| Celebrity Fashions Limited | ||||||
| Ratings 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 BB/Stable/CRISIL A4+’ ratings on the bank facilities of Celebrity Fashions Ltd (CFL).
CRISIL Ratings has also withdrawn its rating on the Rs.23.39 crore proposed long-term bank loan facility and Rs.6.54 crore proposed working capital facility at company's request. The rating action is in-line with CRISIL Rating's policy on withdrawal of its rating on bank loan facilities.
The ratings continue to reflect the extensive experience of the promoters in the readymade garment export industry and established relationship with customers. These strengths are partially offset by average financial risk profile and exposure to intense competition. |
Key Rating Drivers & Detailed Description Strengths: Extensive experience of the promoters: The promoters have more than two decades of experience in the readymade garment export industry; their strong understanding of market dynamics and healthy relations with customers and suppliers should continue to support the business. The Company has achieved revenue of Rs.364.24 crore in fiscal 2023 and Rs.248.15 crore up to Q3 of Fiscal 2024. CRISIL Ratings believes that CFL will continue to benefit from the extensive experience of the promoters over the medium term.
Established relationship with customers: Through its long vintage and presence; CFL has been able to establish healthy relationship with its customers which include reputed readymade apparel corporates like Timberland, Northface, and LLBean etc resulting in regular orders from these customers. CRISIL Rating believes CFL shall continue to benefit from its established customer relationship over the medium term.
Weakness: Average financial risk profile: Financial risk profile is marked by leveraged capital structure and moderate debt protection metrics. Capital structure is leveraged marked by gearing and Total Outside Liabilities/Tangible Networth (TOL/TNW) of 3.06 time and 5.78 time, respectively, as on 31st march 2023 and expected to improve to less than 2.5 times and 5 times, respectively, as on 31st March 2024. Debt protection metrics is moderate marked by interest coverage ratio (ICR) of 2.99 times and Net cash accruals to adjusted debt (NCAAD) of 0.18 time in fiscal 2023 and expected at over 2.5 times and 0.15 time, respectively, for fiscal 2024.
Exposure to intense competition: The readymade garment export industry comprises several unorganised players in India, Bangladesh and Southeast Asia. Thus, intense competition will continue to constrain scalability, pricing power and profitability of players such as CFL. |
Liquidity: Adequate Liquidity is adequate marked by moderate BLU and sufficient cushion between Net Cash Accruals (NCA) vs Repayment obligation (RO). Average month-end bank limit utilisation was moderate at 79% for the 12 months through January 2024. Cash accrual is expected in the range of Rs.12.5 to 15 crore per annum over the medium term against repayment obligation of Rs.3.43 crore per annum and preference share redemption of Rs.5 crore per annum over the medium term. Current ratio stood at 1.24 times as on March 31, 2023 and expected to be over 1.2 times as on March 31, 2024. |
Outlook: Stable CFL will continue to benefit from the extensive experience of its promoters and their established relationship with customers. |
Rating Sensitivity Factors Upward Factors
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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 - 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 Bank Lenders & Facilities | ||||||||||||||||||||||||||||||||
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Criteria Details
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