| Antara Jewellery Private Limited | ||||
| Rating reaffirmed at 'CRISIL BBB+ / Stable'; rated amount enhanced for Bank Debt | ||||
| Rating Action | ||||
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| 1 crore = 10 million | ||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has reaffirmed its rating on the long term bank facility of Antara Jewellery Private Limited (Antara; part of the Vallabhji group) at 'CRISIL BBB+/Stable’.
The rating continues to reflect the group’s extensive experience in the jewellery industry and healthy market position, efficient working capital management and healthy financial risk profile. These strengths are partially offset by susceptibility to foreign exchange (forex) rates and exposure to intense competition in the gold jewellery industry. |
Analytical Approach For arriving at its ratings, CRISIL Ratings has combined the business and financial risk profiles of Vallabhji Malsi and Co (VMC; Rated ‘CRISIL A-/Stable/CRISIL A2+’) and Antara. This is because both these entities, together referred to as the Vallabhji group, have the same promoters, are in a similar line of business, and have fungible cash flow.
Please refer Annexure - List of entities consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers & Detailed Description Strengths: Group’s extensive experience and strong market position: Supported by over four-decade-long experience of the group’s promoters, group has established a strong position in international markets for plain gold jewellery and has increased its presence in domestic markets. Group’s strong market position is supported by established relations with customers such as Malabar Gold Pvt Ltd, Joyalukkas India Pvt Ltd, and PN Gadgil Jewellers Pvt Ltd. Group has its presence in the USA, UK, UAE, and Singapore among other countries resulting in resulting in geographical diversity. Group has seen healthy operating performance during quarter 1 of fiscal 2022 on back of healthy demand from these regions.
Efficient working capital management: Group’s working capital is efficiently managed, as reflected in gross current assets (GCAs) of 134 days as on March 31, 2021, driven by receivables of 22 days and inventory of around 116 days. Prudent debtor collection policies has resulted in debtors to remain in range of 13-23 days over last 5 years through March 31, 2021.
Healthy financial risk profile: Group has healthy financial risk profile with comfortable total outside liabilities to adjusted networth (TOLANW) estimated at 0.63 time on a networth base of Rs 207.5 crore, as on March 31, 2021. Moderate reliance on external debt has resulted in healthy debt protection metrics as reflected in interest coverage ratio of 9.6 times and net cash accruals to adjusted debt of 0.32 times in fiscal 2021. Financial risk profile should remain healthy over the medium term and capital withdrawal to remain monitorable.
Weakness: Susceptibility to foreign exchange (forex) rates: Exports has accounted for over 70% of the group’s revenue, influenced by fluctuations in the value of the Indian rupee, and can affect the group's export receivables. This results in exposure of profits to volatile forex rates. Further, any slowdown in demand of gold driven by high prices or on account of external factors could impact the operating performance.
Exposure to intense competition and regulatory changes in the gold jewellery industry: The gems and jewellery industry in India is highly fragmented and has the presence of a large number of family jewellers with regional presence which can impact operating margin. Also, the profitability is susceptible to volatility in gold prices as seen in the past 2 years where the margin improved on the back of increase in gold prices. However, the mandatory hallmarking requirement for gold jewelry from June, 2021, is expected to benefit organized players such as Vallabhji Group. While the jewelry sector has seen heightened regulatory changes in the recent past, Vallabhji group like other jewelry players will remain susceptible to changing regulatory norms. |
Liquidity: Adequate Group has adequate liquidity indicated by expected cash accruals of over Rs 15 crore over the medium term against repayment obligation of Rs 2.5 crore in fiscals 2022 and fiscal 2023. Group is estimated to have healthy current ratio of 2.38 times as on March 31, 2021 while cash and equivalents were at Rs 1.8 crore. Group has no major capex plans. Group’s fund-based limit were utilized to the tune of 72% over the 12 months through July 2021. |
Outlook: Stable CRISIL Ratings believes the Vallabhji group’s business risk profile will continue to benefit from the promoters’ extensive experience and healthy relationships with customers. |
Rating Sensitivity factors Upward factors: * Significant increase in revenue with improvement in profitability of above 5% leading to accruals above Rs 25 crore on sustained basis * Efficient working capital management and sustenance of financial risk profile with interest coverage ratio above 6 times
Downward factors: * Substantial decline in revenues or dip in operating profitability below 2% resulting in weaker accruals * More-than-expected working capital requirement or capital withdrawal, resulting in gearing of above 1 time |
About the Group VMC was set up as a partnership firm in 1981 by the Gala family. The firm manufactures and exports plain gold and diamond-studded gold jewellery. Major partners are Mr Ulhas Gala, Mrs. Nutan Gala and Mr Ankit Gala.
Antara, set up in 2006, retails plain gold and diamond-studded gold jewellery. The company has two showrooms in Mumbai. |
Key Financial Indicators (Standalone)
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Any other information: Not applicable |
| Note on complexity levels of the rated instrument: CRISIL Ratings' complexity levels are assigned to various types of financial instruments. The CRISIL Ratings' complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL Ratings' complexity levels for instruments that they consider for investment. Users may also call the Customer Service Helpdesk with queries on specific instruments. |
Annexure - Details of Instrument(s)
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Annexure – List of entities consolidated
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| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||
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| This Annexure has been updated on 7-Sep-2021 in line with the lender-wise facility details as on 7-Sep-2021 received from the rated entity |
Criteria Details
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