| Polo Queen Industrial and Fintech Limited | ||||||
| Ratings Reaffirmed | ||||||
| Rating Action | ||||||
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| 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 reaffirmed its 'CRISIL BB-/Stable/CRISIL A4+' ratings on the bank facilities of Polo Queen Industrial and Fintech Limited (PQIFL).
The ratings continue to reflect the extensive experience of the promoters in the trading business, their funding support and the moderate capital structure of the company. These rating strengths are partially constrained by the modest scale of operations amidst intense competition and average debt protection metrics. |
Analytical Approach Unsecured loans from promoters (Rs 7.7 crore as on March 31, 2021) have been treated as neither debt neither equity as these are expected to remain in the business. |
Key Rating Drivers & Detailed Description Strengths: Extensive experience of the promoter in the trading business The four-decade-long experience of the promoters in the trading business, their strong understanding of market dynamics and established relationships with suppliers and customers, will continue to support the business risk profile. The company trades in various products including fabrics, minerals, chemicals and fast-moving consumer goods.
Moderate capital structure Capital structure is moderate as reflected in estimated gearing of 1.1-1.2 time and total outside liabilities to adjusted networth ratio of 2.7-2.8 times as on March 31, 2022. Funding support from the promoters has ensured low dependence on external debt. In absence of any major debt funded capital expenditure, it is expected to remain on similar level over the medium term.
Weaknesses: Modest scale of operations in a competitive trading industry The company has presence in fragmented industries like fabric, chemicals, and FMCG which has various unorganized players leading to intense competitive pressure. The company thus operates on a small scale as reflected in revenue of Rs 32 crore for fiscal 2021. Scale is estimated to improve to Rs 55-56 crores in fiscal 2022 supported by pickup in demand, however, remain modest. Intense competition from other small and mid-sized traders’ limits scalability and bargaining power with customers and suppliers.
Average debt protection metrics The debt protection metrics are expected to remain average in fiscal 2022 with estimated interest coverage ratio of around 1.9 times and net cash accrual to total debt ratio of around 0.14 time on account of modest profitability and cash accrual. With sustenance in operating margin, it is expected to remain on similar level over the medium term. |
Liquidity: Stretched Expected cash accrual of Rs 1.1-1.2 crore per fiscal in 2023 and 2024 should be more than suffice to cover the yearly debt of Rs 0.13-0.15 crore. Fund-based limit of Rs 7 crore was utilised at an average of 72% in the 12 months ended December 31, 2021. Need-based unsecured loans from the promoters also aid liquidity. |
Outlook: Stable CRISIL Ratings believes PQIFL will continue to benefit from the extensive experience of its promoters in the trading business. |
Rating Sensitivity Factors Upward factors
Downward factors
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About the Company PQIFL was set up by members of the Sanghai family in 1984. The Mumbai-based company trades in fabric, FMCG products, minerals and chemicals. The company sells its FMCG products, mainly the personal, home, kitchen and fabric care range, under the 'Polo Queen's brand. It is listed on Bombay stock exchange. |
Key Financial Indicators
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Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
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 Bank Lenders & Facilities | |||
| Facility | Amount (Rs.Crore) | Name of Lender | Rating |
| Bank Guarantee | 0.75 | Central Bank Of India | CRISIL A4+ |
| Cash Credit | 5 | Central Bank Of India | CRISIL BB-/Stable |
| Government Bill Purchase | 2 | Central Bank Of India | CRISIL BB-/Stable |
| Proposed Working Capital Facility | 1 | Not Applicable | CRISIL BB-/Stable |
This Annexure has been updated on 13-Mar-2023 in line with the lender-wise facility details as on 28-Feb-2023 received from the rated entity.
Criteria Details
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