| Fsn Distribution Limited | ||||
| Rating outlook revised to 'Stable'; Rating Reaffirmed | ||||
| Rating Action | ||||
| ||||
| Note: None of the Directors on Crisil Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||
| 1 crore = 10 million | ||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale Crisil Ratings has revised its outlook on the long-term bank facilities of Fsn Distribution Ltd (FDL; Formerly known as Fsn Distribution Private Limited) to ‘Stable’ from ‘Positive’, while reaffirming the rating at ‘Crisil A-’
The revision in the outlook reflects weaker-than-expected standalone performance of FDL. Despite revenue growth, EBITDA losses widened in fiscal 2024 and is expected to continue to report losses for medium term. This is on account of high fixed costs of business development and executive expenses to onboard higher retailers. It will continue to be dependent on parent for funding its growth and working capital requirements.
The rating considers established market position of the parent, FSN E-Commerce Ventures Ltd (FSN; ‘Crisil A/Stable’) in the e-commerce space and the financial support from it. These strengths are partially offset by exposure to risks related to initial stage of operations leading to operating losses and weak financial profile. |
Analytical Approach For arriving at the rating, Crisil Ratings has factored in support received from the parent, FSN. Crisil Ratings believes FDL will, in case of exigencies, receive distress support from its parent for timely debt repayment, considering FSN’s ownership of 100% stake in FDL, operational and managerial support from FSN, and corporate guarantee extended by FSN for FDL’s debt obligations.
Unsecured loans from FSN and Nykaa e-retail of Rs. 319.23 crore as on March 31, 2024, have been treated as neither debt nor equity, as these loans are expected to be retained in the business over the medium term. |
Key Rating Drivers & Detailed Description Strengths:
Weaknesses:
|
Liquidity: Strong FDL has strong liquidity available to it, driven by expectation of support from the parent, FSN, to provide need-based funding support on an ongoing basis and in case of exigencies. On a standalone basis, fund-based limit of Rs 40 crore was utilized 74% on average over the 12 months through November 2024. The company does not have any term debt obligation. Financial support from FSN and its subsidiaries, cash and equivalent and unutilized bank lines will be sufficient to meet working capital requirement. |
Outlook: Stable CRISIL Ratings believe that FDL will continue to benefit from the extensive experience of its promoter, and established relationships with Customers. |
Rating sensitivity factors Upward factors:
Downward factors:
|
About the Company Incorporated in 2022, FDL is a 100% subsidiary of FSN. The company undertakes distribution/wholesale of cosmetic products directly to retailers through its own website, and mobile app. |
About the Group FSN is promoted by Mrs. Falguni Nayar and is managed by her along with her son, Mr. Anchit Nayar and her daughter, Ms. Adwaita Nayar. They are supported by professional management. FSN is listed on BSE and NSE |
Key Financial Indicators
|
Any other information: Not Applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
|
| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||
|
|||||||||||||||||||||||||||||||||||||||
| All amounts are in Rs.Cr. | |||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||
|
Criteria Details
|