Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 36.24 Crs. of Manish Packaging Pvt. Ltd. ('MPPL' or 'The company')
Particulars| Facilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||
|---|---|---|---|---|---|
| Previous | Present | Previous (07 May 2021) |
Present | ||
| Fund Based | 10.00 | 10.00 | Long Term |
BWR BBB+ /Stable
Reaffirmation |
BWR BBB +
/Stable Reaffirmation |
| Non Fund Based | 26.24 | 26.24 | Short Term |
BWR A2+
Reaffirmation |
BWR A2 +
Reaffirmation |
| Grand Total | 36.24 | 36.24 | (Rupees Thirty Six Crores and Twenty Four lakhs Only) | ||
Brickwork Ratings (BWR) has reaffirmed its 'BWR BBB+/Stable/BWR A2+' rating on the bank facilities of Manish Packaging Private Limited (MPPL).
The ratings continue to reflect the company's established and diversified presence in the industry supported by the extensive experience of the promoters, its robust financial risk profile and efficiently managed working capital. These rating strengths are partially offset by its moderate scale of operations, exposure to risks related to volatility in raw material prices, and customer concentration in the revenues
Outlook: Stable
BWR believes that the company will maintain its robust financial risk profile over the medium term, supported by low incremental working capital requirements, and healthy profitability. The Stable outlook indicates a low likelihood of a change in rating over the medium term.
Credit Strengths:
MPPL company is promoted by Kanaiyalal B. Patel who has around five decades of experience and together with Manish K.Patel, Vikas K. Patel, Mrugesh S. Raval and Smit K. Patel forms the core management of the company. An established track record of the management has resulted in long and established relations with most suppliers and customers
The company’s financial risk profile is robust in the absence of any term debt and no expectations of any debt-funded capex in the medium term along with constant accretion to reserves. Additionally, the requirement of working capital debt is minimal leading to robust debt protection metrics. The gearing and TOL/TNW is estimated at 0.01 times (FY21: 0.01) and 0.07 times (FY21: 0.20) respectively for FY22 management-certified financials
The scale of operations has improved over the years at a growth rate of over 11% on a compounded basis. The revenues are estimated at over Rs 218 crore for FY22 recording a growth of over 14% from FY 2021 levels. That said, the scale remains moderate and significant improvement in topline whilst sustaining profitability over the medium term will remain a key rating sensitive.
Around 50% of the revenue comes from the top five customers, exposing the company to revenue concentration risk. However, this risk is mitigated as these customers have equivalent market share in the respective segment. Also, these clients have strict quality and capability norms, leading to low competition. Though the company has added clients, the size of the business and stable profitability will be monitorable.
The company's product prices are based on a conversion margin and PVC resin prices prevailing on the date of sale. The company's operations could be adversely impacted in case of adverse movements in raw material prices, as the conversion margins are thin for absorbing the volatility in input prices. The company generally carries about 1.5-2 months' inventory and hence its ability to manage its inventory during adverse movements in raw material prices will remain a key rating sensitivity factor.
For arriving at its ratings, BWR has considered MPPL’s standalone financials and applied its rating methodology as detailed in the Rating Criteria
RATING SENSITIVITIES
Positive
Negative
Liquidity is strong, The company is expected to generate cash accruals of over Rs 35 crore in FY23 and FY24 against nil term debt obligations. The fund-based working capital limits are seldomly utilised. The company has unencumbered cash balances of over Rs 5.5 crore to meet any exigencies and additionally has liquid investments of over Rs 79 crore as on March 31, 2022. The promoters also provide need-based fund support through unsecured loans as and when required. The current ratio is robust at over 6 times as on March 31, 2022.
ABOUT THE ENTITYMPPL was set up in 1970 in Surat (Gujarat) by Mr. Kanaiyalal Patel as a proprietorship concern and was converted into a private Limited company in 1997. The company is engaged in manufacturing and marketing flexible packaging material, used in the packaging of food, FMCG products, consumer goods, etc. The company manufactures a variety of PVC & CoPet films, including laminates, cast-shrink, twist-wrap, and heat-sealable and metalized films. It has in-house metalizing and printing process capability creating value addition. The raw materials used by the company are both indigenous and imported. It has three manufacturing units in Surat district and one manufacturing facility in Navsari District and is equipped with in-house R & D facilities. The company currently operates 6 units of windmills, each with an annual capacity of 0.8 MW, majorly for captive consumption.
KEY FINANCIAL INDICATORS (Standalone)| Key Parameters | Units |
FY 20-21 (Audited) |
FY 19-20 (Audited) |
|---|---|---|---|
| Operating Revenue | Rs.Crs. | 191.71 | 172.41 |
| EBITDA | Rs.Crs. | 43.72 | 24.00 |
| PAT | Rs.Crs. | 27.86 | 11.86 |
| Tangible Net Worth | Rs.Crs. | 187.30 | 159.44 |
| Total Debt/TNW | Times | 0.01 | 0.03 |
| Current Ratio | Times | 2.38 | 2.92 |
| Facilities | Current Rating (2022) | 2021 | 2020 | 2019 | |||||
|---|---|---|---|---|---|---|---|---|---|
| Type | Tenure | Amount (Rs.Crs.) |
Rating | Date | Rating | Date | Rating | Date | Rating |
| Fund Based | LT | 10.00 |
BWR BBB+/Stable
(Reaffirmation) |
07May2021 |
BWR BBB+ Stable
(Reaffirmation) |
16Jan2020 |
BWR BBB+Stable
(Reaffirmation) |
NA |
NA
|
| Non Fund Based | ST | 26.24 |
BWR A2+
(Reaffirmation) |
07May2021 |
BWR A2+
(Reaffirmation) |
16Jan2020 |
BWR A2+
(Reaffirmation) |
NA |
NA
|
| Grand Total | 36.24 | (Rupees Thirty Six Crores and Twenty Four lakhs Only) | |||||||
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 | |
|---|---|
|
Arbez Noshir Karbhari Ratings Analyst arbez.k@brickworkratings.com |
Chintan Dilip Lakhani Director- Ratings chintan.l@brickworkratings.com |
| 1-860-425-2742 | media@brickworkratings.com | |
| SL.No. | Name of the Bank/Lender | Type Of Facilities | Long Term(Rs.Crs.) | Short Term(Rs.Crs.) | Total(Rs.Crs.) | |
|---|---|---|---|---|---|---|
| 1 | HDFC Bank | Letter of CreditSanctioned | _ | 10.00 | 10.00 | |
| 2 | State Bank Of India (SBI) | Credit Exposure Limit (CEL)Sanctioned | _ | 1.24 | 1.24 | |
| 3 | State Bank Of India (SBI) | FBWC (CC/EPC/FBD/FBP)Sanctioned | 1.00 | _ | 1.00 | |
| 4 | State Bank Of India (SBI) | EPC/PCFC/BDSanctioned | 9.00 | _ | 9.00 | |
| 5 | State Bank Of India (SBI) | Letter of CreditSanctioned | _ | 15.00 | 15.00 | |
| Total | 10.00 | 26.24 | 36.24 | |||
| TOTAL (Rupees Thirty Six Crores and Twenty Four lakhs Only) | ||||||
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