CRISIL has assigned its ‘BBB-/Stable/P3’ ratings to the bank facilities of J.C. Brothers Jewellers (JC), which is part of the JC group. The ratings reflect the JC group’s established market position in the jewellery industry in Hyderabad, and its comfortable financial risk profile, marked by moderate debt protection metrics. These rating strengths are partially offset by the JC group’s exposure to risks related to geographical concentration in its revenue profile, and intense competition in the jewellery business.

For arriving at the ratings, CRISIL has combined the business and financial risk profiles of JC and Chennai Shopping Mall— Jewellers (CSMJ). This is because the two entities, together referred to as the JC group, are in the same line of business and are under a common management. Moreover, CSMJ procures its entire requirement of jewellery from JC.

Outlook: Stable
CRISIL believes that the JC group will maintain its business risk profile over the medium term, on the back of its established market position and promoters’ industry experience. The outlook may be revised to ‘Positive’ if the group improves its revenues and operating margin further and diversifies into other regions. Conversely, the outlook may be revised to ‘Negative’ if the group’s profitability declines, or it undertakes a major debt-funded capital expenditure programme, leading to deterioration in its financial risk profile, or in case of sizeable capital withdrawals by the partners.

About the Group
JC, a registered partnership firm set up in 2004, is promoted by Mr. Marri Janardhan Reddy and his family members. JC is in the retail jewellery business, with three jewellery showrooms (at Ameerpet, Dilsukhnagar, and Kukatpally) in Hyderabad.

CSMJ, a registered partnership firm set up by JC’s promoters in 2009, has two showrooms in Hyderabad at Patny Centre and Kukatpally. The promoters also have interests in retail sales of readymade garments through JC Brothers Retail Pvt Ltd (rated ‘BBB/Stable’ by CRISIL) and Chennai Shopping Mall – Textiles.

The JC group reported a profit after tax (PAT) of Rs.41 million on net sales of Rs.1.7 billion for 2008-09 (refers to financial year, April 1 to March 31), against a PAT of Rs.20 million on net sales of Rs.0.9 billion for 2007-08.