RATING RATIONALE
24May2022

Globe Textiles (India) Ltd.

Brickwork Ratings upgrades the ratings for the Bank Loan Facilities of Rs. 87.97 Crs. of Globe Textiles (India) Ltd.

Particulars
Facilities** Amount (Rs.Crs.) Tenure Rating#
Previous Present Previous
(19 Jul 2021)
Present
Fund Based 79.78 80.35 Long Term BWR BBB- /Stable
Reaffirmation
BWR BBB /Stable
Upgrade
(5.00) (10.00)
(5.00) (9.00)
Non Fund Based 8.74 7.62 Short Term BWR A3
Reaffirmation
BWR A3 +
Upgrade
(0.00) (5.00)
Grand Total 88.52 87.97 (Rupees Eighty Seven Crores and Ninety Seven lakhs Only)
#Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank Loan facilities,consolidation or instruments are provided in Annexure


RATING ACTION / OUTLOOK

BWR has considered the standalone financials of the Company and essentially relied upon the audited financial statements up to FY22, Projected financials up to FY23, 24 and publicly available information and clarifications provided by the entity’s management.

The rating upgrade draws strength from a significant improvement in operating income with stable profit margins in FY22 and moderate financial risk profile. The Company also benefits from the vast business experience of about two decades of the promoters in the line of the textile industry. The profit margins are exposed to susceptibility to volatility prevailed in textile market, forex fluctuation and intense competitive industry. Also, the business is working capital intensive, hence, the efficient management of liquidity remains a key rating sensitivity. 

BWR believes that the business risk profile will be maintained over the medium term. The 'Stable' outlook indicates a low likelihood of rating change over the medium term.

KEY RATING DRIVERS

Credit Strengths:


Credit Risks:

ANALYTICAL APPROACH - Standalone

For arriving at its ratings, BWR has considered a standalone financials of the company and applied its rating methodology as detailed in the Rating Criteria: 

RATING SENSITIVITIES

Positive: Substantial and sustained growth in operating income as per the projection, significant improvement in the profitability and better management of working capital cycle. 

Negative: Deterioration in operating and net margin, significant rise in debt level, stretched working capital cycle driven by a pile-up of inventory or elongated receivables impacting the liquidity.

LIQUIDITY INDICATORS - Adequate

Net cash accruals shows increase from Rs. 2.06Crs in FY21 and Rs. 6.07 Crs in FY22, which is adequate against the current portion of long term debt.  Average cash credit limit utilization remained moderate above 83.77% in the last 6 months ending on 30April2022. Current Ratio is comfortable at 1.19x as on 31st March, 2022. The company has availed total covid line of credit of Rs. 16.95 Crs m which provides the cushion in working capital limits. The operation is working capital intensive, hence efficient management will remain a key rating sensitivity in the near term. 

ABOUT THE ENTITY

Incorporated in 2006,Globe Textiles (India) Limited, is a NSE listed company promoted by Mr Bhavin Parikh and Mr Nilay Vora. GTIL is a manufacturer and exporter of readymade garments , bedsheets, denims etc. The company has a manufacturing unit- at  Ahmedabad with manufacturing capacities of 9 Lakhs garments per annum and export unit at the Special Economic Zone(SEZ) .

KEY FINANCIAL INDICATORS (Standalone)
Key Parameters Units FY 21-22
(Audited)
FY 20-21
(Audited)
Operating Revenue Rs.Crs. 383.42 259.09
EBITDA Rs.Crs. 14.75 4.35
PAT Rs.Crs. 5.14 0.25
Tangible Net Worth Rs.Crs. 49.74 42.76
Total Debt/Tangible Net Worth Times 1.82 1.73
Current Ratio Times 1.19 1.21

RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)
Facilities Current Rating (2022) 2021 2020 2019
Type Tenure Amount
(Rs.Crs.)
Rating Date Rating Date Rating Date Rating
Fund Based LT 80.35
BWR BBB/Stable
(Upgrade)
19Jul2021
BWR BBB- Stable
(Reaffirmation)
23Apr2020
BWR BBB- Stable
(Reaffirmation)
19Feb2019
BWR BBB- Stable
(Assignment)
FB SubLimit LT (10.00)
BWR BBB/Stable
(Upgrade)
19Jul2021
BWR BBB- Stable
(Reaffirmation)
NA
NA
NA
NA
(9.00)
BWR BBB/Stable
(Upgrade)
NA
NA
NA
NA
NA
NA
Non Fund Based ST 7.62
BWR A3+
(Upgrade)
19Jul2021
BWR A3
(Reaffirmation)
23Apr2020
BWR A3
(Reaffirmation)
19Feb2019
BWR A3
(Assignment)
NFB SubLimit ST (5.00)
BWR A3+
(Upgrade)
NA
NA
NA
NA
NA
NA
Grand Total 87.97 (Rupees Eighty Seven Crores and Ninety Seven lakhs Only)
COMPLEXITY LEVELS OF THE INSTRUMENTS - NA

BWR complexity levels are meant for educating investors. The BWR complexity levels are available at www.brickworkratings.com / download / ComplexityLevels.pdf. Investors queries can be sent to info@brickworkratings.com.

Hyperlink/Reference to applicable Criteria
Analytical Contacts

Kunjal Dabhi

Rating Analyst Board : +91 79 66174046 / 47 kunjal.r@brickworkratings.com

Dileep Narayan Singh

Director dileep.s@brickworkratings.com
1-860-425-2742 | media@brickworkratings.com
Globe Textiles (India) Ltd.
ANNEXURE-I
Details of Bank Facilities rated by BWR
SL.No. Name of the Bank/Lender Type Of Facilities Long Term(Rs.Crs.) Short Term(Rs.Crs.) Total(Rs.Crs.)
1 Bank of Maharashtra Cash CreditSanctioned 42.00 _ 42.00
Sub-Limit (Letter of Credit) Sanctioned (5.00)
2 Bank of Maharashtra Credit Exposure Limit (CEL)Sanctioned _ 1.87 1.87
3 Karur Vysya Bank Covid -19 Emergency Line CreditSanctioned 6.65 _ 6.65
4 Karur Vysya Bank Credit Exposure Limit (CEL)Sanctioned _ 0.75 0.75
5 Karur Vysya Bank Term LoanOut-standing _ _ 0.00
6 Karur Vysya Bank Cash CreditSanctioned 10.00 _ 10.00
Sub-Limit (OCC) Sanctioned (9.00)
Sub-Limit (PCL/PCFC/FBN/P/EBD) Sanctioned (10.00)
7 Union Bank of India Cash CreditSanctioned 18.00 _ 18.00
8 Union Bank of India ILC/FLC/BGSanctioned _ 5.00 5.00
9 Union Bank of India Covid -19 Emergency Line CreditSanctioned 3.70 _ 3.70
Total 80.35 7.62 87.97
TOTAL (Rupees Eighty Seven Crores and Ninety Seven lakhs Only)
Print and Digital Media

The Rating Rationale is sent to you for the sole purpose of dissemination through your print, digital or electronic media. While it may be used by you acknowledging credit to BWR, please do not change the wordings in the rationale to avoid conveying a meaning different from what was intended by BWR. BWR alone has the sole right of sharing (both direct and indirect) its rationales for consideration or otherwise through any print or electronic or digital media.

About Brickwork Ratings

Brickwork Ratings (BWR), a Securities and Exchange Board of India [SEBI] registered Credit Rating Agency and accredited by Reserve Bank of India [RBI], offers credit ratings of Bank Loan, Non- convertible / convertible / partially convertible debentures and other capital market instruments and bonds, Commercial Paper, perpetual bonds, asset-backed and mortgage-backed securities, partial guarantees and other structured / credit enhanced debt instruments, Security Receipts, Securitization Products, Municipal Bonds, etc. BWR has rated over 11,541 medium and large corporates and financial institutions’ instruments. BWR has also rated NGOs, Educational Institutions, Hospitals, Real Estate Developers, Urban Local Bodies and Municipal Corporations. BWR has Canara Bank, a leading public sector bank, as one of the promoters and strategic partner. BWR has its corporate office in Bengaluru and a country-wide presence with its offices in Ahmedabad, Chandigarh, Chennai, Hyderabad, Kolkata, Mumbai and New Delhi along with representatives in 150+ locations.

Disclaimer

Brickwork Ratings India Pvt. Ltd. (BWR), a Securities and Exchange Board of India [SEBI] registered Credit Rating Agency and accredited by the Reserve Bank of India [RBI], offers credit ratings of Bank Loan facilities, Non- convertible / convertible / partially convertible debentures and other capital market instruments and bonds, Commercial Paper, perpetual bonds, asset-backed and mortgage-backed securities, partial guarantees and other structured / credit enhanced debt instruments, Security Receipts, Securitization Products, Municipal Bonds, etc. [ hereafter referred to as "Instruments"]. BWR also rates NGOs, Educational Institutions, Hospitals, Real Estate Developers, Urban Local Bodies and Municipal Corporations.

BWR wishes to inform all persons who may come across Rating Rationales and Rating Reports provided by BWR that the ratings assigned by BWR are based on information obtained from the issuer of the instrument and other reliable sources, which in BWR's best judgment are considered reliable. The Rating Rationale / Rating Report & other rating communications are intended for the jurisdiction of India only. The reports should not be the sole or primary basis for any investment decision within the meaning of any law or regulation (including the laws and regulations applicable in Europe and also the USA).

BWR also wishes to inform that access or use of the said documents does not create a client relationship between the user and BWR.

The ratings assigned by BWR are only an expression of BWR's opinion on the entity / instrument and should not in any manner be construed as being a recommendation to either, purchase, hold or sell the instrument.

BWR also wishes to abundantly clarify that these ratings are not to be considered as an investment advice in any jurisdiction nor are they to be used as a basis for or as an alternative to independent financial advice and judgment obtained from the user's financial advisors. BWR shall not be liable to any losses incurred by the users of these Rating Rationales, Rating Reports or its contents. BWR reserves the right to vary, modify, suspend or withdraw the ratings at any time without assigning reasons for the same.

BWR's ratings reflect BWR's opinion on the day the ratings are published and are not reflective of factual circumstances that may have arisen on a later date. BWR is not obliged to update its opinion based on any public notification, in any form or format although BWR may disseminate its opinion and analysis when deemed fit.

Neither BWR nor its affiliates, third party providers, as well as the directors, officers, shareholders, employees or agents (collectively, "BWR Party") guarantee the accuracy, completeness or adequacy of the Ratings, and no BWR Party shall have any liability for any errors, omissions, or interruptions therein, regardless of the cause, or for the results obtained from the use of any part of the Rating Rationales or Rating Reports. Each BWR Party disclaims all express or implied warranties, including, but not limited to, any warranties of merchantability, suitability or fitness for a particular purpose or use. In no event shall any BWR Party be liable to any one for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of any part of the Rating Rationales and/or Rating Reports even if advised of the possibility of such damages. However, BWR or its associates may have other commercial transactions with the company/entity. BWR and its affiliates do not act as a fiduciary.

BWR keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of the respective activity. As a result, certain business units of BWR may have information that is not available to other BWR business units. BWR has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with each analytical process.

BWR clarifies that it may have been paid a fee by the issuers or underwriters of the instruments, facilities, securities etc., or from obligors. BWR's public ratings and analysis are made available on its web site, www.brickworkratings.com. More detailed information may be provided for a fee. BWR's rating criteria are also generally made available without charge on BWR's website.

This disclaimer forms an integral part of the Ratings Rationales / Rating Reports or other press releases, advisories, communications issued by BWR and circulation of the ratings without this disclaimer is prohibited.

BWR is bound by the Code of Conduct for Credit Rating Agencies issued by the Securities and Exchange Board of India and is governed by the applicable regulations issued by the Securities and Exchange Board of India as amended from time to time.