Credit rating agency, CARE has assigned ‘BB-’ rating to Zenith Fibress’ long term bank facilities worth Rs 2 crore. The rating agency has also assigned ‘A4’ rating to the company’s Short-term bank facilities worth Rs 7 crore. The ratings assigned to the bank facilities of Zenith Fibress (ZFS) are constrained by its short track record coupled with small scale of operations along with low profitability margins in highly competitive textile industry with risk of nonrenewal of dealership agreement from Hysoung Corporation, exposed to volatility in trading material prices & forex rates and working capital intensive nature of business resulting in leveraged capital structure.
The rating also factors in its partnership form of constitution with inherent risk of withdrawal of capital in time of contingency and risk of dissolution upon the death/retirement/insolvency of the partners.
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