Man Structurals Pvt. Ltd.

Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 214.50 Crs. of Man Structurals Pvt. Ltd.

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (01 Jul 2021)	Present
Fund Based	78.00	88.00	Long Term	BWR BBB /Stable Assignment	BWR BBB /Stable Reaffirmation
Non Fund Based	136.50	126.50	Short Term	BWR A3+ Assignment	BWR A3 + Reaffirmation
Grand Total	214.50	214.50	(Rupees Two Hundred Fourteen Crores and Fifty 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

RATING ACTION / OUTLOOK

Brickwork ratings has reaffirmed the ratings of BWR BBB/ Stable-BWR A3+,for the bank loan facilities of Man Structurals Pvt Ltd (MSPL or “the company”), covering fund based as well as non-fund based facilities. The ratings, however, continue to derive strength from its experienced promoters, established track record in the manufacturing of transmission line towers, association with reputed customers and diversified product profile. The ratings also factor in its satisfactory overall financial risk profile. However, the ratings are constrained by the susceptibility of operations to intense competition leading to modest scale of operations for the company, along with the working capital intensive nature of operations.

Outlook: Stable

BWR believes that MSPL's business & financial risk profile is likely to be maintained over the medium term. The 'Stable' outlook indicates a low likelihood of rating change over the medium term. The rating outlook may be revised to 'Positive’ in case of the Company’s ability to demonstrate healthy growth in revenues on the back of significant order additions while sustaining its profitability margins leading to improved solvency & liquidity profile. The rating outlook may be revised to 'Negative' if there is a significant deterioration in the revenues or profitability or the Company’s coverage indicators and working capital cycle deteriorates on a sustained basis.

KEY RATING DRIVERS

Credit Strengths:

Experienced promoters and established track record of operations: :

The promoters of MSPL have established a track record of over five decades in manufacturing of galvanized transmission line towers and tower parts. The company is ISO 9001:2000 certified and is an approved vendor for various state electricity boards and public sector undertakings including Indian Railways. The promoters of the company have an extensive experience of more than five decades in the industry. At present, the operations of the company are looked after by Mr. Kishore Rungta who has experience of more than decade in the industry. Further, the promoters are supported by the experienced second line of management.
Diversified product profile of the Company : :
The Company manufactures telecom structures, solar power structures, transmission line towers, and electricity towers along with the transmission lines for Railways, thereby depicting a diversified product profile. The Company also bids for railway projects and is an approved vendor of Railways. MSPL is mainly into manufacturing structures for high voltage direct current (HVDC) levels such as 765 KV, 400 KV, 220 KV and 132 KV. Further, an order book of the company is diversified across reputed clientele with orders from different players, including various State/Central Public sector undertakings and electricity board leading to lower-credit risk.
Satisfactory overall financial risk profile along with reputed clientele: :
The Overall financial risk profile of the company remains moderate as indicated by satisfactory gearing, debt coverage and liquidity indicators. The revenues and profit margins of the company have improved in FY21 considering the sudden revival of the economy post Q1FY21 coupled with receiving large orders from Tata Projects. During FY22( Prov.) .The revenues suffered a decline of 12.49% on a year-on-year basis due to COVID-19 led disruptions and lockdowns, in the first quarter of the year. The PBILDT and PAT margins of the company stood at 7.37% and 1.40%, respectively (PY:7.42% and 0.62%, respectively), in FY22.The company has already achieved revenue of Rs 72.19 Cr. in Q1FY23 and has a firm order book of 457.17 Cr., as on June 30,2022, providing revenue visibility for the medium term. The capital structure of the company has remained at a satisfactory level marked by an overall gearing ratio of 1.11x, as on March 31, 2022(Prov.; PY:1.41x). The ISCR also remained at a comfortable level of 1.57x in FY22(Prov.; PY:1.36x). Further, the order book of the company is diversified across reputed clientele with orders from different players including various State/Central Public sector undertakings and electricity board leading to lower counterparty risk.

Credit Risks:

Working capital intensive nature of operations: :

Working capital requirement of the company stands high due to an elongated operating cycle of 161 days, as on March 31, 2022 (Prov.). This was on account of high debtor realization days of ~132 days, as on March 31,2022(Prov.) and high inventory holding requirement of the company ( average inventory holding days of 164 days, as on March 31, 2022). This has also resulted in high reliance on the external funds to meet the working capital requirements.
Intense Competition in this industry: :

The tower manufacturing industry is intensely competitive with the presence of many small and large players. Further, the tender based nature of the business constrains the revenue and profitability levels.
Modest scale of operations: :

Despite being in this line of business for 52 years, the scale of operations of the company has remained at a modest level of Rs.260.94 Cr. in FY22. The same constrains its ability to bid and execute large orders which generally have better profit margin.

ANALYTICAL APPROACH - Standalone

The ratings of Man Structurals Pvt Ltd have been arrived at on a standalone basis after the independent evaluation of its financial risk profile. For arriving at its ratings, Brickwork Ratings (BWR) has applied its rating methodology as detailed in the rating criteria below (hyperlinks provided at the end of this rationale)

RATING SENSITIVITIES

Positive: The ability of the Company to demonstrate healthy growth in revenues on the back of significant order additions while sustaining its profitability margins. The same needs to be supported by significant improvement in the solvency & liquidity profile.

Negative: Significant decline in revenue and profitability resulting in deteriorated debt coverage indicators and/ or liquidity position.

LIQUIDITY INDICATORS - Adequate

The Current Ratio of the company stood comfortable at 1.28x, as on March 31, 2021 and 1.31x, as on March 31,2022 (Prov.). In FY22 (Prov.) the company had a debt repayment obligation of Rs 2.19 Cr, which was met through the cash accruals of Rs 6.67 Cr. For FY23 and FY 24, the company has a debt repayment obligation of Rs 2.00 Cr, each which is also projected to be met from the internal accruals. MSPL’s operations are working capital intensive in nature due to high inventory requirements for its key raw materials due to few standardized components, time taken for fabrication of the transmission towers and moderate credit period extended to major transmission clients. The company had unencumbered cash and cash equivalents of Rs. 0.33 Cr as on March 31, 2021 and Rs 0.12Cr as on March 31,2022(Prov.). The average credit utilization of its bank limits "(for the six months period ended July 2022)" , stood at ~80%. The overall gearing ratio stood at 1.41x for FY21 and 1.11x in FY22 ( Prov.) providing sufficient headroom for the company to raise additional debt in case of any need. The company does not have any major debt funded capex plans in the near future.

ABOUT THE ENTITY

Incorporated in 1970 by the Rungta family, Man Structurals Pvt Ltd (MSPL) is engaged in manufacturing of galvanized transmission line towers and other associated products for power transmission infrastructure. The company has manufacturing capacity of 64,000 metric tonne per annum (MTPA) and manufacturing plant is located at Jaipur (Rajasthan). MSPL also manufactures microwave towers, wind-mill towers and solar energy structures; however majority of income (i.e ~about 70%) is contributed by sale of transmission line towers. MSPL has strategic alliance with Tata Projects Ltd. to bid for projects of Power Grid Corporation of India Ltd. MSPL is mainly into manufacturing structures for high voltage direct current (HVDC) levels such as 765 KV, 400 KV, 220 KV and 132 KV. MSPL also executes EPC contracts which involve setting up of transmission lines.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 20-21 (Audited)	FY 19-20 (Audited)
Operating Revenue	Rs.Crs.	298.21	259.78
EBITDA	Rs.Crs.	22.13	25.11
PAT	Rs.Crs.	1.85	4.90
Tangible Net Worth	Rs.Crs.	70.12	68.27
Total Debt/TNW	Times	1.41	1.45
Current Ratio	Times	1.28	1.24

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

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

Facilities	Current Rating (2022)			2021		2020		2019
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	88.00	BWR BBB/Stable (Reaffirmation)	01Jul2021	BWR BBB Stable (Assignment)	NA	NA	NA	NA
Non Fund Based	ST	126.50	BWR A3+ (Reaffirmation)	01Jul2021	BWR A3+ (Assignment)	NA	NA	NA	NA
Grand Total		214.50	(Rupees Two Hundred Fourteen Crores and Fifty 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
Mehtaab Chahal Ratings Analyst mehtaab.c@brickworkratings.com	Sudeep Sanwal Associate Director - Ratings sudeep.s@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

Man Structurals Pvt. 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	Axis Bank Ltd.	Cash Credit - Sanctioned	28.00	_	28.00
2	Axis Bank Ltd.	Bank Guarantee - Sanctioned	_	10.00	10.00
3	Axis Bank Ltd.	Letter of Credit - Sanctioned	_	10.00	10.00
4	Bandhan Bank	Cash Credit - Sanctioned	10.00	_	10.00
5	Bandhan Bank	Bank Guarantee - Sanctioned	_	16.50	16.50
6	HDFC Bank	Cash Credit - Sanctioned	20.00	_	20.00
7	HDFC Bank	Bank Guarantee - Sanctioned	_	_	0.00
8	ICICI Bank	Letter of Credit - Sanctioned	_	35.00	35.00
9	ICICI Bank	Bank Guarantee - Sanctioned	_	20.00	20.00
10	ICICI Bank	Cash Credit - Sanctioned	10.00	_	10.00
11	IndusInd Bank	Letter of Credit - Sanctioned	_	5.00	5.00
12	IndusInd Bank	Working Capital Demand Loan - Sanctioned	10.00	_	10.00
13	IndusInd Bank	Bank Guarantee - Sanctioned	_	30.00	30.00
14	Yes Bank	Working Capital (CC) - Sanctioned	10.00	_	10.00
Total			88.00	126.50	214.50
TOTAL (Rupees Two Hundred Fourteen Crores and Fifty lakhs Only)

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