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Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
Bank Loan Ratings | 36.00 | ACUITE BBB- | Negative | Assigned | - |
Bank Loan Ratings | 45.00 | ACUITE BBB- | Negative | Reaffirmed | - |
Total Outstanding | 81.00 | - | - |
Rating Rationale |
ACUITE has reaffirmed the long-term rating of ‘ACUITE BBB-’ (read as ACUITE triple B minus) on the Rs. 45 crore bank facilities of Metalloys Recycling Limited (MCL). The outlook remains ‘Negative’. Rationale for Reaffirmation |
About the Company |
Incorporated in 1987, MRL is a Mumbai based company promoted by Mr. Ambalal Porwal and Mr. Vijay Mohanlal Porwal, who possesses over 3 decades of experience in the industry. The company is engaged in the processing of secondary ferrous and non-ferrous metals, and its main products are copper scrap, aluminium scrap, zinc scrap, brass scrap, magnesium scrap, nickel scrap and blended stainless-steel scrap. The products sold by MRL are used as basic raw materials for various copper alloys, various grades of brass, zinc alloys, aluminium alloys, nickel alloys and stainless-steel production. MRL’s processing unit is located at Kalyan (Thane), and office in Andheri (Mumbai). |
Unsupported Rating |
Not Applicable |
Analytical Approach |
Acuité has taken a standalone view of the business and financial risk profile of MRL to arrive at the rating. |
Key Rating Drivers |
Strengths |
Benefits derived from experience management |
Weaknesses |
Increasing Working Capital Operations |
Rating Sensitivities |
|
Liquidity Position |
Adequate |
MRL’s liquidity is adequate backed by its Net Cash Accruals (NCA) of Rs. 8.35 crore as against Long-Term Debt Repayment of Rs. 2.62 crore in FY2023. Additionally, the Current Ratio stood comfortably at 1.72 times in FY2023 as against 2.00 times in FY2022. The working capital limits are utilized ~ 95 percent on consolidated basis for 6 months ended March 2024. The unencumbered cash and bank balance stood at Rs. 2.66 crore as on FY2023. Acuité expects liquidity profile of the company to remain adequate due to sufficient accruals, moderate current ratio, and absence of any major debt laden capex plan over the medium term. |
Outlook: Negative |
Acuité believes that the company, will maintain a ‘Negative’ outlook over the medium term due to declining topline and elongation of working capital cycle. The outlook may be revised to ‘Stable’ in case the company achieves sustained growth in revenues and higher-thanexpected improvement in profitability, working capital management and debt protection metrics. Conversely, the rating may be downgraded in case of a further decline in revenues and operating profit margins or weakening of liquidity profile on account of further elongation of working capital cycle. |
Other Factors affecting Rating |
None |
Particulars | Unit | FY 23 (Actual) | FY 22 (Actual) |
Operating Income | Rs. Cr. | 567.31 | 612.80 |
PAT | Rs. Cr. | 7.01 | 4.11 |
PAT Margin | (%) | 1.24 | 0.67 |
Total Debt/Tangible Net Worth | Times | 0.95 | 0.87 |
PBDIT/Interest | Times | 3.39 | 3.13 |
Status of non-cooperation with previous CRA (if applicable) |
Not Applicable |
Any other information |
None |
Applicable Criteria |
• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm • Manufacturing Entities: https://www.acuite.in/view-rating-criteria-59.htm • Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm • Trading Entities: https://www.acuite.in/view-rating-criteria-61.htm |
Note on complexity levels of the rated instrument |
In order to inform the investors about complexity of instruments, Acuité has categorized such instruments in three levels: Simple, Complex and Highly Complex. Acuite’ s categorisation of the instruments across the three categories is based on factors like variability of the returns to the investors, uncertainty in cash flow patterns, number of counterparties and general understanding of the instrument by the market. It has to be understood that complexity is different from credit risk and even an instrument categorized as 'Simple' can carry high levels of risk. For more details, please refer Rating Criteria “Complexity Level Of Financial Instruments” on www.acuite.in. |
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