Marudhar Industries Limited

Brickwork Ratings reaffirms the long term and short term ratings for the Bank Loan Facilities of Rs. 78.19 Crs. of Marudhar Industries Limited

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (17 Sep 2021)	Present
Fund Based	53.29	51.29	Long Term	BWR BBB /Stable Reaffirmation	BWR BBB /Stable Reaffirmation
	(25.00)	(25.00)
	(5.32)	(5.32)
Non Fund Based	26.90	26.90	Short Term	BWR A3 Reaffirmation	BWR A3 Reaffirmation
Grand Total	80.19	78.19	(Rupees Seventy Eight Crores and Nineteen 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 reaffirms the long term and short term rating at BWR BBB/stable/A3 with a stable outlook for the Bank Loan Facilities of Marudhar Industries Limited. The rating reaffirmed factors in the Established track record of operations and experienced promoters, Integrated Nature of Operations, Comfortable capital structure with moderate debt coverage indicators. The rating is constrained on account of profitability of the Company is susceptible to volatility in raw material prices, presence in the intensely competitive aluminum foil industry. BWR has essentially relied upon the audited standalone for FY20, FY21 and FY22, projections of FY23, FY24 and publicly available information / clarifications provided by the entity’s management.

KEY RATING DRIVERS

Credit Strengths:

Established track record of operations and experienced promoters :
The Company has established a track record of operation in the aluminium foil and flexi packaging industry of more than two decades. The Company benefits from a strong and diversified customer profile belonging to various sectors including pharmaceuticals, agriculture, FMCG etc. The Company has an established position in the market and sells its aluminium foil food containers under the brand name “HealthWrap”. The Company also benefits from the extensive experience of its promoters Mr. Naresh Jain and Mr. Bhavesh Jain who collectively possesses around seventeen years of experience in the packaging industry. Further, they are supported by a team of well qualified and experienced professionals as the second line of management. The vast experience of the promoters have helped the Company to maintain long standing relations with its customers and suppliers.
Integrated nature of operations :
The Company benefits from the integrated nature of operations as it can undertake continuous strip casting and rolling to converting of aluminium foils. This enables the Company to manufacture a wide range of aluminium flat rolled products. Further, the presence of a flexible packaging division helps the Company to manufacture co-extruded polymers, flexible laminates and aluminium foil-based flexible packaging products.
Comfortable capital structure with moderate debt coverage indicators :
The financial risk profile of the Company is comfortable marked by tangible net worth of Rs. 44.55 crores as on 31.03.2022. The debt to equity ratio at 1.68 times as on 31.03.2022; however the total long term borrowings of Rs. 24.34 crores as on 31.03.2022 mainly includes interest free loans from related parties. The debt coverage indicators have remained comfortable as the Interest Service Coverage Ratio (ISCR) stood at 2.18 times for FY2022 as against 1.83 times in the previous year and Debt Service Coverage Ratio (DSCR) stood at 1.92 times for FY2022 as against 1.22 times in the previous year. Going forward, the financial risk profile of the Company is expected to remain comfortable on account of improvement in the improvement in profitability of the company.

Credit Risks:

Profitability of the Company is susceptible to volatility in raw material prices :
The main raw material for the company is aluminium foil and it comprises a significant portion of the total purchase cost for the company. The price of aluminium coil is linked with the price of primary aluminium in the domestic market, which in turn is governed by global supply-demand scenario and foreign exchange rate fluctuation. Hence, the profitability of the company is exposed to volatility in the prices of aluminium and also foreign exchange fluctuation risk on its imports in the absence of adequate hedging mechanisms.
Presence in the intensely competitive aluminum foil industry :
The company operates in a highly fragmented and intensely competitive aluminium foil industry on account of ample available production capacity along with imports of regular quality foils, particularly from China and South East Asian nations.

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). BWR has principally relied upon the standalone audited financials up to FY2022 and publicly available information and clarification/information provided by the Company.

RATING SENSITIVITIES

Positive:

Significant growth in revenue and profitability leading to higher than expected net cash accruals.
Significant reduction in overall debt of the company leading to its improvement in capital structure and debt protection indicators of the company.

Negative:

Significant decline in revenue and profitability leading to deterioration in the liquidity profile of the company.
Deterioration in the capital structure of the company and debt protection indicators.
Major debt funded capacity expansion plan leading to deterioration in the financial risk profile of the company.

LIQUIDITY INDICATORS - Adequate

The company has reported net cash accruals of Rs. 8.43 crores for FY 2022 which is sufficient to cover CPLTD Rs. 2.22 Cr The current ratio stood at 1.31 times as on 31.03.2022. The cash and bank balance stood at Rs. 7.97 crores as on 31.03.2022 and mainly includes deposit and margin money against non fund based facilities for less than three months. Average utilization of HDFC CC limit is 69.83% for the June22-Nov22. Average utilization of Punjab National Bank CC limit is 83.94% for the Apr22-Nov22.

ABOUT THE ENTITY

Marudhar Industries Limited (MIL or ”The Company”) was initially incorporated as Kartic Traders and Exported Limited (KTEL) in May 1983 by Mr. N. P. Jain in West Bengal. During 1995, two group companies of Marudhar Metal Private Limited and Salecha Foils and Strips Private Limited were merged into KTEL and renamed into Marudhar Industries Limited. Subsequently, the company was listed on the Calcutta Stock Exchange in the year 1997. However, the shares are privately held and not much trading activity is carried out for it. Currently the company has delisted the shares from Calcutta stock Exchange. The Company is promoted by Mr. Naresh S. Jain and Mr. Bhavesh S. Jain.
The Company is engaged in manufacturing and exporting of aluminium foil, laminated bags & pouches. It also undertakes designing and making packaging pouches & films. The Company has two manufacturing units in Vatva, Ahmedabad with Unit I for manufacturing of aluminium foils, coils, sheets with an installed 10,000 metric tonnes per annum (MTPA) and Unit II for flexi packaging with an installed capacity of 10000 MTPA.
MIL mainly caters to pharmaceuticals, agriculture sector and FMCG industry. MIL sells the aluminium foil food containers under the registered brand name “HealthWrap”. The company majorly caters to the domestic customers i.e. traders in major cities of the country and around 1% is derived from exports.
Furthermore, the main raw material i.e. aluminium ingots, hot rolled (HR), aluminium coils, cold rolled, aluminium coils and aluminium scrap which is majorly sourced from domestic suppliers including NALCO and BALCO against letter of credit under yearly contracts. It also procures polymer granules, plain polyester films and metalized polyester films from domestic suppliers.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 21-22 (Audited)	FY 20-21 (Audited)
Operating Revenue	Rs.Crs.	333.89	220.98
EBITDA	Rs.Crs.	16.30	17.47
PAT	Rs.Crs.	3.76	0.79
Tangible Net Worth	Rs.Crs.	44.55	40.33
Total Debt/TNW	Times	1.68	1.53
Current Ratio	Times	1.31	1.24

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

CRISIL rated BBB-/stable/A3 to Marudhar Industries Limited vide press release dated Sep 7, 2022.

ANY OTHER INFORMATION

Not Applicable

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	51.29	BWR BBB/Stable (Reaffirmation)	17Sep2021	BWR BBB Stable (Reaffirmation)	07Apr2020	BWR BBB Stable (Reaffirmation)	NA	NA
FB SubLimit	LT	(25.00)	BWR BBB/Stable (Reaffirmation)	17Sep2021	BWR BBB Stable (Reaffirmation)	07Apr2020	BWR BBB Stable (Reaffirmation)	NA	NA
		(5.32)	BWR BBB/Stable (Reaffirmation)	NA	NA	NA	NA	NA	NA
Non Fund Based	ST	26.90	BWR A3 (Reaffirmation)	17Sep2021	BWR A3 (Reaffirmation)	07Apr2020	BWR A3 (Reaffirmation)	NA	NA
Grand Total		78.19	(Rupees Seventy Eight Crores and Nineteen 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
Rujuta Sadanand Zajam Ratings Analyst rujuta.sz@brickworkratings.com	Vidya Shankar Principal Director - Ratings Board : +91 80 4040 9940 vidyashankar@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

Marudhar Industries 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	HDFC Bank	Cash Credit - Sanctioned	25.00	_	25.00
	Sub-Limit (Working Capital Demand Loan) - Sanctioned	(25.00)
2	HDFC Bank	Letter of Credit - Sanctioned	_	18.40	18.40
3	HDFC Bank	Letter of Credit - Sanctioned	_	3.00	3.00
4	HDFC Bank	Letter of Credit - Sanctioned	_	0.50	0.50
5	HDFC Bank	GECL - Sanctioned	5.09	_	5.09
6	Punjab National Bank	GECL - Sanctioned	2.20	_	2.20
7	Punjab National Bank	Letter of Credit - Sanctioned	_	5.00	5.00
8	Punjab National Bank	Cash Credit - Sanctioned	19.00	_	19.00
	Sub-Limit (Packing Credit) - Sanctioned	(5.32)
Total			51.29	26.90	78.19
TOTAL (Rupees Seventy Eight Crores and Nineteen lakhs Only)

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