Mahipal Foods & Gum Industries

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.10.00 Crs. of Mahipal Foods & Gum Industries

Particulars

Facility**	Amount (Rs.Crs)	Tenure	Rating*
Fund Based
Cash Credit	10.00	Long Term	BWR B + (Stable)
Sub Total	10.00
Grand Total	10.00	(Rupees Ten Crores Only)

*Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank facilities are provided in Annexure-I RATING ACTION / OUTLOOK : Stable

BWR believes the Mahipal Foods & Gum Industries business risk profile will 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 the revenues and profit show sustained improvement. The rating outlook may be revisd to 'Negative' if the revenues go down and profit margins show lower than expected figures.

KEY RATING DRIVERS

BWR has essentially relied upon the audited financial statements of Mahipal Foods & Gum Industries up to FY16,FY17,FY18 and projected financial statements up to FY19 publicly available information and information / clarifications provided by the entity’s management. The rating draws strength from the vast business experience of the partners / directors, established track of operations and average conversion cycle. However, the rating is constrained by the decline in revenues, weak debt protection metrics, Low Profitability Margins and High gearing level.Going forward, the ability of the entity to achieve projected revenue & profitability margins and manage liquidity would be key rating sensitivities.

Strengths

Extensive Experience of Partners & Long track record of business :
Mr Sanjay Mahipal has been processing guar gum for the past 10 years and has over four decades experience in Agriculture commodity which helps to established relationships with their customers and suppliers.
Average Conversion Cycle :
The company has average conversion cycle of 18 days due to low days Payables and Receivables.

Weakness

Decline in Revenues :
The company revenues has decline from Rs 185.00 crores in FY17 to Rs 172.62 crores in FY18, The company has achieved revenues of Rs 139.00 crores till 31.03.19 as informed by the Management.
Weak Debt Protection Metrics :
The firm has weak debt protection metrics with Interest Service Coverage Ratio estimated at 1.24 Times and Debt Service Coverage Ratio at 0.57 Times in FY18.
Low Profitability Margins :
The firm has low profitability margins with Operating Profitability Margins of 0.89% and Net Profit Margins of 0.11% in FY18.
High Gearing Level :
The Firm has high gearing level with TD/TNW of 7.45 times and TOL/TNW of 2.43 Times in FY18.

ANALYTICAL APPROACH AND APPLICABLE RATING CRITERIA

For ariving 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).

LIQUIDITY POSITION

The company has associate concern with the name of MAT White Gum Industries Private Limited but there is no such operational linkages between them. The company has cash & bank balances of Rs 2.02 crores in FY18. The company has nil long term debt. Debt Service Indicators with Interest Service Coverage Ratio of 1.24 Times and Debt Service Coverage Ratio of 0.57 Times in FY18. The company has an average c.c utilisation of 33% from last six months. Low conversion cycle of 18 days in FY18. The current ratio has been 5.57 Times in FY18.

PROFILE

Mahipal Foods & Gum Industries incorporated in 30/08/2006 with Partners namely Mr Sanjay Mahipal, Ms. Nisha Mahipal and Ms. Munni Devi Mahipal. The Company is engaged in manufacturing and trading of Guar Gum and Mustard Oil. The company has its unit located at Sri Ganganagar, Rajasthan.

KEY FINANCIAL INDICATORS

Key Parameters	Units	FY 17-18	FY 16-17
Operating Revenue	Rs.Crs	172.62	185.01
EBITDA	Rs.Crs	1.54	1.23
PAT	Rs.Crs	0.19	0.14
Tangible Net Worth	Rs.Crs	2.06	1.81
Total Debt/Tangible Net Worth	Times	7.45	5.84
Current Ratio	Times	5.57	2.94

RATING HISTORY (INCLUDING WITHDRAWAL AND SUSPENSION)

S.No	Current Rating (2019)				Rating History
	Facilities	Tenure	Amount (Rs.Crs)	Rating	2018	2017	2016
Fund Based
1	Cash Credit	Long Term	10.00	BWR B+ (Pronounced as BWR Single B plus) (Outlook: Stable)	NA	NA	NA
Total			10.00	(Rupees Ten Crores Only)

COMPLEXITY LEVELS OF THE INSTRUMENTS

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 :

For More Information Contact:

Analytical Contacts	Investor Contacts
Aman Sharma Ratings Analyst B : +91 172 5032 295 / 6 aman.s@brickworkratings.com	Liena Thakur Assistant Vice President - Corporate Communications M : +91 84339 94686 liena.t@brickworkratings.com
V.K.Kukreja Associate Director - Ratings B : +91 11 2341 2232 kukreja.vk@brickworkratings.com
1-860-425-2742

Mahipal Foods & Gum Industries

ANNEXURE-I

Details of Bank Facilities rated by BWR

SL.No.	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)
1	Cash Credit	10.00	_	10.00
Total				10.00
TOTAL (Rupees Ten Crores Only)

Additional information is available at www.brickworkratings.com The ratings above were solicited by,or on behalf of , the issuer, and therefore, Brickwork Ratings has been compensated for the provision of the ratings.
Ratings are not a recommendation or suggestion ,directly or indirectly, to you or any other person, to buy sell, make or hold on any investement,loan or security or to undertake any investement strategy with respect to any investment,loan or security or any issuer.

About Brickwork Ratings

Brickwork Ratings (BWR), a SEBI registered Credit Rating Agency, accredited by RBI and empaneled by NSIC, offers Bank Loan, NCD, Commercial Paper, MSME ratings and grading services. NABARD has empaneled Brickwork for MFI and NGO grading. BWR is accredited by IREDA & the Ministry of New and Renewable Energy (MNRE), Government of India. Brickwork Ratings has Canara Bank, a leading public sector bank, as its promoter and strategic partner.
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DISCLAIMER

Brickwork Ratings (BWR) has assigned the rating based on the information obtained from the issuer and other reliable sources, which are deemed to be accurate. BWR has taken considerable steps to avoid any data distortion; however, it does not examine the precision or completeness of the information obtained. And hence, the information in this report is presented "as is" without any express or implied warranty of any kind. BWR does not make any representation in respect to the truth or accuracy of any such information. The rating assigned by BWR should be treated as an opinion rather than a recommendation to buy, sell or hold the rated instrument and BWR shall not be liable for any losses incurred by users from any use of this report or its contents. BWR has the right to change, suspend or withdraw the ratings at any time for any reasons.