Metal Care Alloys Private Limited

Brickwork Ratings reaffirms the long term rating at BWR BBB-/Stable & short term rating at BWR A3 for the Bank Loan Facilities of Rs. 32.56 Crs. of Metal Care Alloys Private Limited

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (28 Jan 2022)	Present
Fund Based	33.06	32.56	Long Term	BWR BBB- /Stable Reaffirmation	BWR BBB - /Stable Reaffirmation
	(20.00)	(20.00)
	(20.00)	(20.00)
Non Fund Based	(10.00)	(10.00)	Short Term	BWR A3 Reaffirmation	BWR A3 Reaffirmation
Non Fund Based	(2.00)	(2.00)	Short Term	BWR A3 Reaffirmation	BWR A3 Reaffirmation
Grand Total	33.06	32.56	(Rupees Thirty Two Crores and Fifty Six 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

The Long term rating of the Bank Loan Facilities of the entity Metal Care Alloys Pvt. Ltd has been reaffirmed at BWR BBB-/Stable & reaffirmed the short term rating at BWR A3. Brickwork Ratings (BWR) has essentially relied on the audited financial statements of Metal Care Alloys Pvt. Ltd up to FY22, projections upto FY24 publicly available information, and information/clarifications provided by the company’s management and its bankers to arrive at the present ratings BWR believes that the business risk profile of Metal Care Alloys Pvt. Ltd will be maintained over the medium term. The 'Stable' outlook indicates a low likelihood of rating change over the medium term. The ratings have been reaffirmed on account of the experience of the management, reputed client base, moderate financial risk profile & growth in revenues & profitability. The rating is however constrained due to foreign exchange fluctuations & intense competition.

KEY RATING DRIVERS

Credit Strengths:

Qualified promoters assisted by experienced key management personnel :
The Company is managed by 2 young directors who are strongly assisted by their fairly qualified key management personnel. Together, they possess combined industry experience of more than 5 decades.
Reputed clientele base and established clientele relationship :
MCAPL has developed strong business relationship with its customers since inception, which has further resulted in acquiring repeat orders from them on a frequent basis. It caters to some of the renowned clients across industries such as pump, engineering, electrical etc.
Relatively Moderate Financial Risk Profile :
The company has a relatively moderate financial risk profile as reflected by a moderate gearing of 2.09X in FY22 due to an increasing TNW & projected 1.73X in FY23. The coverage ratios as reflected by ISCR & DSCR stood at 2.06X & 1.61X in FY22 & projected 2.13X & 1.67X in FY23 indicating the ability of the company to service its interest & debt obligations. The current ratio has improved to 1.58X in FY22, from 1.37X in FY21.
Growth in revenues and profitability :
Revenue growth in FY22 to Rs 156.72 Crs from Rs 122.12 Crs in FY21. PAT also increased to Rs 2.13 Crs in FY22 from Rs 1.45 Crs in FY21. The company is projecting to achieve TOI of Rs. 194.60 Crs. in FY22 and it is achieveable on the basis of sales made by the company amounting to Rs. 125.71 Crs. for the period April 22 to Nov 22. Profitability margins OPM and NPM were 5.78% & 1.19% in FY21 respectively declining marginally to 5.23% and 1.36% in FY22.

Credit Risks:

Exposure to risks arising from foreign exchange fluctuations :
As the Company is involved in imports and exports as well, it is susceptible to risks arising from adverse changes in foreign exchange rates. Foreign exchange fluctuations have a direct bearing on the profitability of the Company. However, the risk for same is mitigated as the company imports in same proportion as the exports reducing the risk and creating a natural hedging mechanism.
Intense Competition in the Industry :
The aluminium industry is highly fragmented with the presence of both organized and unorganized players in the downstream segment providing similar products/services. Hence, the company faces competition from regional players leading to intense competition and pricing pressures, which in turn affect the profitability margins of the company.

ANALYTICAL APPROACH - Standalone

For arriving at its ratings, BWR has applied its rating methodology as detailed in the Rating Criteria detailed below (hyperlinks provided at the end of this rationale). The company has no group entity.

RATING SENSITIVITIES

Going forward the ability of the Company to scale up its operations, improve overall financial risk profile of the company backed by profitability margins, gearing levels, coverage indicators, ability to service debt repayment timely and efficiently manage its working capital would be key rating sensitivities

Positive: The Ratings may be Upgraded in case of improvement in capacity utilisation levels leading to growth in revenue and profitability, infusion of funds by way of share capital/unsecured loans projected.

Negative: The Ratings may be Downgraded in case of a deterioration in the financial risk profile, withdrawal of subordinated debt before entire repayment of outside debt obligations, any long-term debt-funded capex expansion plan impacting leverage & achieving the projected financials of the Company.

LIQUIDITY INDICATORS - Adequate

The liquidity position of the company is adequate with current ratio of 1.58x in FY22.

The net cash accurals is Rs 3.03 Crs as against the debt obligations Rs 0.12 Crs in FY22 & projected net cah accurals Rs 2.14 Crs as against debt obligations Rs 0.50 Crs in FY23.

The cash & cash balance stands at Rs 6.37 Crs as on 31st March 2022.

Average cash credit utilization stands at Rs 97.57% includes period from May- Oct 2022.

ABOUT THE ENTITY

Metal Care Alloys Private Ltd(MCAPL) was incorporated in July 2015. Based in Mumbai (Maharashtra), it is a private limited company having authorised share capital of ₹3 Crs. It has its corporate office in Mumbai and manufacturing unit located in Palghar. The Company is recognised by Government of India as a Star Export House since September 2018.MCAPL is engaged in manufacturing of copper and copper-based alloys ingots. The various grades of copper alloys ingots include gunmetal ingots, aluminium bronze ingots, lead bronze ingots, tin lead bronze ingots, phosphorous bronze ingots, tin bronze ingots and brass ingots.

During FY22 total exports increased to Rs. 81.99 Cr from Rs. 66.20 Cr in FY21. Major export countries are China, Hongkong and Middle East. Credit terms: 10%-20% Advance and balance against documents Imports increased from Rs. 17.24 Cr in FY21 to Rs. 43.89 Cr in FY22. Major import countries are USA and Singapore Imports are against advance and balance against shipment. Company follows back to back order mechanism and hence keeps itself insulated from any adverse price movements. Company does not follow any hedging mechanism as it is naturally hedge having both imports and exports. Of the total unsecured loans Rs. 3.32 Cr is subordinated and interest free. Undertaking for the same has been provided to the bank and same has been furnished to agency as well. We purchase best quality raw material from the international as well as local market. After completing chemical testing of the raw material (Pre-Production Testing), the production charge is made as per the customer specifications for production of ingots. This raw material charge will then be melted in the induction furnace.
Before pouring, the liquid metal is tested on the Optical Emission Spectrometer by taking a button sample. Getting ok report from the lab, this proceeds for pouring in moulds through Laddles.
Once again the metallurgical testing is done in the lab and after getting the approval from lab, the batch vise ingots goes for weighment and packing on wooden pallets accordingly following the international packing rules. The ready goods in the stores are loaded in the containers/lorry according to the customers purchase order and the goods are dispatched.
Entire process from purchase to conversion into finished goods takes upto ~60 days.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 21-22 (Audited)	FY 20-21 (Audited)
Operating Revenue	Rs.Crs.	156.72	122.12
EBITDA	Rs.Crs.	8.20	7.05
PAT	Rs.Crs.	2.13	1.45
Tangible Net Worth	Rs.Crs.	22.53	20.36
Total Debt/TNW	Times	2.09	1.46
Current Ratio	Times	1.58	1.37

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

India Ratings & Research has reaffirmed the Long term rating to BB+ Issuer Non-Cooperating & had withdrawn the short-term rating on 10th Dec 2021.

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

Facilities	Current Rating (2022)			2022 (History)		2021		2020		2019
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	32.56	BWR BBB-/Stable (Reaffirmation)	28Jan2022	BWR BBB- Stable (Reaffirmation)	19Nov2021	BWR BBB- Stable (Reaffirmation)	24Aug2020	BWR BBB- Stable (Reaffirmation)	05Feb2019	BWR BBB- Stable (Assignment)
FB SubLimit	LT	(20.00)	BWR BBB-/Stable (Reaffirmation)	NA	NA	NA	NA	NA	NA	NA	NA
		(20.00)	BWR BBB-/Stable (Reaffirmation)	NA	NA	NA	NA	NA	NA	NA	NA
Non Fund Based	ST	0.00	NA	NA	NA	19Nov2021	BWR A3 (Reaffirmation)	24Aug2020	BWR A3 (Reaffirmation)	05Feb2019	BWR A3 (Assignment)
NFB SubLimit	ST	(10.00)	BWR A3 (Reaffirmation)	28Jan2022	BWR A3 (Reaffirmation)	NA	NA	NA	NA	NA	NA
NFB SubLimit	ST	(2.00)	BWR A3 (Reaffirmation)	NA	NA	NA	NA	NA	NA	NA	NA
Grand Total		32.56	(Rupees Thirty Two Crores and Fifty Six 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
Suman Prabitra Paul Ratings Analyst suman.p@brickworkratings.com	Sushil Kumar Chitkara Director - Ratings Board : +91 22 2831 1426, +91 22 2831 1439 sushilkumar.c@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

Metal Care Alloys Private Limited

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	Bank of Maharashtra	Term Loan - Sanctioned	0.56	_	0.56
2	Bank of Maharashtra	Cash Credit - Sanctioned	32.00	_	32.00
	Sub-Limit (Bank Guarantee) - Sanctioned		(2.00)
	Sub-Limit (FOBN/FOBD/EBD) - Sanctioned	(20.00)
	Sub-Limit (Letter Of Credit) - Sanctioned		(10.00)
	Sub-Limit (PC / PCFC) - Sanctioned	(20.00)
Total			32.56	0.00	32.56
TOTAL (Rupees Thirty Two Crores and Fifty Six lakhs Only)

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