­Established track record and experienced management
M/s. Monika Enterprise was partnership firm incorporated in 2015. Later it was incorporated in 2022 into Monika Alcobev Limited. Monika Alcobev Limited is India’s leading branded wine and spirits company that markets & distributes alcoholic beverages. The Directors of the company are Mr. Bhimji Nanji Patel, Mr. Kunal Bhimji Patel and Mr. Dhara Kunal Patel. The company is geographically diversified into states such as Maharashtra, Karnataka, Goa, Haryana, Telangana, Rajasthan etc. Operating Income for the FY24 stood at Rs. 189.20 crore as against Rs.165.74 crore for FY23. The improvement in the revenue is driven by increase in the number of brands & geographic diversification. Further, EBITDA Margin for the FY24 stood at 16.50 % as against 17.25% in FY23. The Profit after tax margins (PAT) stood at 8.98 % in FY24 from 9.39% in FY23.
Acuite believes that Monika Alcobev Ltd will continue to benefit from its established track record of operations and experience management over the medium term.
 
Moderate financial risk profile
The financial risk profile of the company is marked by moderate capital structure and debt protection metrics. The net worth of Monika Alcobev Limited stood at Rs. 59.14 Cr. as on FY2024 as against Rs. 17.54 Cr. as on FY23-due to accretion of profits and infusion of equity capital. The gearing level (debt-equity) stood at 2.08 times as on FY2024 as against 4.11 times as on FY23- since their long-term debts reduced substantially. Total outside liabilities to Tangible net worth (TOL/TNW) ratio stood high at 2.66 times in FY2024 as against 6.33 times in FY23. The coverage indicators are moderate marked by Interest Coverage Ratio (ICR) of 3.60 times for FY2024 as against 4.60 times for FY23. Debt service coverage ratio (DSCR) stood at 2.56 times in FY2024 as compared with 2.71 times in FY23. However, the financial risk profil of the company will remain average in near future with no capex plans.

Established relationship with Premium Brand of liquor manufacturing
Monika Alcobev Limited  distributes beer, whiskey, scotch, wine and other liquor products of key liquor manufacturing principals, namely Belenkya, Jose Cuevro, Bushmills, Laurent- Perrier, Templeton Rye, Diplomatico Reserva etc. Additionally, the company also distributes imported labels of whiskey, scotch, tequila and other products. It has got 100+ brands across Champagne, wine, whiskey, tequila, vodka etc. MAL has the liberty of free pricing system for imported goods, hence they can change the prices of imported liquor anytime based on the changes in market scenario, subject to taxes and VAT.

­Working capital management
The operations of the company are working capital intensive in nature marked by GCA Days of 392 days in the FY2024 as against 267 days in FY23. The receivables days stood at 174 days in FY2024 & 142 days in FY23 with the credit period allowed of 90- 120 days. The inventory holding days stood at 198 days in FY2024 as against 105 days in FY23. The company generally maintains inventory of 90-120 days. The creditor days of the company stood at 62 days in FY2024 as against 87 days in FY23. The creditor days is 45– 60 days. The debtor days have dragged the working capital cycle since they need to maintain stocks for corporations i.e state distributors, across 30-40 depots. These state corporations then supply to hotels, bars and other outlets, resulting in skewed collection cycle. Acuite believes that the working capital cycle of the company will continue to remain high over the medium term. 



Government Regulatory Risks
The Indian alcohol industry is characterized by stringent regulations and is primarily regulated by the respective State Governments. Every state has its set of regulations with respect to distribution and retail channels, registration, taxation and pricing of alcohol. Licenses to produce and bottle are particularly scarce and contract manufacturing is a well-established market entry strategy. Furthermore, players within the industry are susceptible to high excise duties;any adverse change in excise duties can weaken profitability,and consequently, affect its credit risk profile.