Rating Rationale
Key Rating Drivers & Detailed Description
Strengths:
Extensive experience of the promoters: The promoters, Mr
Manik Kodre and his family members, have been engaged in the
glass business for around two decades. Backed by their
expertise and understanding of industry dynamics, the company
has been able to maintain healthy relationships with suppliers
and customers and scale up operations over the years.
Established clientele and enhanced product diversity: MGPL
caters to around 100 customers and has longstanding
relationships with most of them. Key customers include Sleek
International Pvt Ltd, Delman Polymer Pvt Ltd and Godrej and
Boyce Mfg. Co Ltd. Along with toughened glass, the company
manufactures laminated and insulated glasses. The diversified
product basket has enabled growth in scale.
Moderate scale of operations: Intense competition constrains
scalability, as reflected in revenue of Rs 59.9 crore in fiscal 2024
(up from Rs 51.72 crore in fiscal 2023). Revenue has grown at
compounded annual rate of around 24% over the four fiscals
ended March 31, 2024, supported by capacity additions. MGPL
plans to expand its capacities further in fiscal 2025, timely
completion and successful ramp up are monitorables.
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Weaknesses:
Exposure to risk arising from the commoditised nature of float
glass: Float glass processing involves limited value addition and
knowledge of glass handling to avoid breakage and wastage
acts as a key entry barrier. With increasing demand for
architectural glass in the real estate sector and industrial glass
in automobiles, competition is likely to increase. Moreover, price
of float glass, key raw material, is volatile. The operating margin
thus remains vulnerable to volatility in float glass prices.
However, order-backed inventory provides some insulation
against adverse changes in raw material prices.
Leveraged capital structure: Gearing was high at 2.82 times,
while networth was low at Rs 8.01 crore as on March 31, 2023.
With partially debt-funded capital expenditure plans, leverage
may increase over the medium term. Sustained improvement in
capital structure is a monitorable.
Exposure to project risk: MGPL plans to enhance its production
capacity in fiscal 2025. Planned capex of Rs 23.38 crore will be
funded via debt of Rs 17-18 crore and balance via internal
accrual. Construction is scheduled to begin from September
2024, and the unit is likely to be commercialised within one year.
Timely completion and ramp up in scale are monitorable.
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