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Rating Rationale
Brickwork Ratings on a review Reaffirms ‘BWR B+’ for Long Term Bank
loan Facility and withdrawal of rating ‘BWR A4’ for Short Term Bank loan
Facility aggregating to ₹ 11.00 Crores of Spectrum International Private
Limited
Brickwork Ratings on a review reaffirms the following Ratings1 for Long Term Bank loan
Facility and withdraws short term rating for Bank loan Facility aggregating to Rs. 11.00 Crores
of Spectrum International Private Limited.
Facility
Previous
Limits
Rs Cr
Present
Limits
Rs Cr
Rating
History
Tenure
Review rating
Fund Based Limits
BWR B+
(Pronounced BWR B
Secured Cash
Credit
Non Fund Based
6.60
11.00
Long
Term
BWR B+
Plus)
(Pronounced BWR B
Outlook –Stable
Reaffirmation
Plus)
BWR A4
Letter of
Guarantee
Total
10.00
16.60
Nil
11.00
Short
Term
(Pronounced BWR A
Rating Withdrawn
INR Eleven Crores Only
Four)
BWR has principally relied upon the audited financial results up to 2012-13 (ending Sep, 2013.),
provisional Sep 14, (audited financials not made available) projected financial of Sep 15 of
Spectrum
International
Private
Limited,
publicly
available
information
and
information/clarification provided by the Company management.
The rating continues to factor the promoters’ experience and consistent growth in revenue.
However the rating continues to be constrained by declined in operating profit margins,
moderate trading operations, moderate leverage position, weak debt protection metrics, thin
profitability margins, and high degree of competition.
Background:
Spectrum International Private Limited was incorporated in 1991, taken over by Mr. Amit Shah
and other promoters in 2001. The Company is majorly into the business of trading of organic
and BCI cotton bales, Yarn, Hosiery. The company is also in to the business of manufacturing of
Organic and BCI cotton bales made from raw organic cotton. The company has outsourced all
1
Please refer to www.brickworkratings.com for definition of the Ratings
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1
16 Feb 2015
manufacturing activities to other ginning mills, spinning mill and others including associate
concern.
The company procures its raw material from farmers spread in various states. The company has
become authorized member of Better Cotton Initiative and implementing partner for organic
products.
Management Profile:
Mr. Amit Shah, CEO is MBA (USA) and having an experience of more than a decade in the line
of industry. Mr. Parantap Dave, Professional Director is a Chartered Accountant and having an
experience of more than two decades. He takes care of financial and legal aspects of company.
Mr. Amitabh Singh, Professional Director, is B.Sc. (Agriculture) and having an experience of
more than two decades. He manages the farm activities at the farm levels for procurement major
input cotton.
Business Operations:
Spectrum International Private Limited is majorly into the business of trading of organic and
BCI Cotton bales, Yarn, Hosiery etc. Manufacturing, of Organic and BCI Cotton Bales, is
outsourced to other ginning mills across various states of India such as Maharashtra, Orissa,
and Gujarat. The company procures raw material directly from farmers and open market. The
company has contracted with ~ 27000 farmers who covers ~ 110,000 acres of land. The
company is also dealing indirectly with various brands such as Marks & Spencer’s (M&S),
Heinz and Mauritz (H&M), C&A, Tesco, Gina Tricot, Kappahl, MQ, Migros, etc.
Financial Performance:
Financial performance of the company is characterized by increasing revenue, reduction in
profitability margins and moderate capital structure. Total income has registered a significant
year-over-year growth of ~48% in Sep 13 (audited) over Sep 12 (audited) mainly on account of
increase in sales volume. Operating profit has increased in absolute terms to Rs. 3.78 Crores
against Rs. 1.81 Crores in Sep 12, EBITDA and PAT margin had increased by 72 bps and 28 bps
respectively in Sep 13 compared to Sep12 on account of huge variation in raw material prices.
The solvency position remained moderate, though improved, on account of high working-capital
borrowings as on Sep 2013. The overall capital structure of the company has improved which is
reflected in overall gearing of 1.97x as on Sep, 2013 against 2.81x as on Sep, 2012 due to
accretion of profits. Nevertheless the overall gearing expected to increase due to increase in
working capital borrowings to support its growing scale of operations. The debt coverage
indicator ISCR has improved to 1.36 x in Sep 13 against 1.15x in Sep 12.
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16 Feb 2015
Rating Outlook
Going forward, the ability of company to consistently scale up its operations, manage working
capital effectively, withstanding volatile raw material prices along with improvement in
profitability and capital structure are the key rating sensitivities.
Analyst Contact
Relationship Contact
analyst@brickworkratings.com425-24
bd@brickworkratings.com
Phone
Media Contact
1-860-425-2742
media@brickworkratings.com
Disclaimer: Brickwork Ratings (BWR) has assigned the rating based on the information obtained from the issuer and other reliable sources,
which are deemed to be accurate. BWR has taken considerable steps to avoid any data distortion; however, it does not examine the precision or
completeness of the information obtained. And hence, the information in this report is presented “as is” without any express or implied warranty
of any kind. BWR does not make any representation in respect to the truth or accuracy of any such information. The rating assigned by BWR
should be treated as an opinion rather than a recommendation to buy, sell or hold the rated instrument and BWR shall not be liable for any losses
incurred by users from any use of this report or its contents. BWR has the right to change, suspend or withdraw the ratings at any time for any
reasons.
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