RATING RATIONALE
21Sep2021

Mangalam Global Enterprise Ltd.

Brickwork Ratings reaffirms the ratings for the Enhanced Bank Loan Facilities of Rs. 145.73 Crs. of Mangalam Global Enterprise Ltd.

Particulars
Facilities** Amount (Rs.Crs.) Tenure Rating#
Previous Present Previous
(06 Aug 2020)
Present
Fund Based 40.00 105.73 Long Term BWR BBB-/Stable
Assignment
BWR BBB - /Stable
Reaffirmation
10.00 35.00 Short Term BWR A3
Assignment
BWR A3
Reaffirmation
Non Fund Based 0.00 5.00 Short Term BWR A3
Assignment
BWR A3
Reaffirmation
Grand Total 50.00 145.73 (Rupees One Hundred Forty Five Crores and Seventy Three 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

BWR essentially relied on audited results upto FY21, Projections upto FY24, publicly available information and clarification/information provided by the company.


The rating continues to derive strength from the extensive experience of the management, its diversified business profile, established relationships with customers and suppliers, locational advantage, revenue growth, and adequate financial risk profile.

 The ratings however continue to remain constrained on account of its thin profitability due to its presence in an intensely competitive agro-commodity industry along with limited value addition. The ratings also take into account the vulnerability of profit margins to volatile raw material prices, agro-climatic risk , foreign currency fluctuation and its presence in a highly fragmented and competitive industry. The ratings are further constrained due to the limited  operating history of operations for wheat, rice, soya oil, mustard oil and allied products

The stable outlook indicates low likelihood of rating change over medium term. BWR believes that Mangalam Global Enterprise Limited’s business risk profile will be maintained over medium term

KEY RATING DRIVERS

Credit Strengths:


Credit Risks:

ANALYTICAL APPROACH - Standalone

Standalone

While assigning the ratings, BWR has applied its rating methodology as detailed in the Rating Criteria (hyperlinks provided at the end of this rationale).

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 has an adequate liquidity profile with absence of any major long-term repayment obligations and major capex plans. Further, the company had cash accruals of around Rs. 7.48 Crs and average utilization of bank limits is below 65% for the past 12 months. The company
has a short conversion cycle of 21 days and current ratio for FY21 is1.45 times. Going forward, company is expected to generate cash accruals of around Rs.10-15 crs which are adequate to meet scheduled nominal yearly debt repayments of Rs.1.5-Rs.2.0 crs over the next two years.

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 20-21
(Audited)
FY 19-20
(Audited)
Operating Revenue Rs.Crs. 907.78 574.06
EBITDA Rs.Crs. 8.16 8.81
PAT Rs.Crs. 5.29 3.75
Tangible Net Worth Rs.Crs. 66.68 57.74
Total Debt/Tangible Net Worth Times 1.17 0.56
Current Ratio Times 1.45 2.24
KEY COVENANTS OF THE FACILITY RATED

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


NON-COOPERATION WITH PREVIOUS CREDIT RATING AGENCY

NA

RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)
Facilities Current Rating  (2021) 2021 (History) 2020 2019 2018
Type Tenure Amount
(Rs.Crs.)
Rating Date Rating Date Rating Date Rating Date Rating
Fund Based LT 105.73
BWR BBB-/Stable
(Reaffirmation)
NA
NA
06Aug2020
BWR BBB-Stable
(Assignment)
NA
NA
NA
NA
Fund Based ST 35.00
BWR A3
(Reaffirmation)
NA
NA
06Aug2020
BWR A3
(Assignment)
NA
NA
NA
NA
Non Fund Based ST 5.00
BWR A3
(Reaffirmation)
NA
NA
06Aug2020
BWR A3
(Assignment)
NA
NA
NA
NA
Grand Total 145.73 (Rupees One Hundred Forty Five Crores and Seventy Three lakhs Only)
Press Release, as on 11Aug2021
Rating advisory for delay in periodic review

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

Priya Depala

Senior Rating Analyst priya.d@brickworkratings.com

Dileep Narayan Singh

Director dileep.s@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 HDFC Bank EPC/ PCFC/ FBP/ PSFCSanctioned 35.00 _ 35.00
2 HDFC Bank Bill Discounted (BD)Sanctioned _ 30.00 30.00
3 HDFC Bank GECLSanctioned 2.34 _ 2.34
4 HDFC Bank Short term loan-Pledge FundingSanctioned _ 5.00 5.00
5 HDFC Bank Credit Exposure Limit (CEL)Sanctioned _ 5.00 5.00
6 Punjab National Bank Cash CreditSanctioned 25.00 _ 25.00
7 Punjab National Bank Covid -19 Emergency Line CreditSanctioned 1.95 _ 1.95
8 Punjab National Bank GECLSanctioned 1.44 _ 1.44
9 Un tied portion Cash CreditProposed 40.00 _ 40.00
Total 105.73 40.00 145.73
TOTAL (Rupees One Hundred Forty Five Crores and Seventy Three lakhs Only)
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