| Vaibhavlaxmi Spintex LLP | ||||||
| Rating outlook revised to 'Positive'; Ratings reaffirmed; rated amount enhanced for Bank Debt | ||||||
| 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 Vaibhavlaxmi Spintex LLP (VSLLP: part of the Vaibhavlaxmi group) to 'Positive' from 'Stable' while reaffirming the rating at 'CRISIL BBB+'. The short-term rating has been reaffirmed at 'CRISIL A2'.
The positive outlook focuses on the sustainability of the revenue for the coming financials years with improved operating margins along with cash accruals benefited by the capital expenditure done by the group in renewable energy power plants. The group will continue to benefit from the extensive experience of the promoters and the established position of the group in the cotton textile industry, integrated operations, and healthy financial risk profile. |
Analytical Approach CRISIL Ratings has combined the business and financial risk profiles of Vaibhavlaxmi Spinning Mills Ltd (VSML), VSLLP, Vaibhavlaxmi Exports Pvt Ltd (VEPL) and Vaibhavlaxmi Industries, collectively referred to as the Vaibhavlaxmi group, as these entities have common promoters, same business and significant operational, managerial and financial linkages. (Refer Annexure for the list of entities considered and the analytical treatment of consolidation.)
Unsecured loan of Rs 7.5 crore as on March 31, 2022, from the promoters has been treated as neither debt nor equity because the loan may remain in the business over the medium term.
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:
Weaknesses:
The cotton yarn industry has a large number of organized and unorganized players and is exposed to intense competition driven by low capital requirement. The limited product diversification limits the bargaining power of yarn players with suppliers and customers restricting profitability.
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Liquidity: Adequate Fund Support from promoters in the form of unsecured loans to the extent of Rs.7.5 crores has been treated as NDNE. The bank utilization is moderate at 87.47% on consolidated basis for all group companies Current ratio is at 2.12 in FY 2022. In addition, it will act as cushion to the liquidity of the company. NCA/RO remains comfortable at 2.48. Firm is expected to generate cash accruals of 70-75 crores to provide comfortable cushion against and repayment obligations. |
Outlook: Positive CRISIL Ratings believes that Vaibhavlaxmi group will continue to benefit from the extensive experience of the promoters and established relationships with clients. |
Rating Sensitivity factors Upward factors
Downward factors
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About the Group The manufacturing units of the group are in Kadi, Gujarat. Mr. Ramesh Patel and his sons, Mr. Niranjan Patel and Mr. Ashish Patel are the promoters.
VLI, set up in 1995, undertakes cotton ginning and cotton oil extraction.
VSML, incorporated in 2013, manufactures cotton yarn.
VSLLP, formed in 2016, executes cotton ginning and spinning.
VEPL, established in 2010, trades in cotton bales and yarn. |
Key Financial Indicators
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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. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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* - Issuer did not cooperate; based on best-available information
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| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||||||||||||||||||||||||||||||
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This Annexure has been updated on 05-Aug-22 in line with the lender-wise facility details as on 07-Sep-21 received from the rated entity.
Criteria Details
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