| Maharani Innovative Paints Private Limited | ||||||
| Ratings Reaffirmed | ||||||
| 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 reaffirmed its 'CRISIL BBB/Stable/CRISIL A3+’ ratings on the bank facilities of Maharani Innovative Paints Pvt Ltd (MIPL).
The ratings continue to reflect the promoters’ established relationships with customers, their extensive experience in the industrial paints industry and the company’s comfortable financial risk profile. These strengths are partially offset by high concentration in revenue, susceptibility to volatility in raw material prices and large working capital requirement. |
Key Rating Drivers & Detailed Description Strengths: Established relationships with customers, backed by the extensive experience of the promoters: The promoters have been supplying liquid and powder paints to two-wheeler original equipment manufacturers (OEMs) and their ancillaries since 1980. Because of their extensive experience and track record, they have been able to establish healthy relationships with clients, such as Hero Motocorp Ltd (HML; 'CRISIL AAA/Stable/CRISIL A1+'), Honda Motorcycle & Scooter India Pvt Ltd (Honda), TVS Motor Co Ltd (TVS) and Bajaj Auto Ltd (Bajaj; 'CRISIL AAA/Stable/CRISIL A1+') and their ancillaries, resulting in repeat orders.
Comfortable financial risk profile: Total outside liabilities to adjusted net worth ratio was moderate, estimated at 0.67 time and net worth healthy at Rs 46.21 crore as on March 31, 2022. Interest coverage and net cash accrual to adjusted debt ratios were estimated at 3.52 times and 0.27 time, respectively, in fiscal 2022, owing to moderate profitability and comfortable leverage.
Weaknesses: Customer concentration in revenue: Over 50% of the revenue comes from HML and its ancillaries, and the remaining from other customers such as Honda, TVS and Bajaj. The company is vulnerable to changes in vendor or trade policies by the OEMs or slowdown in their revenue.
Susceptibility to volatility in raw material prices: The paint industry is raw material intensive, as input expenses account for 65-70% of the operating income. Most raw materials are petroleum-based, including polyester and epoxy resins, xylene and phthalic anhydride, and hence, their prices are volatile. Also, being a supplier to the OEMs and on account of its modest scale, MIPL has low pricing power. The operating margin will likely remain susceptible to sharp volatility in input cost.
Large working capital requirement: Gross current assets (GCAs) were sizeable at an estimated 138 days as on March 31, 2022, driven by receivables and inventory of 84 and 33 days, respectively. GCAs are expected at 140-150 days over the medium term. Despite large working capital requirement, working capital cycle will continue to be efficiently managed over the medium term. |
Liquidity: Adequate In the absence of any major debt-funded capital expenditure and nil debt obligation, expected net cash accrual of Rs 4-6 crore over the medium term is sufficient to cater to incremental working capital requirement. Current ratio was healthy at an estimated 1.73 times as on March 31, 2022. Bank limit utilization averaged a low 44% over the 12 months through September 2022. |
Outlook: Stable CRISIL Ratings believes MIPL will continue to benefit from its established relationships with customers and comfortable financial risk profile. |
Upward Factors
Downward Factors
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About the Company Incorporated in 2014, MIPL manufactures industrial paints, including liquid industrial paints, industrial powder coatings, general industry paints, thinners and allied paint products. The company is a wholly owned subsidiary of Maharani Paints Private Limited (MPL), which is promoted by the Haryana-based Bhatia family. MPL transferred its business operations to MIPL with effect from April 1, 2014, while retaining the plant. MIPL has leased MPL's premises in Prithla, Haryana, and has a unit in Sitarganj, Uttarakhand. The company sells its liquid paints under the brand Marlac and powder coating under Mahacoat. Mr B R Bhatia, director, manages the operations. |
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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| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | |||
| Facility | Amount (Rs.Crore) | Name of Lender | Rating |
| Cash Credit | 11 | Citibank N. A. | CRISIL BBB/Stable |
| Cash Credit | 14.5 | State Bank of India | CRISIL BBB/Stable |
| Letter of Credit | 7 | State Bank of India | CRISIL A3+ |
| Proposed Long Term Bank Loan Facility | 3 | Not Applicable | CRISIL BBB/Stable |
This Annexure has been updated on 16-Feb-23 in line with the lender-wise facility details as on 25-Jan-23 received from the rated entity.
Criteria Details
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