December 29, 2010
Mumbai
CRISIL ‘BBB-’ and ‘P3’ for CRAVATEX’s bank facilities
Rs.140.0 Million Cash Credit BBB-/Stable (Assigned)
Rs.10.00 Million Proposed Long-Term Bank Loan Facility BBB-/Stable(Assigned)
Rs.80.00 Million Letter of Credit P3(Assigned)

CRISIL has assigned its ‘BBB-/Stable/P3’ ratings to the bank facilities of Cravatex Ltd (CRAV). The ratings reflect CRAV’s established position in the fitness equipment and sports goods segment as an exclusive distributor of Johnson Health Tech Co Ltd (Johnson), Fila Sports (Fila), and Dunlop International Ltd (Dunlop) in India, and healthy financial risk profile marked by marked by low gearing and robust debt protection measures. These rating strengths are partially offset by susceptibility of CRAV’s revenue and earnings to negotiating power with principals and increasing competition in the sports goods and fitness equipment industry.

Outlook: Stable
CRISIL believes that CRAV will continue to benefit over the medium term from the growing health awareness in India, increasing disposable income levels, leading to buoyancy in demand for fitness gear and sports equipment, and its healthy relationships with suppliers. The outlook may be revised to ‘Positive’ if CRAV’s financial risk profile improves, driven by more-than-expected growth in revenues and earnings, while maintaining its gearing and debt protection metrics. Conversely, the outlook may be revised to ‘Negative’ if CRAV reports less-than-expected revenues and earnings or its debt protection metrics deteriorate because of a stretch in the working capital cycle.

About the Company
CRAV was set up in 1951 by Mr. Ramkumar Batra. Mr. Rajesh Batra is the current chairman of CRAV. The company supplies fitness equipment for home and commercial use through a chain of 48 ‘Proline Fitness’ stores spread across India. CRAV has exclusive distribution rights in India to supply equipment such as treadmills, bikes, and elliptical trainers made by Johnson, shoes and apparels made by Fila, and tennis racquets and balls made by Dunlop. CRAV has a registered office at Mumbai (Maharashtra).

CRAV reported a profit after tax (PAT) of Rs.36.89 million on net sales of Rs.584.49 million for 2009-10 (refers to financial year, April 1 to March 31), against a PAT of Rs.18.47 million on net sales of Rs.442.38 million for 2008-09.

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December 29, 2010

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