Press Release

Mehala Machines India Limited

February 10, 2023

Amount (₹
Facilities/Instruments Rating1 Rating Action
crore)
Long Term Bank CARE BB; Stable; ISSUER NOT Rating moved to ISSUER NOT
9.50
Facilities COOPERATING* COOPERATING category
Details of instruments/facilities in Annexure-1.
*Issuer did not cooperate; based on best available information.
Rationale and key rating drivers
Mehala Machines India Limited (MMIL) has not paid the surveillance fees for the rating exercise agreed to in its Rating Agreement.
In line with the extant SEBI guidelines, CARE Ratings Ltd.’s rating on Mehala Machines India Limited’s bank facilities will now be
denoted as CARE BB; Stable; ISSUER NOT COOPERATING*.
Users of this rating (including investors, lenders and the public at large) are hence requested to exercise caution
while using the above ratings
The rating assigned to the bank facilities of Mehala Machines India Limited (MMIL) continues to be constrained by moderate scale
of operations, moderate debt coverage indicators and presence in highly fragmented and competitive industry. However, rating
derives strengths from experienced promoters with established track record, comfortable capital structure and reputed clientele
base.
Analytical approach: Standalone
The following were the rating strengths and weaknesses of MMIL:
Key weaknesses
Moderate scale of operations
The scale of operations remained small albeit increased by 42% in FY22 to Rs. 121.04 crore from Rs.85.51 crore in FY21 due to
higher demand of used textile machineries. The company booked income of Rs. 70.80 crore and net profit of Rs. 3.95 crore in
8mFY23 (Prov.).
Moderate debt coverage indicators
The debt coverage indicators stood moderate with Total debt/GCA which improved to 7.69x as of March 31, 2022 from 9.53x as
of March 31, 2021 due to increase in accruals.
Highly fragmented and competitive industry
The trading industry is highly fragmented with large number of organized and unorganized players in India. There is high
competition within the industry due to low entry barriers on account of low capital investment required. On account of the same
competition within the players is very high which in turn leads to a fragmented market and moderate profitability margins.
Key strengths
Experienced promoters with established track record
MMIL was incorporated in 1996 by Mr. C. Subramaniam along with other directors. Mr. C. Subramaniam is a qualified graduate
and he is the Managing Director of the company who takes care of day to day operations. The company has experienced executive
team who has more than a decade of experience in the industry. The vast experience of the promoters in the industry the
company has enabled the company to have established relationship with suppliers and customers.
Comfortable capital structure
The capital structure continued to remain comfortable with overall gearing (Including LC acceptances) of 1.01x as on March 31,
2022 (PY: 0.88x).
Reputed clientele base
MMIL’s has established strong business relationship with various reputed clients namely Raymond Apparel Limited, Godrej
Industries Limited, Arvind Limited (CARE AA-; Stable / CARE A1+), Shahi Exports Limited, Best Corporation Private Limited (CARE
A; Stable / CARE A1) and others.
Liquidity: Stretched
Liquidity is stretched marked by moderate accruals to repay its term debt obligations of Rs. 1.35 crore and with moderate cash
balance of Rs. 1.55 crore as of March 31, 2022. The operating cycle of the company remained stretched albeit improved to 106
days in FY22 from 113 days in FY21. Being a trader, the company imports and stocks sufficient machineries in its stockyard to
meet demand from customers and holds spare parts for manufacturing of woollen ring frames. On account of this, the inventory
period stood at 85 days in FY21 (PY:106 days). MMIL imports machinery through letter of credit facility with sanctioned limit of

1
Complete definition of the ratings assigned are available at www.careedge.in and other CARE Ratings Ltd.’s publications

1 CARE Ratings Ltd.

 Press Release

Rs. 25 crore. The entity had been sanctioned with cash credit limit of 9.50 crore. The average utilization of LC and CC stood 90%
and 99% respectively for last twelve months ended January 2023.
Applicable criteria
Policy in respect of Non-cooperation by issuer
Policy on default recognition
Financial Ratios – Non financial Sector
Liquidity Analysis of Non-financial sector entities
Rating Outlook and Credit Watch
Wholesale Trading

About the company

Mehala Machines India Limited (MMIL) was incorporated in 1996 by Mr. C. Subramaniam and other directors at Tamil Nadu. The
company is engaged in trading of “Industrial Garment Machinery”. MMIL purchases Industrial Garments Machinery from China,
Taiwan and Germany and sells the products to the customers located in India. The registered office of the company is located at
Tirupur, Tamil Nadu.
Brief Financials (₹ crore) March 31, 2021 (A) March 31, 2022 (A) 9MFY23 (P)
Total operating income 85.51 121.04 70.80
PBILDT 6.88 8.85 5.52
PAT 2.83 4.41 NA
Overall gearing (times) 0.51 0.57 NA
Interest coverage (times) 2.68 4.19 6.00
A: Audited; P: Provisional; NA: Not Available

Status of non-cooperation with previous CRA: Not Applicable

Any other information: Not Applicable
Rating history for the last three years: Please refer Annexure-2
Covenants of the rated instruments/facilities: Detailed explanation of the covenants of the rated instruments/facilities is
given in Annexure-3
Complexity level of the various instruments rated: Annexure-4
Lender details: Annexure-5
Annexure-1: Details of instruments/facilities
Date of
Maturity Size of Rating Assigned
Name of the Issuance Coupon
ISIN Date (DD- the Issue along with Rating
Instrument (DD-MM- Rate (%)
MM-YYYY) (₹ crore) Outlook
YYYY)
CARE BB; Stable;
Fund-based -
- - - 9.50 ISSUER NOT
LT-Cash Credit
COOPERATING*
*Issuer did not cooperate; based on best available information.

Annexure-2: Rating history for the last three years

Current Ratings Rating History

Date(s) Date(s) Date(s) Date(s)

Name of the
Sr. and and and and
Instrument/Bank Amount
No. Rating(s) Rating(s) Rating(s) Rating(s)
Facilities Type Outstanding Rating
assigned assigned assigned assigned
(₹ crore)
in 2022- in 2021- in 2020- in 2019-
2023 2022 2021 2020
CARE BB; 1)CARE 1)CARE 1)CARE
Fund-based - LT- Stable; ISSUER BB; Stable BB; Stable BB; Stable
1 LT 9.50 -
Cash Credit NOT (23-Dec- (26-Mar- (03-Mar-
COOPERATING* 21) 21) 20)

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 Press Release

*Issuer did not cooperate; based on best available information.

*Long term/Short term.

Annexure-3: Detailed explanation of the covenants of the rated instruments/facilities: Not Applicable

Annexure-4: Complexity level of the various instruments rated

Sr. No. Name of the Instrument Complexity Level

1 Fund-based - LT-Cash Credit Simple

Annexure-5: Lender details

To view the lender wise details of bank facilities please click here

Note on the complexity levels of the rated instruments: CARE Ratings has classified instruments rated by it on the basis
of complexity. Investors/market intermediaries/regulators or others are welcome to write to care@careedge.in for any
clarifications.

3 CARE Ratings Ltd.

 Press Release

Contact us
Media contact
Name: Mradul Mishra
Phone: +91-22-6754 3596
E-mail: mradul.mishra@careedge.in

Analyst contact
Name: Naveen S
Phone: 0422- 4332399
E-mail: naveen.kumar@careedge.in

Relationship contact
Name: Pradeep Kumar V
Phone: +91-98407 54521
E-mail: pradeep.kumar@careedge.in

About us:
Established in 1993, CARE Ratings is one of the leading credit rating agencies in India. Registered under the Securities and
Exchange Board of India, it has been acknowledged as an External Credit Assessment Institution by the RBI. With an equitable
position in the Indian capital market, CARE Ratings provides a wide array of credit rating services that help corporates raise capital
and enable investors to make informed decisions. With an established track record of rating companies over almost three decades,
CARE Ratings follows a robust and transparent rating process that leverages its domain and analytical expertise, backed by the
methodologies congruent with the international best practices. CARE Ratings has played a pivotal role in developing bank debt
and capital market instruments, including commercial papers, corporate bonds and debentures, and structured credit.

Disclaimer:
The ratings issued by CARE Ratings are opinions on the likelihood of timely payment of the obligations under the rated instrument and are not recommendations to
sanction, renew, disburse, or recall the concerned bank facilities or to buy, sell, or hold any security. These ratings do not convey suitability or price for the investor.
The agency does not constitute an audit on the rated entity. CARE Ratings has based its ratings/outlook based on information obtained from reliable and credible
sources. CARE Ratings does not, however, guarantee the accuracy, adequacy, or completeness of any information and is not responsible for any errors or omissions
and the results obtained from the use of such information. Most entities whose bank facilities/instruments are rated by CARE Ratings have paid a credit rating fee,
based on the amount and type of bank facilities/instruments. CARE Ratings or its subsidiaries/associates may also be involved with other commercial transactions with
the entity. In case of partnership/proprietary concerns, the rating/outlook assigned by CARE Ratings is, inter-alia, based on the capital deployed by the
partners/proprietors and the current financial strength of the firm. The ratings/outlook may change in case of withdrawal of capital, or the unsecured loans brought
in by the partners/proprietors in addition to the financial performance and other relevant factors. CARE Ratings is not responsible for any errors and states that it has
no financial liability whatsoever to the users of the ratings of CARE Ratings. The ratings of CARE Ratings do not factor in any rating-related trigger clauses as per the
terms of the facilities/instruments, which may involve acceleration of payments in case of rating downgrades. However, if any such clauses are introduced and
triggered, the ratings may see volatility and sharp downgrades.

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