| Sarita Handa Exports Private Limited | ||||||
| Ratings reaffirmed at 'CRISIL BBB+ / Stable / CRISIL A2 ' | ||||||
| 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 A2’ ratings assigned to bank facilities of Sarita Handa Exports Private Limited (SHEPL).
The ratings continue to reflect SHEPL's established market position, healthy relationships with customers, and comfortable financial risk profile and liquidity. These strengths are partially offset by exposure to customer and geographic concentration risk and large working capital requirement. |
Key Rating Drivers & Detailed Description Strengths:
Three decades of experience in the home textiles industry, has helped the promoter, Ms Sarita Handa, maintain healthy relationships with customers, and establish a strong position in the overseas market. Majority of products are sold to high-end customers in niche markets. Detailed designing, good craftsmanship, and constant innovations of patterns and combinations, have enabled the company to meet clients' expectations, and retain top clients, such as Williams-Sonoma and the Macy Merchandising group (Macy's), for over a decade.
Despite lockdown amid Covid-19 pandemic, the operations were not much impacted during Fiscal 2021. It achieved revenue of Rs. 191 crore in first 9 months of Fiscal 2021 (Apr-Dec 2020) with expectation of around Rs. 260 crore for Fiscal 2021 (as against Rs. 263 crore during Fiscal 2020), thereby indicating low impact of covid-19. The operating margins (EBIDTA) have been on declining trend over past few years from around 24% in Fiscal 2017 to around 17% in Fiscal 2020 and below 15% during 9M Fiscal 2021. The same is largely due to shift in consumer sentiments to more value-for-money products (like washable types) increase in raw material prices and high competition among others.
Financial risk profile should remain healthy due to adequate profitability and low debt. Networth was high at Rs 116 crore as on March 31, 2020, with gearing low at 0.15 time. Debt protection metrics were also strong, with interest coverage and net cash accrual to total debt ratios of 23.96 times and 0.77 times, respectively, in fiscal 2020.
Networth is estimated to increase to Rs. 128 crore as on March 31, 2021 and gearing is expected to be in range of 0.15-0.25 time for Fiscal 2021.
Weaknesses:
The US market accounts for almost 95% of revenue, with the rest coming from Europe. Further, as majority of revenue coming from few customers, lowers the bargaining power against customers and leads to concentration risk.
Gross current assets were 95 days as on March 31, 2020, driven by inventory of 40-60 days (owing to long order processing) and debtors of 29-70 days (due to high lead time in exports). |
Liquidity: Adequate The liquidity profile of the company is adequate as reflected by expected net cash accrual of Rs 15-22 crore in fiscals 2021 and 2022, against which there are no major term debt repayment obligations. Bank limit utilisation is moderate at around 40 percent for the past twelve months ended Dec 2020. Liquidity is also supported by investments in mutual funds, outstanding at around Rs 15 crore as on March 31, 2020. Current ratio was healthy at 1.76 time as on March 31, 2020.
Going forward, the liquidity may however get constrained by expectation of sizable dividend payouts. The same was Rs. 22 crore in Fiscal 2020 after share buy-back done in Fiscal 2019.
Low gearing and moderate net worth support its financial flexibility, and provides the financial cushion available in case of any adverse conditions or downturn in the business. |
Outlook: Stable CRISIL believes SHEPL will continue to benefit from an established position as an exporter, strong clientele and supplier base. |
Rating Sensitivity factors Upward factors
Downward factors
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About the Company SHEPL, incorporated in 1993, is a Manesar (Haryana)-based company that manufactures and exports home textiles such as bed sheets, pillow covers, table covers, quilts, and duvets. Ms Sarita Handa, Ms Suparna Handa and Mr Rahul Puri manage the business. |
Key Financial Indicators
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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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* - Issuer did not cooperate; based on best-available information
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| Annexure - Details of various bank facilities | ||||||||||||||||||||||||||||||||||||
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