| MMP Industries Limited | ||||||
| Ratings placed on 'Watch Developing' | ||||||
| Rating Action | ||||||
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| Note: None of the Directors on Crisil Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||||
| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale Crisil Ratings has placed its ratings on the bank facilities of MMP Industries Limited (MMPIL) on 'Rating Watch with Developing Implications‘.
The ratings of MMP have been placed on rating watch with developing implications, following announcement of a fire incident at the aluminium powder division at company’s plant in Umred, Maharashtra on 11th April 2025 at around 6.45 p.m. The estimated losses of inventory and plant & machinery are upto Rs 15-20 crore. However, detailed clarity regarding the final quantum of loss, amount covered under insurance claim, final timelines by when the plant would be able to resume operations and accordingly, estimated production/ revenue loss, is currently not available and is awaited. Crisil Ratings will remain in contact with the management to monitor the developments, and will resolve the watch once there is clarity regarding the impact of this event on the business and financial risk profile of the company.
The ratings continue to reflect the established position of the company in the aluminium powder products industry, its established clientele and the extensive experience of the promoters. The ratings also factor in efficient working capital management and a healthy financial risk profile. These strengths are partially offset by vulnerability to volatility in raw material prices. |
Analytical Approach Crisil Ratings has considered the standalone business and financial risk profiles of MMPIL. |
Key Rating Drivers & Detailed Description Strengths: Established market position and its established clientele: Over the years, MMPIL has diversified its presence in different segments such as aluminium powder, aluminium foils and conductor cables with established clientele such as UltraTech Cement Ltd, Shree Cement, Torrent Pharma and Cadila Pharmaceuticals. Owing to diversified presence and well-established clientele, the operating income increased to Rs 579 crore in fiscal 2024 from Rs 231 crore in March 2021.
Extensive experience of the promoters: The promoters have been in the aluminium powder products industry for over three decades. Mr Arun Bhandari, the key promoter, is a chemical engineer and has gained significant technical expertise and capabilities. Over the years, the promoters have upgraded technology through continuous research and development and leveraged this to build a strong clientele.
Efficient working capital management: The working capital cycle is managed efficiently, as reflected in moderate gross current assets (GCAs) of around 109 days as on March 31, 2024, as against 92 days a year earlier. While receivables were small at 38 days, inventory was high at 76 days. The GCAs are expected at 100-115 days over the medium term.
Healthy financial risk profile: Capital structure is supported by healthy networth and low total outside liabilities to adjusted networth ratio of Rs 254.49 crore and 0.57 time, respectively, as on March 31, 2024. Debt protection metrics were comfortable, as reflected in interest coverage and net cash accrual to adjusted debt ratios of 6.9 times and 0.31 times, respectively, in fiscal 2024. The company has planned a solar expansion under the Maharashtra Open Access Policy, which will cut energy costs and boost the operating margin. Expected investment of Rs 25 crore in the next 10-12 months for the same will be met through internal accrual. Furthermore, the company is expected to enhance its cable range to include low tension (LT) power in phases, which will entail capital expenditure (capex) of Rs 80-90 crore over the next 2-3 years. The first investment of Rs 45 crore will be done in fiscal 2026, which will be partly debt funded. The financial risk profile will likely remain healthy over the medium term despite debt-funded capex plans over the medium term.
Weakness: Vulnerability to volatility in raw material prices: Cost of raw material, such as aluminium ingots and foils, accounts for 75-80% of sales; prices of raw materials are volatile and governed by demand-supply dynamics. The company’s realisation (operating margin per MT) remained lower in fiscal 2023 due to volatility in aluminium prices in the last two fiscals. The operating margin improved in fiscals 2024 and 2025 owing to stable prices and will likely sustain amid volatility in raw material prices, and new product manufacturing in place, for which the company is selling products at competitive prices to gain market share and higher capacity utilisation. The operating margin was 6.55-9.36% over the three fiscals through 2024, and the company is able to pass on increase in prices with lag of 3-4 months. |
Liquidity: Adequate Expected cash accrual over Rs 40 crore will comfortably cover yearly debt obligation of Rs 6.5-9.7 crore over the medium term. Fund-based bank limit was utilised around 82% on average during the 12 months through February 2025. Current ratio was healthy at 1.47 times as on March 31, 2024. |
Rating sensitivity factors Upward factors:
Downward factors:
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About the Company MMPIL was incorporated in 1984 by Mr Arun Bhandari and Mr P M Lodha. Based in Nagpur, Maharashtra, the company manufactures aluminium-based products such as pyro and flake aluminum powder, atomised aluminium powder, aluminium paste and aluminium conductors. The company is listed on the National Stock Echange of India Ltd. |
Key Financial Indicators
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Any other information: Not Applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
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| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||
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Criteria Details
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