Experienced management and part of reputed group
MACL has been engaged in manufacturing of aluminum rolled products and caster coils since 2013. Prior to 2013, the operations were under Manaksia Ltd(ML). ML is the flagship company of the group. Currently the company is managed by Mr. Sunil Kumar Agrawal who has an experience of about three decades in manufacturing of aluminum rolling products. The company has a diversified presence as majority of its revenue comes from overseas markets such as USA, European and African nations among others. The company caters to strong customer base in various end-user industries which includes EPC players, OEM and Engineering companies.

Improvement in the scale of operation
The company had registered strong revenue growth of around 60 percent in FY22 in comparison to degrowth in FY21. The growth is driven by rise in average realization of aluminum products and sale volume. The contribution of overseas markets has increased to 79 percent in FY22 as against 74 percent in FY21. GOI has imposed antidumping duty on Chinese aluminum products which will help the company to improve its domestic presence. Acuite believes the scale of operation will remain at similar level over the medium term because of moderation in aluminum prices and current slowdown in certain markets such as USA, UK among others.

Comfortable financial risk profile
The financial risk profile of the MACL is marked by healthy net worth, low gearing and comfortable debt protection metrics. The net worth of the company stood at Rs.127.16 crore in FY2022 as compared to Rs.119.59 crore in FY2021.Acuité has treated unsecured loans of Rs 10.87 Cr as part of networth as the amount is subordinated to bank debt. The gearing of the company stood at 0.91 times as on March 31, 2022 when compared to 0.83 times as on March 31, 2021. TOL/TNW stood at 1.93 times in FY22 as against 1.70 times in FY21 due to rise in debt level. Interest coverage ratio (ICR) had improved to 2.10 times during FY22 as against 1.15 times in FY21 due to improvement in profit margin. The debt service coverage ratio stood at 1.38 times in FY22 as against 0.94 times in FY21. The net cash accruals against total debt (NCA/TD) stood at 0.12 times in FY22 as against 0.03 times in FY21. Acuité believes the financial risk profile of the company will improve over medium term because of no major debt funded capex along with improvement in profit margin.

High working capital requirement
The working capital management is marked by Gross Current Assets (GCA) of 207 days in FY2022 as against 277 days in FY2021. The company maintains inventory of around 130 days on an average due to lead time involved in import of raw-material and extends clean credit of around 30 days to its customers, resulting in high GCA days. The debtor days stood at 35 days in FY22 as against 55 days in FY2021, respectively. Inventory day had declined in FY22 to 131 days from 166 days in FY21 due to higher base effect. However inventory as on 31.03.2022 stood at Rs 146.91 Cr as against Rs 117.60 Cr in FY21.Acuité believes that the working capital requirement will continue to remain high over the medium term on account of its high inventory requirements.

Modest profitability margin
The company has modest profitability margin as reflected from its EBITDA margin which stood at 6.35 percent in FY22 as against 5.10 percent in FY21 and 7.97 percent in FY20.the profit margins have dipped in FY’22 primarily on account of high freight cost due to shortage of containers. RoCE of the company stood at 9.10 percent in FY22 as against 4.15 percent in FY21. Acuite believes profitability margin will improve over the medium with normilization of frieght cost.