January 07, 2015
Pincon Spirit Limited
Rating downgraded to 'CRISIL BB+/Stable' ; placed on 'Notice of withdrawal'
Total Bank Loan Facilities Rated Rs.1000 Million
Long Term Rating CRISIL BB+/Stable (Downgraded from 'CRISIL BBB/Stable'; Placed on 'Notice of Withdrawal')
(Refer to Annexure 1 for Facility-wise details)

CRISIL has downgraded its rating on the long-term bank facilities of Pincon Spirit Ltd (PSL; part of the Pincon group) to 'CRISIL BB+/Stable' from 'CRISIL BBB/Stable', and placed the rating on notice of withdrawal for 60 days at the Pincon group's request. The rating will be withdrawn at the end of the notice period, in line with CRISIL's policy on withdrawal of its bank loan ratings.
The rating downgrade reflects deterioration in the Pincon group's liquidity because of funding requirement for its recent asset acquisition and its large incremental working capital requirements. The group's scale of operations has increased sharply over the past few quarters resulting in large incremental working capital requirements. As enhancement in bank lines has lagged the growing working capital requirements, the group has utilised its existing fund-based working capital limits extensively. Moreover, the group recently purchased a country liquor manufacturing plant for a cash consideration of Rs.85 million, which has further strained its liquidity. Substantial capital infusion by promoters and controlled working capital cycle are crucial for shoring up the group's liquidity, and will remain key rating sensitivity factors over the medium term.
The rating reflects the Pincon group's moderate financial risk profile, marked by a comfortable capital structure and adequate debt protection metrics, and its sound risk management policies. These rating strengths are partially offset by the group's large working capital requirements, susceptibility to changes in government regulations, and exposure to intense competition in the Indian-made foreign liquor (IMFL) industry.
For arriving at the rating, CRISIL has combined the business and financial risk profiles of PSL and Paul Distributors Pvt Ltd (PDPL), together referred to as the Pincon group. PDPL is a 55 per cent subsidiary of PSL, and both the companies are in the same line of business and have a common management.

Outlook: Stable

CRISIL believes that the Pincon group will continue to benefit over the medium term from its established position in the IMFL distribution business. The group's liquidity, however, will remain constrained over this period by its large working capital requirements. The outlook may be revised to 'Positive' in case of significant and sustainable growth in the group's cash accruals and controlled working capital cycle, resulting in an improvement in its liquidity. Conversely, the outlook may be revised to 'Negative' in case of a stretch in the Pincon group's working capital cycle or any unanticipated investments in unrelated businesses that weaken its liquidity.

About the Group

The Pincon group, based in Kolkata, is promoted by Mr. Monoranjan Roy. PSL (formerly, Sarang Viniyog Ltd), incorporated in 1978, trades in IMFL manufactured by established companies such as United Breweries Ltd, Seagram India Pvt Ltd, and Radico Khaitan. It also blends and sells IMFL under its own brand, Pincon.
PDPL was incorporated in 1995. The company is a distributor of IMFL and beer for several liquor manufacturers in West Bengal. PSL acquired PDPL in 2012-13 (refers to financial year, April 1 to March 31).
For 2013-14, PSL reported a profit after tax (PAT) of Rs.99.5 million on net sales of Rs.3.8 billion, against a PAT of Rs.84.8 million on net sales of Rs.3.2 billion for 2012-13.
For 2013-14, PDPL reported a PAT of Rs.11.6 million on net sales of Rs.949 million, against a PAT of Rs.4.1 million on net sales of Rs.506 million for 2012-13.

Annexure 1 - Details of various bank facilities
Current facilities Previous facilities
Facility Amount (Rs.Million) Rating Facility Amount (Rs.Million) Rating
Cash Credit 495 CRISIL BB+/Stable(Notice of Withdrawal) Cash Credit 495 CRISIL BBB/Stable
Proposed Cash Credit Limit 505 CRISIL BB+/Stable(Notice of Withdrawal) Proposed Cash Credit Limit 505 CRISIL BBB/Stable
Total 1000 -- Total 1000 --
Media Contacts
Analytical Contacts
Customer Service Helpdesk
Tanuja Abhinandan
Communications and Brand Management
CRISIL Limited
Phone: +91 22 3342 1818

Jyoti Parmar
Communications and Brand Management
CRISIL Limited
Phone: +91 22 3342 1835
E-mail: jyoti.parmar@crisil.com

Arvind Rao
Director - CRISIL Ratings
Phone:+91 22 4097 8278
Email: arvind.rao@crisil.com

Aditya Munshi
Associate Director - CRISIL Ratings
Phone:+91 22 4097 8105
Email: aditya.munshi@crisil.com
Timings: 10.00 am TO 7.00 pm
Toll free Number:1800 267 1301
Email: CRISILratingdesk@crisil.com


This rating rationale is transmitted to you for the sole purpose of dissemination through your newspaper / magazine / agency. The rating rationale may be used by you in full or in part without changing the meaning or context thereof but with due credit to CRISIL. However, CRISIL alone has the sole right of distribution of its rationales for consideration or otherwise through any media including websites, portals etc.

Crisil complexity levels are assigned to various types of financial instruments. The crisil complexity levels are available on www.crisil.com/complexity-levels.investors are advised to refer to the crisil complexity levels for instruments that they desire to invest in. Investors may also call the Customer Service Helpdesk with queries on specific instruments.

CRISIL is a global analytical company providing ratings, research, and risk and policy advisory services. We are India's leading ratings agency. We are also the foremost provider of high-end research to the world's largest banks and leading corporations.

About CRISIL Ratings
CRISIL Ratings is India's leading rating agency. We pioneered the concept of credit rating in India in 1987. With a tradition of independence, analytical rigour and innovation, we have a leadership position. We have rated over 75,000 entities, by far the largest number in India. We are a full-service rating agency. We rate the entire range of debt instruments: bank loans, certificates of deposit, commercial paper, non-convertible debentures, bank hybrid capital instruments, asset-backed securities, mortgage-backed securities, perpetual bonds, and partial guarantees. CRISIL sets the standards in every aspect of the credit rating business. We have instituted several innovations in India including rating municipal bonds, partially guaranteed instruments and microfinance institutions. We pioneered a globally unique and affordable rating service for Small and Medium Enterprises (SMEs).This has significantly expanded the market for ratings and is improving SMEs' access to affordable finance. We have an active outreach programme with issuers, investors and regulators to maintain a high level of transparency regarding our rating criteria and to disseminate our analytical insights and knowledge.

CRISIL respects your privacy. We use your contact information, such as your name, address, and email id, to fulfil your request and service your account and to provide you with additional information from CRISIL and other parts of McGraw Hill Financial you may find of interest.
For further information, or to let us know your preferences with respect to receiving marketing materials, please visit www.crisil.com/privacy. You can view McGraw Hill Financial's Customer Privacy Policy at http://www.mhfi.com/privacy.
Last updated: August, 2014

Disclaimer:A CRISIL rating reflects CRISIL's current opinion on the likelihood of timely payment of the obligations under the rated instrument and does not constitute an audit of the rated entity by CRISIL. CRISIL ratings are based on information provided by the issuer or obtained by CRISIL from sources it considers reliable. CRISIL does not guarantee the completeness or accuracy of the information on which the rating is based. A CRISIL rating is not a recommendation to buy, sell, or hold the rated instrument; it does not comment on the market price or suitability for a particular investor. All CRISIL ratings are under surveillance. Ratings are revised as and when circumstances so warrant. CRISIL is not responsible for any errors and especially states that it has no financial liability whatsoever to the subscribers / users / transmitters / distributors of this product. CRISIL Ratings rating criteria are available without charge to the public on the CRISIL web site, www.crisil.com. For the latest rating information on any instrument of any company rated by CRISIL, please contact CRISIL RATING DESK at CRISILratingdesk@crisil.com, or at (+91 22) 3342 3000.

January 07, 2015