The agency has, however, reaffirmed the company's short-term rating at 'Crisil A1+'.
Crisil Ratings stated that the rating action reflects continuation of subdued business risk profile of MAL, particularly due to a consistently muted top line and pressure on profitability.
In the first nine months of fiscal 2026, sales volume of over 1.8 lakh metric tons and moderate realization of around Rs 80,000 per ton, resulted in operating income (including other related income) being limited to Rs 1,613 crore.
Power costs, forming around 30% of the total cost of sales, continue to have a significant bearing on profitability, resulting in an operating margin of 9.5% in the first nine months of fiscal 2026.
In the absence of a significant reduction in power costs, the recovery in the scale of operations remains lower than expected, and scale and profitability are likely to remain range-bound over the medium term.
For MAL, operating margin lowered to 7'10% in the two fiscals through 2025, down from over 13'37% in the five fiscals through 2023.
Low sales volume, coupled with a moderation in realizations to around Rs 80,000 per ton in fiscals 2024'25 from over Rs 1,10,000 per ton in fiscal 2022'23, limited overall revenue to around Rs 1,700-1,800 crore in fiscals 2024-25.
These factors, combined with high investments of Rs 3,636 crore as of 31 March 2025 in current and non-current assets resulted in a low return on capital employed (RoCE) of 6'9% in fiscals 2024'25. RoCE is expected to be sustained at around the same level on the basis of limited contribution from the ferro alloy segment over the medium term.
The ratings continue to reflect extensive experience of promoters and strong financial risk profile. These strengths are partially offset by exposure to volatility in prices of raw materials and finished goods and cyclicality in the ferro alloys industry.
MAL, established in 1985, manufactures ferroalloys such as ferro manganese, ferro silicon and silico manganese, with varying proportions of other chemical compositions.
The scrip had advanced 1.30% to end at Rs 905.85 on the BSE yesterday.