| Premier Mills Private Limited | ||||
| Rating 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 A1+’ rating on the short-term bank facilities of Premier Mills Private Limited (PMPL; part of Premier group).
The rating continues to reflect Premier group's established presence across the textile value chain, diversified revenue profile, and its healthy financial risk profile. These strengths are partially offset by susceptibility to volatile raw material prices and forex rates and to intense industry competition. |
Analytical Approach For arriving at the ratings, CRISIL Ratings has combined the business and financial risk profiles of Premier Spg & Wvg Mills Pvt Ltd (PSW), Coimbatore Polytex Pvt Ltd (CPT), PMPL, Sree Narasimha Textiles Pvt Ltd (SNT), Prima Products Pvt Ltd (Prima), Lakshmi Narasimha Textiles Pvt Ltd (LNT), Premier Cotton Textiles (PCT), and Premier Fine Linens Pvt Ltd (PFL). This is because these entities, collectively referred to as the Premier group, are under the same management, have a common treasury, and have significant intra-group business synergies, including fungible cash flows.
Unsecured loans from the promoters, related parties and entities have been treated as debt.
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:
The group has a sizeable weaving capacity, with 375 looms and a spinning capacity of 384432 spindles and 4416 rotors. The grey fabric produced caters to both domestic and export markets, in addition to meeting captive requirements. The group has established presence in the readymade garments segment in Southern India, and strong brand equity (Premier dhotis sold under the Chalukya, Prime King, and Chakravarthy brands; and Premier stitching materials).
Although a smaller player when compared to other industry majors like Vardhman Textiles Limited (rated CRISIL AA+/Stable/CRISIL A1+), the Premier group is able to compete and command premium because of its premium quality and range of diverse products. Thus, the group's comprehensive infrastructure, along with experience of more than six decades in the textile industry, lends stability to its business risk profile.
The Premier group has captive windmill capacity of 105 megawatt, which contributes over 80% cent of the total power requirement. The considerable windmill capacity helps reduce the group's power cost, which, in turn, helps improve operating efficiency and maintain healthy margins. CRISIL Ratings believes the Premier group will continue to benefit from its strong market position and healthy operating efficiencies over the medium term.
Weaknesses:
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Liquidity: Strong Bank limit utilisation is moderate at around 52 percent for the past twelve months ended April 2023. Cash accruals are expected to be in the range of Rs 200 to 250 crore which are sufficient against term debt obligation of Rs 20-25 crore over the medium term. In addition, it will be act as cushion to the liquidity of the company. The promoters have extended support in the form of unsecured loans to meet its working capital requirements and repayment obligations. Unencumbered cash and bank and mutual funds investment balance of around Rs.595 crore as on March 31, 2023 will further support the liquidity. |
Rating Sensitivity factors Upward factors:
Downward factors:
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About the Group The Premier group was set up in 1945 by Mr V N Ramachandran. The group is an established textile house in southern India, with a presence across the textile value chain. The group is engaged in spinning cotton yarn, manufacturing fabric and made ups. The group spins cotton yarn of counts 30 to 180. While about 65% of fabric sales is from domestic, rest is from export markets of Europe and Middle Eastern countries. Made ups are primarily exported to United States of America.
PSW, incorporated in 1945, is engaged in manufacturing of fabric and yarn. PML, incorporated in 1995, is engaged in manufacturing of yarn. SNT, incorporated in 1976, is engaged in manufacturing of yarn. Prima, incorporated in 1987, is engaged in manufacturing of yarn. CPT, incorporated in 2003, is engaged in manufacturing of yarn and fabric. 98% revenues are from yarn and remaining from fabric. PCT, a partnership firm set up in 1996, is engaged in manufacturing of yarn. LNT, incorporated in 2004, is engaged in manufacturing of yarn. PFL, incorporated in 1995, is engaged in manufacturing of fabric and made-ups like bed linen. |
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 – 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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Criteria Details
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