CRISIL’s ratings on the bank facilities of Dania Oro Jewellery Pvt Ltd (Dania Oro, part of the Dynamix group) continue to be constrained by delays in repayment of term loan obligations by a group company, Rolly Jewellery Pvt Ltd. The ratings also factor in the Dynamix group’s weak financial risk profile, marked by high gearing and weak debt protection metrics, its large working capital requirements, and geographical concentration in its revenue profile. These weaknesses are partially offset by the Dynamix group’s moderate market position in the jewellery industry.

For arriving at the ratings, CRISIL has combined the business and financial risk profiles of Dania Oro, Dynamix Chains Manufacturing Pvt Ltd (Dynamix Chains, rated ‘B-/Stable/P4’ by CRISIL), SAY India Jewellers Pvt Ltd (SAY India, rated ‘P4’ by CRISIL), Lily Jewellery Pvt Ltd (Lily, rated ‘P4’ by CRISIL), Yash Jewellery Pvt Ltd (Yash, rated ‘B-/Stable/P4’ by CRISIL), Rolly Jewellery Pvt Ltd (Rolly, rated ‘D/P5’ by CRISIL), Jewel America Inc (Jewel America) and Barjon Inc (Barjon). This is because these entities, collectively referred to as the Dynamix group, are under a common promoter group, in the same line of business, and have operational synergies and fungible cash flows.

Outlook: Stable
CRISIL believes that the Dynamix group will continue to benefit from its sound manufacturing facilities and moderate market position in the jewellery segment. The outlook may be revised to ‘Positive’ if there is significant improvement in the group’s financial risk profile because of healthy cash accruals and profitability, and if the group companies demonstrate a track record of timely repayment of debt obligations. Conversely, the outlook may be revised to ‘Negative’ if the group’s financial risk profile deteriorates because of continued losses in Jewel America, or if the group undertakes any large, debt-funded capital expenditure programme.

About the Group
The Dynamix group of companies, engaged in the manufacture of jewellery, is promoted by Mr. Pramod Goenka. The group manufactures gold, silver, and diamond-studded jewellery, which is mainly exported to countries such as the US and the UK.

Set up in October 2007, Dynamix Chains manufactures specialised chains and pendants, which are exported to the US. SAY India, Lily, Dania Oro and Yash (set up in May 1995, February 2004, February 2006, and November 2006, respectively), export diamond-studded gold jewellery, while Rolly (established in January 2005) exports light-weight electro-form jewellery. Jewel America, a leading jewellery wholesaler in the US, was acquired by the group in February 2009.

Dania Oro, on a standalone basis, reported a profit after tax (PAT) of Rs.22 million on net sales of Rs.297 million for 2009-10 (refers to financial year, April 1 to March 31) as against a PAT of Rs.57 million on net sales of Rs.691 million in the previous year.