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CRISIL has assigned its ‘BB+/Stable’ rating to the cash credit facility Chandana Ramesh Jewellers & Textiles Pvt Ltd (CRJTPL), a part of the Chandana Ramesh group. The rating reflects the Chandana Ramesh group’s large working capital requirements, exposure to risks related to geographic concentration in revenue profile, intense competition in the textile sector, and average financial risk profile marked by small net worth, high gearing, and low profitability margins. These rating weaknesses are partially offset by the Chandana Ramesh group’s established brand name in the Hyderabad market, and the benefits that the group derives from its promoters’ experience in the jewellery and textile industry.
For arriving at its ratings, CRISIL has combined the business and financial risk profiles of CRJTPL, and its group entities - Chandana Brothers Jewellers (Tirupati) Pvt Ltd (CB Jewellers Tirupati), Chandana Brothers Jewellers (Kakinada) Pvt Ltd (CB Jewellers Kakinada), Chandana Kanchi Sarees (CKS), Chandana Brothers (Tirupati) (CB Tirupati), Chandana Brothers (Tanuku) (CB Tanuku), Chandana Ramesh Shopping Mall (Chittoor) (CR Shopping), Chandana Brothers (Chittoor) (CB Chittor), Chandana Brothers (CB Kakinada), Chandana Brothers Shopping Mall (Rajamundhry) (CB Shopping) and Chandana Silk Sari (Rajamundhry) (CSS Rajamundhry). This is because all these entities, collectively referred to as the Chandana Ramesh group, are in the same line of business, have a common management, and have intra-group operational and financial linkages.
Outlook: Stable
CRISIL believes that the Chandana Ramesh group will maintain its financial risk profile over the medium term, on the back of its established market position in the jewellery and textile retail segment. The outlook may be revised to ‘Positive’ if the group improves its operating margin, and expands its reach. Conversely, the outlook may be revised to ‘Negative’ if the group’s operating margin declines, or it undertakes major debt-funded capital expenditure programme.
About the Group
CRJTPL was incorporated as a private limited company in 2004. The company’s main promoters are Chandana Ramesh and his family and friends. The company runs four jewellery showrooms at Chittoor, Rajamundhry, Tanuku, and Tirupati (all in Andhra Pradesh) and one textile showroom in Tirupati. The promoters also own two other private limited companies, six partnership firms, one hindu undivided family (HUF) and one proprietorship firm, all engaged in the same line of business, sharing a common brand name. Some of these entities also share a common showroom. The group intends to set up a showroom in Kakinada by November 2010. The promoters also plan to set up another shopping mall in Rajamundhry.
The Chandana Ramesh group reported a profit after tax (PAT) of Rs.12 million on net sales of Rs.992 million for 2008-09 (refers to financial year, April 1 to March 31) against a PAT of Rs.13 million on net sales of Rs.778 million for 2007-08.
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Disclaimer: A CRISIL rating reflects CRISIL's current opinion on the likelihood of timely payment of the obligations under the rated instrument and does not constitute an audit of the rated entity by CRISIL. CRISIL ratings are based on information provided by the issuer or obtained by CRISIL from sources it considers reliable. CRISIL does not guarantee the completeness or accuracy of the information on which the rating is based. A CRISIL rating is not a recommendation to buy, sell or hold the rated instrument; it does not comment on the market price or suitability for a particular investor. All CRISIL ratings are under surveillance. Ratings are revised as and when circumstances so warrant. CRISIL is not responsible for any errors and especially states that it has no financial liability whatsoever to the subscribers / users / transmitters / distributors of this product. . CRISIL Ratings’ rating criteria are generally available without charge to the public on the CRISIL public web site, www.crisil.com. For the latest rating information on any instrument of any company rated by CRISIL, please contact CRISIL RATING DESK at CRISILratingdesk@crisil.com, or at (+91 22) 3342 3000.
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