| Riviera Home Furnishings Private Limited | ||||||
| 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 reaffirmed its 'CRISIL A-/Stable/CRISIL A2+’ ratings on the bank facilities of Riviera Home Furnishings Private Limited (RHFPL).
Revenue is estimated to have grown from Rs 320 crore in fiscal 2021 to Rs 395 crore in fiscal 2022, driven by higher volume and realisation. The growth in volume was because of healthy pickup in demand for home furnishing products in key markets such as the US and the EU - demand had slowed down in fiscal 2020 amid the Covid-19 pandemic. The established track record and strong clientele of RHFPL will support its business risk profile.
The earnings before interest, taxes, depreciation and amortisation margin is estimated at 14.9% in fiscal 2022 despite increased raw material prices, as the company is partially able to pass on input cost increase to clients. The margin is expected at 12-15% over the medium term.
The ratings continue to reflect the established market position of RHFPL in the home furnishings segment, healthy relationships with key customers, and robust financial risk profile because of strong networth and debt protection metrics. These strengths are partially offset by modest scale of operations, geographical concentration in revenue, and large working capital requirement. |
Key Rating Drivers & Detailed Description Strengths: Established market position in the home furnishings products segment: RHFPL manufactures and exports bath mats, tub mats, and made-ups such as bed spreads, floor covers, and cotton carpets; all of which are niche products due to their special design, pattern and size. The company's market position has strengthened over the past few years, driven by deeper penetration into the US, Germany, Belgium and Australia.
Robust financial risk profile: Networth had declined in fiscal 2021 and remained modest in fiscal 2022 on account of dividend payout (by way of share buyback). However, low reliance on external debt kept total outside liabilities to tangible networth ratio below 1 time over the past few fiscals. The ratio is expected at 0.3-0.5 time over the medium term. Additionally, sustained decline in interest cost led to robust debt protection metrics, as indicated by interest coverage and net cash accrual to debt ratios of 33 times and 0.49 time, respectively, for fiscal 2021. No debt-funded capital expenditure (capex) and expected accretion to reserves will continue to aid financial risk profile over the medium term.
Weaknesses: Modest scale of operations and geographical concentration in revenue: While RHFPL achieved revenue growth in fiscal 2022 to Rs 395 crore, its scale remains modest. Moreover, the ongoing global slowdown will likely constrain order flow, reducing turnover by 5-10% in fiscal 2023. Also, the US market contributed around 60% to the topline during fiscal 2022, rendering revenue susceptible to any change in geopolitical relations between the US and India. |
Liquidity: Strong Accrual is expected to be healthy at Rs 38-42 crore annually against no term debt obligation over the medium term. Bank limit utilisation averaged 89% for the 12 months through March 2022. Current ratio was comfortable at 1.7 times as on March 31, 2022. |
Outlook: Stable RHFPL will continue to benefit from its strong market position and healthy relationships with key customers. |
Rating Sensitivity Factors Upward Factors
Downward Factors
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About the Company RHFPL was set up by Mr Kuldeep Singla, Mr Vishesh Singla, Mr Navdeep Singla and Mr Lalit Goel in April 1995 as Rugs India Pvt Ltd. It got its current name in March 2006. The company manufactures and exports bath mats, tub mats, and made-ups such as bed spreads, floor coverings, and carpets. It has five facilities in Panipat, Haryana. |
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 - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||||||
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This Annexure has been updated on 21-Jun-22 in line with the lender-wise facility details as on 06-Aug-21 received from the rated entity.
Criteria Details
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