CRISIL assigns BB- to Ugam Impex's bank facilities

(ADPnews) - Oct 8, 2010 - CRISIL gave on Thursday its BB-/stable rating to the bank facilities of Ugam Impex Ltd, part of the Bodra group.

The rating reflects the Bodra group’s large working capital requirements, and exposure to risks related to geographical and customer concentration in revenues from jewellery division. These rating weaknesses are partially offset by the group’s moderate financial risk profile, marked by adequate net worth and conservative capital structure.

For arriving at its ratings, CRISIL has combined the business and financial risk profiles of UIL, and its group companies Guru-G Tex Print Pvt Ltd (GTPPL), and Raj International Ltd (RIL). This is because the three entities collectively referred to as the Bodra group have common promoters and management, are in similar lines of business, and have fungible funds. Moreover, UIL owns 17.6 per cent stake in GTPPL.

CRISIL believes that the Bodra group will, over the medium term, continue to benefit from healthy growth in sales in its jewellery manufacturing and textile trading divisions and improvement in its operating margin. The outlook may be revised to "positive", if the Bodra group reports better-than-expected growth in sales and operating margin, resulting in an improvement in debt protection metrics. Conversely, the outlook may be revised to "negative", if the group reports less-than-expected growth in sales or its working capital requirements increase substantially, thus exerting pressure on the company’s liquidity.

Rating agency website: www.crisil.com

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