Long track record of operations and experienced management
Being in the industry for more than a decade, company has established a significant track of operations in the domestic and international markets. The products of the company are exported to various geographical locations like European countries, Middle East counties, North America, Africa and Asia Pacific. The company sells their products under its own brand ‘Megaa’ and ‘Megaa Delight’ which are exported globally and also available in retail/wholesale chains in the domestic market majorly in the north-eastern region of India. Further, the company’s established relationships with the West Bengal farmers provides them with ease of raw material procurement. The management, including Mr. Yogesh Gupta and Mr. Shankar Ramalingam, of MMPL have an extensive experience of more than two decades in the trading and export in the shrimp industry. 
Acuité believes that the long-standing experience of the management shall continue to benefit the company going forward, resulting in steady growth in the scale of operations.

Modest scale of operations and profitability
The ongoing Red Sea crisis and international pricing pressure from global competitors led to moderation in the FY24 revenue and profitability. While majority of the procurement is done from West Bengal, the pricing pressure also created procurement challenges from the local farmers and company had to source raw materials from other states. Therefore, while the volumes improved the lowering of realisations led to moderation in revenue at Rs. 237.15 Cr. in FY24 as compared to Rs. 242.73 Cr. in FY23. Further, the operating margins also moderated at 5.84 percent in FY24 as against 6.65 percent in FY23 owing to increased freight cost and rise in procurement cost of the raw material from states like Odissa and Andhra Pradesh. Furthermore, the company has achieved a revenue of Rs. 224.25 Cr. till February 28, 2025. 
Acuité believes that improvement in the scale of operations and profitability margins will remain a key rating sensitivity.

Intensive working capital operations
The working capital of operations is marked by high gross current assets (GCA) of 181 days in FY24 as compared to 126 days in FY23. This was majorly driven by debtor levels which stood increased at 65 days in FY24 as against 32 days in FY23 on account of increase in the delivery transit time due to Red Sea crisis leading to delay in receipts from the customers. Additionally, the inventory level also elevated at 109 days in FY24 as compared to 92 days in FY23. Further, the company has substantial dependence on its suppliers to support the working capital wherein the creditor levels stood at 24 days in FY24 as against 28 days in FY23. The company generally receives credit period of 15-20 days from the suppliers.
Acuité believes that any further stretch in the working capital operations shall be a key rating sensitivity.

Moderate financial risk profile 
The company’s financial risk profile is moderate marked by tangible net worth of Rs. 41.00 Cr. as on March 31, 2024 as against Rs. 37.59 Cr. as on March 31, 2023, owing to accretion of profits to reserves. The gearing (debt-equity) of the company stood increased at 2.36 times in FY24 as compared to 1.60 times in FY23 owing to the increased utilisation of working capital limits. Further, the debt protection metrics lowered but remain moderate with interest coverage ratio of 2.08 times in FY24 as compared to 2.58 times in FY23 and debt service coverage ratio of 1.43 times in FY24 as compared to 1.72 times in FY23. 
Moreover, Acuité believes that the financial risk profile is expected to improve going forward on the back of steady cash accruals and absence of any significant debt funded capex.

Volatility in pricing and demand affecting operating performance
The shrimp processing and export industry is marked by uncertainty to the global pricing pressure, risks associated with regulatory alterations and shifts in demand patterns within client nations, including the imposition of anti-dumping duties by importing countries. Hence, the company’s margins are susceptible to the volatility in the shrimp realisations which in turn are driven by global parameters. The risks of extreme climatic conditions and disease outbreaks are inherent in shrimp farming. Additionally, since major revenue stems from exports, the credit risk profile is vulnerable to fluctuations in foreign exchange rates. Further, being an export-oriented unit, MMPL’s operating profitability is supported by the export incentives received from the Government of India (GoI). The performance of the company thus remains vulnerable to volatility in the price and availability of shrimp and any change in export or import regulations. 
Any significant reduction in the demand and prices adversely impacting the operating margins and cash accruals of the group will remain a key monitorable.