Credit rating agency, Credit Analysis & Research (CARE) has revised rating of Pranavaditya Spinning Mills’ long term bank facilities worth Rs 14 crore to ‘BB’ from ‘B+’. The rating agency has reaffirmed ‘A4’ rating to the company’s short-term bank facilities worth Rs 1 crore.
The revision in the long-term rating assigned to the bank facilities of Pranavaditya Spinning Mills (PSML) takes into consideration improvement in operational and financial risk profile of holding company, viz, Indo Count Industries (ICIL), comfortable debt coverage indicators of PSML and improved working capital cycle. The ratings, however, continue to be constrained by the small scale of operations and volatility in profitability margins due to volatility in prices of the key raw material inputs.
Pranavaditya Spinning Mills (PSML) is primarily engaged in the manufacture of cotton yarn. Cotton yarn manufactured by PSML is sold both in the domestic markets as well as exported to countries like China, Korea, Egypt, Bangladesh, Turkey, Vietnam, Poland, Hong Kong and Japan. In FY14, of the total sales of Rs 71.83 crore, Rs.46.90 crore was generated from exports (ie, about 65% of the total sales) as compared with Rs 34 crore (ie, about 60% of the total sales in FY13).