ICRA Assigns B+ Rating to Shyamsundar Satyanarayan Textiles (P) Limited's Cash Credit Facility

Shyamsundar Satyanarayan Textiles (P) Limited's (SSTPL) cash credit facility of Rs. 15 crore has been assigned a rating of [ICRA]B+ by ICRA. The rating takes into account the highly fragmented industry structure, weak financial profile, and high working capital intensity. Despite this, the rating derives comfort from the experience of the promoters in the fabric trading business and the established relationship with suppliers.

Key Takeaways:

• ICRA has assigned a B+ rating to SSTPL's Rs. 15 crore cash credit facility, indicating a moderate level of credit risk.
• The rating factors in the highly fragmented industry structure, which keeps margins under check, and the weak financial profile of the company characterized by nominal profits and cash accruals.
• The working capital intensity of operations has remained at a high level due to high receivables and significant inventory holding, impacting the liquidity position of the company.
• The rating also considers the adverse price fluctuations of traded materials, which can keep SSTPL's profitability and cash flows volatile.
• The experience of the promoters in the fabric trading business and the established relationship with suppliers provide some comfort to the rating.
• SSTPL is engaged in the trading of denim and other fabrics, and is an authorized dealer of Arvind Ltd. in eastern India.

Statistics:

• Rs. 15 crore: The amount of the cash credit facility assigned a B+ rating by ICRA.
• 0.55 crore: The net profit before tax reported by SSTPL during the first nine months of 2014-15.
• 49.08 crore: The operating income reported by SSTPL during the first nine months of 2014-15 (provisional).
• 0.53 crore: The net profit reported by SSTPL in 2013-14.
• 62.32 crore: The operating income reported by SSTPL in 2013-14.

Sources:

• ICRA Limited. (2015, March). Rating: [ICRA]B+ assigned to SSTPL's cash credit facility. Retrieved from http://www.icra.in/