September 24, 2014 Mumbai
William Industries Private Limited
Advisory as on September 24, 2014
This rating advisory is provided in relation to the rating of William Industries Private Limited
The key rating sensitivity factors for the rating include:
Equity infusion
Profitability levels
Capital expenditure (capex) plans and their funding mix
CRISIL keeps all its outstanding ratings under continuous surveillance. Accordingly, it seeks regular updates from companies on business and financial performance. CRISIL is yet to receive adequate information from William Industries Private Limited to enable it to undertake a rating review. CRISIL is taking all possible efforts to get to cooperate with its rating process for enabling it to carry out the rating review. CRISIL views information availability risk as a key credit factor in its rating process and views non-sharing of information as a first signal of possible deterioration in credit quality, as outlined in its criteria ‘Information Availability Risk in Credit Ratings’. CRISIL will suspend the ratings shortly if the company continues non- cooperation with the rating process.
About the Company
Incorporated in 2004 as a private limited company, WIPL has been manufacturing socks since 1962, when it was a partnership firm. The present promoter-directors, Mr. Vivek Juneja and Mr.
Manoj Juneja, manage the company’s operations. WIPL manufactures cotton and nylon socks for men, women, and kids under the Anchor brand, and also sells them to ACC Ltd and Tata Motors Ltd, and to private labels and retail departmental stores and malls. The company’s marketing and designing activities are undertaken in-house; however, the socks are manufactured by its group companies, Narvin Chemicals Pvt Ltd (Navi Mumbai [Maharashtra];
with a capacity of 0.7 million dozens per annum), and Global Knits Pvt Ltd (Indore [Madhya Pradesh]; with a capacity of around 0.6 million dozens per annum). All these group companies undertake exclusive jobwork for WIPL.
Please note: This advisory should not be construed as a rating reaffirmation.
May 28, 2012 www.crisil.com1
May 28, 2012 Mumbai
William Industries Private Limited
Ratings Reaffirmed
Total Bank Loan Facilities Rated Rs.56.6 Million
Long-Term Rating CRISIL B+/Stable (Reaffirmed)
Short-Term Rating CRISIL A4 (Reaffirmed)
(Refer to Annexure 1 for details on facilities)
CRISIL’s ratings on the bank facilities of William Industries Pvt Ltd (WIPL) continue to reflect WIPL’s below-average financial risk profile, marked by a small net worth, moderate gearing, and weak debt protection metrics, and vulnerability to volatility in raw material prices and to intense competition in the socks industry. These rating weaknesses are partially offset by the benefits that WIPL derives from its promoters’ extensive industry experience.
Outlook: Stable
CRISIL believes that WIPL will benefit over the medium term from its promoters’ extensive experience in manufacturing socks and its strong clientele. The outlook may be revised to ‘Positive’
in case of substantial increase in accruals or large equity infusion by the promoters, leading to an improved financial risk profile. Conversely, the outlook may be revised to ‘Negative’ if there is a stretch in its working capital cycle or if the company undertakes any unanticipated debt-funded capital expenditure (capex) programme, thereby further weakening its liquidity.
Update
WIPL’s performance in 2011-12 was in line with CRISIL’s projections. The company registered revenues of Rs.175 million in 2011-12, as against Rs.160 million in 2010-11. However, despite somewhat higher revenues, WIPL is estimated to generate profit after tax (PAT) of Rs.1.4 million in 2011-12, which is at the same level as in 2010-11, mainly due to a decline in operating margin to 5 per cent in 2011-12 from 8 per cent in 2010-11; the decline was because of the introduction of an excise duty of 8 per cent in the segment since March 2011.
CRISIL Complexity Levels are assigned to various types of financial instruments. The CRISIL Complexity Levels are available on www.crisil.com/complexity-levels. Investors are advised to refer to the CRISIL Complexity Levels for instruments that they desire to invest in.
Investors may also call the CRISIL Helpline at +91 22 3342 3047 / + 91 22 3342 3064 with queries on specific instruments.
May 28, 2012 www.crisil.com2
WIPL’s liquidity remains stretched on account of its working-capital-intensive operations, mainly because of large inventory of about 180 days (in line with historical). This leads to full utilisation of its fund-based bank lines of Rs.60 million, with instances of overdrawn bank limits; these are, however, regularised within two to three days. The liquidity is supported by interest-free unsecured loans of Rs.70 million extended by the promoters as on March 31, 2012. CRISIL continues to treat such loans as quasi-equity as these loans will be retained in the business in the long term. WIPL has not availed of any term loans. The company plans to undertake a debt-funded capex programme of about Rs.40 million over the medium term to buy machinery required to make fashion socks. Its adjusted net worth as on March 31, 2012, is about Rs.700 million. Its estimated adjusted gearing is 0.9 times as on March 31, 2012, expected to deteriorate to well over 1 time over the medium term on account of the debt-funded capex. WIPL’s debt protection metrics are inadequate, with net cash accruals to total debt and interest coverage ratios of 0.1 times and about 1.5 times, respectively, in 2011-12 on account of lower profitability and modest cash accruals.
For 2010-11, WIPL reported a net loss of Rs.0.2 million on net sales of Rs.158.9 million, against a PAT of Rs.0.6 million on net sales of Rs.148.3 million for 2009-10.
About the Company
Incorporated in 2004 as a private limited company, WIPL has been manufacturing socks since 1962, when it was a partnership firm. The present promoter-directors, Mr. Vivek Juneja and Mr.
Manoj Juneja, manage the company’s operations. WIPL manufactures cotton and nylon socks for men, women, and kids under the Anchor brand, and also sells them to ACC Ltd and Tata Motors Ltd, and to private labels and retail departmental stores and malls. The company’s marketing and designing activities are undertaken in-house; however, the socks are manufactured by its group companies, Narvin Chemicals Pvt Ltd (Navi Mumbai [Maharashtra]; with a capacity of 0.7 million dozens per annum), and Global Knits Pvt Ltd (Indore [Madhya Pradesh]; with a capacity of around 0.6 million dozens per annum). All these group companies undertake exclusive jobwork for WIPL.
Annexure 1 - Details of various bank facilities
Current facilities Previous facilities
Facility
Amount (Rs.
Million)
Rating Facility
Amount (Rs.
Million)
Rating
Bank Guarantee 4 CRISIL A4 Bank Guarantee 4 CRISIL A4
Cash Credit 52.6 CRISIL B+/Stable Cash Credit 45 CRISIL B+/Stable
-- 0 -- Long-Term Loan 7.6 CRISIL
B+/Stable
Total 56.6 -- Total 56.6 --
Media Contacts Analytical Contacts CRISIL Rating Desk
Mitu Samar
Director, Communications and Brand Management
CRISIL Limited Tel: +91-22- 3342 1838 E-mail: [email protected] Tanuja Abhinandan
Communications and Brand Management CRISIL Limited
Tel: +91-22- 3342 1818
Email: [email protected]
Gurpreet S Chhatwal
Senior Director - CRISIL Ratings Tel: +91-11-4250 5100
Email: [email protected] Subodh K Rai
Senior Director - CRISIL Ratings Tel: +91-11-4250 5100
Email: [email protected]
Tel: +91-22-3342 3047/3342 3064 Email:[email protected]
May 28, 2012 www.crisil.com3 Note:
This rating rationale is transmitted to you for the sole purpose of dissemination through your newspaper / magazine / agency. The rating rationale may be used by you in full or in part without changing the meaning or context thereof but with due credit to CRISIL.
However, CRISIL alone has the sole right of distribution of its rationales for consideration or otherwise through any media including websites, portals etc.
About CRISIL Limited
CRISIL is a global analytical company providing ratings, research, and risk and policy advisory services. We are India's leading ratings agency. We are also the foremost provider of high-end research to the world's largest banks and leading corporations.
CRISIL PRIVACY NOTICE
CRISIL respects your privacy. We use your contact information, such as your name, address, and email id, to fulfill your request and service your account and to provide you with additional information from CRISIL and other parts of The McGraw-Hill Companies, Inc. you may find of interest.
For further information, or to let us know your preferences with respect to receiving marketing materials, please visit www.crisil.com/privacy. You can view McGraw-Hill's Customer Privacy Policy at http://www.mcgraw- hill.com/site/tools/privacy/privacy_english.
Last updated: April 30, 2012
Disclaimer: A CRISIL rating reflects CRISIL's current opinion on the likelihood of timely payment of the obligations under the rated instrument and does not constitute an audit of the rated entity by CRISIL. CRISIL ratings are based on information provided by the issuer or obtained by CRISIL from sources it considers reliable. CRISIL does not guarantee the completeness or accuracy of the information on which the rating is based. A CRISIL rating is not a recommendation to buy, sell, or hold the rated instrument; it does not comment on the market price or suitability for a particular investor. All CRISIL ratings are under surveillance. Ratings are revised as and when circumstances so warrant. CRISIL is not responsible for any errors and especially states that it has no financial liability whatsoever to the subscribers / users / transmitters / distributors of this product. CRISIL Ratings’ rating criteria are available without charge to the public on the CRISIL web site, www.crisil.com. For the latest rating information on any instrument of any company rated by CRISIL, please contact CRISIL RATING DESK at [email protected], or at (+91 22) 3342 3000.
