| SSIPL Retail Limited | ||||||
| Rating outlook revised to 'Stable'; Ratings reaffirmed | ||||||
| Rating Action | ||||||
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| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed rationale CRISIL Ratings has revised its rating outlook on the long-term bank facilities of SSIPL Retail Limited (SRL; a part of the SSIPL group) to ‘Stable’ from ‘Negative’; the ratings on the bank facilities of the entity have been reaffirmed at ‘CRISIL B+/CRISIL A4’.
The outlook revision factors in the additional liquidity of Rs 145-147 crore infused by the management through selling of its stores. These funds have been subsequently utilised to repay obligations of the group towards creditors and the bank. Further, the group has been sanctioned a guaranteed emergency credit line (GECL) of around Rs 36 crore in January 2021 that has been utilised to meet the working capital requirement. Further improvement in the liquidity with positive cash accruals supported by the recovery in overall business profitability will remain akey rating sensitivity factor.
The ratings continue to reflect weak financial and business risk profiles of the SSIPL group. These weaknesses are partially offset by established position in the Indian footwear industry. |
Analytical approach For arriving at the ratings, CRISIL Ratings has combined the business and financial risk profiles of SRL and its fully owned subsidiary, SSIPL Lifestyle Pvt Ltd (SLS), together referred to as the SSIPL group, as the two companies have common management, strong business linkages and are in the same line of business.
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 Weaknesses:
Financial risk profile has been constrained by the operational losses incurred during the two fiscals through 2021; the situation further got aggravated owing to steep decline in the retail business amid the pandemic. Networth reduced by more than 33% on-year in fiscal 2021; total outside liabilities to tangible networth ratio deteriorated to 4.0 times as on March 31, 2021, from 3.6 times a year ago. Debt protection metrics will remain weak owing to negative cash accruals in fiscal 2021.
The operations remained closed for a major part of the first quarter of fiscal 2021 because of the nationwide lockdown imposed to contain the spread of the pandemic; demand was subdued in the second quarter of the fiscal as well. Thus, operating losses increased to 37-38% in fiscal 2021 from 0.2% in fiscal 2020. Additionally, a 50% decline in on-year revenue led to negative cash accrual of Rs 42 crore in fiscal 2021. Although revival in business performance is expected from fiscal 2022, with the group achieving a turnover of Rs 62 crore in the first quarter itself, extent of such revival will remain a key monitorable.
Strength:
The group has healthy relationship with global brands such as Nike, Clarks, Lotto, Levis and United Colors of Benetton (UCB). It has diversified into manufacturing, distributorship and retailing. In the retail segment, the group caters to all customer segments through exclusive and multi-brand outlets. Further, addition of customers such as Converse and Paragon shall continue to support the business. |
Liquidity: Poor Bank limit utilisation was high, at an average of 90% during the 12 months through May 2021. However, utilisation reduced to 70%, supported by the proceeds from the sale of stores and the Rs 36 crore GECL received by the group in February 2021; the sanctioned bank limit has also been reduced to around Rs 107 crore as on May 31, 2021, from the previous Rs 175 crore.
Cash accrual is expected to remain negative owing to the operational losses incurred in the past. The promoters are likely to extend need-based funds to help in servicing of debt. However, timely infusion of such funds will remain a key monitorable. Current ratio was moderate at 1.01 times on March 31, 2021. |
Outlook: Stable The SSIPL group will continue to benefit from the extensive experience of the promoters and their established relationship with clients. |
Rating sensitivity factors Upward factors
Downward factors
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About the SSIPL group The SSIPL group is a specialty retailer of international sports and lifestyle brands in India and has diversified into manufacturing, retailing and distribution.
SRL is the flagship company of the SSIPL group and was established in 1994 as Moja Shoes Pvt Ltd by Mr Rishab Soni, Mr Sunil Taneja and Mr Amit Mathur. It manufactures sports shoes for Puma, Lotto and its own brand, Mmojah, and operates several Nike stores. The facilities are in Haryana, Uttarakhand and Himachal Pradesh.
SLS, incorporated in 2007, retails brands such as Lotto, Levis and UCB; it also owns multi-brand outlets (Sports Station, Shoetree, Value Station and Mmojah). |
Key financials (Standalone)
*Provisional |
Any other information: Not applicable |
| Note on complexity levels of the rated instrument: CRISIL Ratings' complexity levels are assigned to various types of financial instruments. The CRISIL Ratings' complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL Ratings' 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 – 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 various bank facilities | ||||||||||||||||||||||||||||||||||||||||||
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Criteria Details
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