Mangalam Global Enterprise Ltd.

Brickwork Ratings upgrades the ratings for the Bank Loan Facilities of Rs. 197.98 Crs. of Mangalam Global Enterprise Ltd, and removes the same from Issuer Not Cooperating category.

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (21 Dec 2022)	Present
Fund Based	105.73	190.98	Long Term	BWR BB /Stable ISSUER NOT COOPERATING*/Downgraded	BWR BBB - /Stable removal from ISSUER NOT COOPERATING* category/Upgraded
Fund Based	35.00	5.00	Short Term	BWR A4 ISSUER NOT COOPERATING*/Downgraded	BWR A3 removal from ISSUER NOT COOPERATING* category/Upgraded
Non Fund Based	5.00	2.00	Short Term	BWR A4 ISSUER NOT COOPERATING*/Downgraded	BWR A3 removal from ISSUER NOT COOPERATING* category/Upgraded
Grand Total	145.73	197.98	(Rupees One Hundred Ninety Seven Crores and Ninety Eight lakhs Only)

#Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank Loan facilities,consolidation or instruments are provided in Annexure
Note: *Issuer did not cooperate; based on best available information.

RATING ACTION / OUTLOOK

Brickwork Ratings has relied upon the Audited Financial statements of the company for FY23, Projections for FY24 & FY25, as well as information / clarifications provided by the company's management and its bankers, to carry out the rating exercise.

BWR has upgraded the rating for the long-term bank loan facilities of Mangalam Global Enterprise Ltd to "BWR BBB-/ Stable" and the rating for their short term bank loan facilities to "BWR A3" for an amount aggregating to Rs.197.98 crores and has removed the ratings from the "Issuer Not Cooperating" category, as the client has now provided necessary information and documents for the review. The rating upgrade is based on the fact that the downgrading in December 2022 was due to non cooperation of the Issuer, and not on account of any adverse or impaired financial performance on its part, and the present upgrade is in effect a restoration of the rating to its earlier level prior to non cooperation. The current rating factors in the experienced and competent management, diversified revenue profile, locational advantage, revenue growth and adequate finance risk profile.

The rating is however constrained by profitability vulnerability to volatile raw material prices and agro-climatic risk, high volume low margin business model and intense competition.

The outlook has been retained at "Stable" as BWR believes that the business risk profile of Mangalam Global Enterprise Ltd will be maintained over the medium term, and thus the Stable outlook indicates a low likelihood of a rating change over the medium term. The rating outlook may be revised to "Positive" in case of significant improvement in its topline and its credit metrics, or to "Negative" if there is any substantial decrease in the operating income or deterioration in the financial parameters.

KEY RATING DRIVERS

Credit Strengths:

Experienced and competent management :
The company is promoted by Ahmedabad based Mangalam Group. The Promoter of the Company are: Vipin Prakash Mangal, Chanakya Prakash Mangal and Chandragupt Prakash Mangal. Mr. Vipin Prakash Mangal has more than 3 decades of experience in trading business. Mr. Chankya Prakash Mangal and Mr. Chandragupt Prakash Mangal decided to join the family business as a fourth generation. Apart from this, the company has a management team of qualified and experienced professionals adding value to the organization through their expertise.
Diversified Revenue profile :
The company is mainly into Manufacturing and Trading of Agricultural Products such as Castor Oil, Castor Seed, Castor Oil cake, High Protein Oil Cake, Cotton Bales, Cotton Seeds etc. The company has also started manufacturing and trading of Mustard seed, Mustard oil, Mustard cake, Soya seed, Soya refined oil, Soya cake, Wheat and Rice and other agri products from FY21. Apart from this the company generates revenue as service provider for liaising and clearing service and from lease rentals
Locational Advantage :
Gujarat accounts for approximately 75% of the total castor seed production in India. With Gujarat being the main centre for castor seed crop, the company enjoys the advantage of proximity to its main raw material source.
Revenue growth :
The Company has registered rapid growth in turnover in last 4 years. The Company has achieved revenue of Rs. 1225.85 Crs with Net profit of Rs.11.90 Crs in FY23.
Adequate financial Risk Profile :
The company has adequate net worth at around Rs 94.17 crs and capital structure is comfortably marked by moderate total outside liabilities to net worth of around 2.89 times for FY23. ISCR at 2.02 times and DSCR at 2.02 times is comfortable for FY23.

Credit Risks:

Profitability vulnerable to volatile raw material prices and agro-climatic risk :
Seasonal volatility and fluctuations in raw material prices may impact the revenue and thereby affect the margins. Agro-climatic risks related to castor seed production can impact the production and pricing of castor oil, which is its main raw material. Moreover, MGEL is exposed to unexpected foreign exchange price movements, as the export realisations are generally in USD terms. However, it tries to cover a bulk of the forex exposure through forward contracts.
High volume low margin business model and intense competition :
MGEL operates under high volume low margin business model. The financial operations are largely dependent on the volume of the business. The company has to generate higher volume in terms of quantity to increase profitability and to maintain commercial feasibility. The ratings are constrained by inherently thin margins in this line of business. Gross profit margin ranges from 1.5-4% for manufacturing of these agro based products. Apart from this the company faces competition from organised as well as unorganised players in the industry.

ANALYTICAL APPROACH

BWR has considered standalone financials of Mangalam Global Enterprise Ltd. The reason for considering the standalone financials is that the other two group entities which are consolidated are foreign entities and the revenue from those two entities are nominal.

RATING SENSITIVITIES

Positive : BWR could revise the rating if it demonstrates substantial growth in revenue and profitability along with an improvement in its liquidity profile.

Negative : Negative pressure on the ratings could arise from weak performance and deterioration in liquidity or leverage metrics.

LIQUIDITY INDICATORS - Adequate

The company had cash accruals of around Rs.17.92 Crs and average utilization of bank limits is below 92% for the past 12 months. The company has a conversion cycle of 50 days and current ratio for FY23 is 1.17 times. Going forward, company is expected to generate cash accruals of around Rs.17.87 crs. The ISRC for FY23 is 2.02 times and DSCR is 2.02 times.

ABOUT THE ENTITY

Incorporated in 2010, Mangalam Global Enterprise Limited is set up by Ahmedabad-based Mangalam group. The Promoter of the Company are: Vipin Prakash Mangal, Chanakya Prakash Mangal and Chandragupt Prakash Mangal. The company is mainly engaged in the business of manufacturing and trading of Castor Oil (F.S.G.), Castor De-Oiled Cake and High Protein Castor De-Oiled Cake for domestic and international markets. The company also engaged in the manufacturing and trading of cotton bales and cotton seeds. The company has also started manufacturing and trading of Mustard seed, Mustard oil, Mustard cake, Soya seed, Soya refined oil, Soya cake, Wheat and Rice and other agricultural products from FY21.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 22-23 (Audited)	FY 21-22 (Audited)
Operating Revenue	Rs.Crs.	1225.85	1188.78
EBITDA	Rs.Crs.	24.53	9.60
PAT	Rs.Crs.	11.90	3.91
Tangible Net Worth	Rs.Crs.	94.17	61.39
Total Debt/TNW	Times	2.36	1.59
Current Ratio	Times	1.17	1.35

KEY FINANCIAL INDICATORS (Consolidated)

Key Parameters	Units	FY 22-23 (Audited)	FY 21-22 (Audited)
Operating Revenue	Rs.Crs.	1425.20	1278.95
EBITDA	Rs.Crs.	28.29	11.82
PAT	Rs.Crs.	12.70	3.61
Tangible Net Worth	Rs.Crs.	97.30	62.33
Total Debt/TNW	Times	2.45	1.92
Current Ratio	Times	1.16	1.37

KEY COVENANTS OF THE FACILITY RATED

The terms of sanction include standard covenants normally stipulated for such facilities.

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)

Facilities	Current Rating (2023)			2022		2021		2020
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	190.98	BWR BBB-/Stable (removal from ISSUER NOT COOPERATING* category/Upgraded)	21Dec2022	BWR BB Stable (ISSUER NOT COOPERATING*/Downgraded)	21Sep2021	BWR BBB- Stable (Reaffirmation)	06Aug2020	BWR BBB- Stable (Assignment)
Fund Based	ST	5.00	BWR A3 (removal from ISSUER NOT COOPERATING* category/Upgraded)	21Dec2022	BWR A4 (ISSUER NOT COOPERATING*/Downgraded)	21Sep2021	BWR A3 (Reaffirmation)	06Aug2020	BWR A3 (Assignment)
Non Fund Based	LT	0.00	NA	NA	NA	NA	NA	06Aug2020	BWR ()
Non Fund Based	ST	2.00	BWR A3 (removal from ISSUER NOT COOPERATING* category/Upgraded)	21Dec2022	BWR A4 (ISSUER NOT COOPERATING*/Downgraded)	21Sep2021	BWR A3 (Reaffirmation)	NA	NA
Grand Total		197.98	(Rupees One Hundred Ninety Seven Crores and Ninety Eight lakhs Only)

COMPLEXITY LEVELS OF THE INSTRUMENTS - Simple

BWR complexity levels are meant for educating investors. The BWR complexity levels are available at www.brickworkratings.com / download / ComplexityLevels.pdf. Investors queries can be sent to info@brickworkratings.com.

Hyperlink/Reference to applicable Criteria

Analytical Contacts
Anitha More Rating Analyst anithamore@brickworkratings.com	Nagaraj K Director - Ratings Board : +91 80 4040 9940 nagaraj.ks@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

Mangalam Global Enterprise Ltd.

ANNEXURE-I

Details of Bank Facilities rated by BWR

SL.No.	Name of the Bank/Lender	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)
1	Canara Bank	Cash Credit - Sanctioned	45.00	_	45.00
2	HDFC Bank	Bill Discounted (BD) - Sanctioned	_	_	0.00
3	HDFC Bank	Credit Exposure Limit (CEL) - Sanctioned	_	_	0.00
4	HDFC Bank	PSR - Sanctioned	_	5.00	5.00
5	HDFC Bank	GECL - Sanctioned	2.34	_	2.34
6	HDFC Bank	EPC/ PCFC/ FBP/ PSFC - Sanctioned	35.00	_	35.00
7	HDFC Bank	GECL 2.0 - Sanctioned	9.57	_	9.57
8	Punjab National Bank	GECL 1.0 - Sanctioned	5.57	_	5.57
9	Punjab National Bank	GECL - Sanctioned	1.00	_	1.00
10	Punjab National Bank	Covid -19 Emergency Line Credit - Sanctioned	_	_	0.00
11	Punjab National Bank	Cash Credit - Sanctioned	40.00	_	40.00
12	State Bank Of India (SBI)	Term Loan - Sanctioned	2.50	_	2.50
13	State Bank Of India (SBI)	Cash Credit - Sanctioned	50.00	_	50.00
14	State Bank Of India (SBI)	Bank Guarantee - Sanctioned	_	2.00	2.00
15	Un tied portion	Cash Credit - Proposed	_	_	0.00
Total			190.98	7.00	197.98
TOTAL (Rupees One Hundred Ninety Seven Crores and Ninety Eight lakhs Only)

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