May 02, 2013

Mumbai

Winsome Diamonds & Jewellery Limited

Rating downgraded to ‘CRISIL D’; Removed from ‘Watch’

Total Bank Loan Facilities Rated	Rs.38,450.0 Million
Short-Term Rating	CRISIL D (Downgraded from ‘CRISIL A4’; Removed from ‘Rating Watch with Negative Implications’)

(Refer to Annexure 1 for details on facilities)

CRISIL has downgraded its rating on the short-term bank facilities of Winsome Diamonds & Jewellery Ltd (Winsome; part of the Winsome group) to ‘CRISIL D’ from ‘CRISIL A4/Rating Watch with Negative Implications’.

The rating downgrade reflect delays of over 30 consecutive days by Winsome in servicing its maturing letter of credit obligations; the delays have been caused by weakening in Winsome group’s liquidity due to a sudden stretch in its receivables. The group has not been receiving any payments from most of its customers since early March 2013, unlike earlier, when it received payments from them regularly. The group continues to be in discussions with its bankers for debt restructuring and with its customers for realisation of its receivables.

The rating continues to reflect the Winsome group’s large working capital requirements, high degree of customer concentration in its revenue profile, and its exposure to intense competition in the domestic and export jewellery markets resulting in low profitability margins. These rating weaknesses are partially offset by the extensive experience of the Winsome group’s promoters in the gems and jewellery industry.

For arriving at its rating, CRISIL has combined the business and financial risk profiles of Winsome, and its group companies, Su-Raj Diamond Industries Ltd (Su-Raj) and Forever Precious Jewellery and Diamonds Ltd (Forever Precious). This is because these companies, collectively referred to as the Winsome group, have common promoters, and significant managerial, operational, and financial linkages with each other.

About the Group

Winsome (formerly, Su Raj Diamonds and Jewellery Ltd) is the flagship company of the Winsome group, which processes diamonds and manufactures gold jewellery. Winsome has a diamond cutting and polishing unit at Surat (Gujarat). The company’s jewellery manufacturing units are in Bengaluru (Karnataka), Kochi (Kerala), Chennai (Tamil Nadu), Goa, and Kolkata (West Bengal).

Su-Raj cuts and processes diamonds; it has manufacturing units in Surat and Jodhpur (Rajasthan). The company also exports gold jewellery.

Forever Precious manufactures gold jewellery and the company’s wholesale centres are based in New Delhi, Gujarat, Maharashtra, Andhra Pradesh, Karnataka, and Tamil Nadu. The company is also engaged in retailing of gold jewellery.

Annexure 1 - Details of various bank facilities

Current facilities			Previous facilities
Facility	Amount (Rs. Million)	Rating	Facility	Amount (Rs. Million)	Rating
Letter of Credit and Bank Guarantee	34,700.0	CRISIL D	Letter of Credit and Bank Guarantee	34,700.0	CRISIL A4 (Watch Negative)
Packing Credit	3,750.0*	CRISIL D	Packing Credit	3,750.0*	CRISIL A4 (Watch Negative)
Total	38,450.0		Total	38,450.0

*Interchangeable with post-shipment credit

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Last updated: March 7, 2013

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May 02, 2013	http://www.crisil.com