| Kanodia Global Private Limited | ||||||
| Ratings reaffirmed at 'CRISIL BBB- / Stable / CRISIL A3 ' | ||||||
| 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 'CRISIL BBB-/Stable/CRISIL A3' ratings on the bank facilities of Kanodia Global Pvt Ltd (KGPL).
The ratings continue to reflect the company's established market presence in the knitted home furnishing segment, its comfortable financial risk profile, and diversified customer base. These strengths are partially offset by exposure to intense competition and geographical concentration risk, and susceptibility to volatility in raw material prices and foreign exchange (forex) rates. |
Key Rating Drivers & Detailed Description Strengths: Established market position and strong customer relationships: The promoters’ experience of five decades in manufacturing knotted garments and of over 15 years in the knitted home textile business has helped KGPL build healthy relationships with customers and suppliers in India and abroad, and report healthy business performance.
Comfortable financial risk profile: Networth is estimated at Rs 52 crore as on March 31, 2021, and may increase, driven by consistent accretion to reserves. Adequate profitability resulted in interest coverage ratio of 3.26 times, estimated for fiscal 2021. Total outside liabilities to tangible networth, estimated at 1.24 times as on March 31, 2021, remained comfortable despite external debt of Rs 53.5 crore to fund capital expenditure (capex) for setting up a plant.
Diversified customer base: KGPL caters to a diverse clientele, as reflected in overall contribution of the top 10 customers, not exceeding 40% of total revenue.
Weaknesses Exposure to intense competition: The home furnishings segment is highly unorganised and fragmented, due to low capital investment. Presence of a large number of exporters intensifies competition in the overseas market. Competition between organised players may also intensify, as given the focus on increasing brand penetration over the long term.
High geographical concentration in revenue: Europe accounts for around 35% of KGPL’s revenue. Geographical and customer concentration renders revenue susceptible to slowdown in a particular economy, or to loss of orders from key customers.
Susceptibility to volatility in raw material prices and forex rates: The company’s inability to pass on any increase in raw material (cotton and yarn) prices could constrain its operating margin. Even though more than 90% of revenue is denominated in US dollars, the company does not hedge its exposure. Profitability will, therefore, remain susceptible to fluctuations in cotton and yarn prices, and forex rates. |
Liquidity: Adequate Liquidity should remain adequate with sufficient net cash accrual, expected at over Rs 12.5 crore and Rs 14 crore respectively for fiscals 2022 and 2023, against maturing term debt of Rs 6.8-7.5 crore per fiscal. The balance cash accrual will help fund incremental working capital requirement or capex. Bank limit utilisation averaged 70-80% for the 12 months ended March 2021. Current ratio is 1.3 times estimated as on March 31, 2021. While the liquidity has remained adequate, any subsequent impact of pandemic waves on business might have a bearing on liquidity and hence will remain a key monitorable factor. |
Outlook Stable CRISIL Ratings believes KGPL will maintain its established market position, offering knitted throws, cushion covers, and other home furnishing products to offshore customers aided by the extensive experience of its promoters and the recently enhanced capacity. |
Rating Sensitivity factors Upward factors
Downward factors
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About the Company Based in Delhi, KGPL was set up as Kanodia Hosiery Mills by Mr N L Kanodia in 1940 and was reconstituted as Kanodia Hosiery Mill Pvt Ltd. It got its present name in 2002. The company manufactures a wide range of knitted home textiles such as throws, cushion covers, baby blankets, pillows, and fashion and apparel accessories. Manufacturing is undertaken entirely in-house at facilities at Panipat, Kundli, and Rai in Haryana. KGPL has capacity to produce 15 lakh pieces per year. |
Key Financial Indicators
*Provisional financials |
Any other information: Not applicable |
| Note on complexity levels of the rated instrument: CRISIL complexity levels are assigned to various types of financial instruments. The CRISIL complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL 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 - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of various bank facilities | ||||||||||||||||||||||||||||||||||||||||||||||||
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Criteria Details
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