for FY2024 as against 36 days for FY2023 and the creditor days stood at 114 days for FY2024 as against 89 days for FY2023. 

Acuité believes that the ability of MACL to improve and maintain an efficient working capital cycle over the medium term will remain a key rating sensitivity factor.

Decline in operating income albeit improvement in operating profitability margin
The operating income of MACL stood at Rs.432.49 Cr. in FY2024 against Rs.466.91 Cr. in FY2023. Further, in Q1FY25, operating income declined to Rs.81.72 Cr. from Rs.117.7 Cr. in Q4FY24. The decline in revenue is primarily on account of lower price realisations and lower exports. The revenue share from exports declined due to limited availability of vessels required for exports. As learned from the management, they expect the revenue to improve from Q2FY25 onwards. 

Further, the operating profit margin increased to 8.04% in FY2024 from 6.92% in FY2023 on account of various projects being undertaken by the company to automate the processes and increase efficiencies since last 3 years. The management expects the profitability to gradually increase further in the near term. Furthermore, the operating profit margin increased to 10.56% in Q1FY25 from 7.63% in Q4FY24.

Acuité believes that the ability of MACL to improve its scale of operations while maintaining the profitability margins will remain a key rating sensitivity factor.