RATING RATIONALE
30Sep2022

Euro Leder Fashion Limited

Brickwork Ratings revises the ratings for the Bank Loan Facilities of Rs.18.00 Crs. of Euro Leder Fashion Limited.

Particulars
Facilities** Amount (Rs.Crs.) Tenure Rating#
Previous Present Previous
(06 May 2022)
Present
Fund Based 18.00 18.00 Short Term BWR A4
Reaffirmation/ISSUER NOT COOPERATING*
BWR A4 +
removal from ISSUER NOT COOPERATING* category/Upgraded
(0.00) (10.00)
Grand Total 18.00 18.00 (Rupees Eighteen Crores 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
Note: *Issuer did not cooperate; based on best available information for 06 May,2022, now being removed from the issuer not cooperating category for the present rating.


RATING ACTION / OUTLOOK

Brickwork Ratings have upgraded the company's rating to BWR A4 +/ Stable and removed from Issuer not cooperating category for the bank facilities, as the company has provided requisite information for rating review. The rating factors in the extensive experience of promoters and moderate financial profile. The rating is backed by the projections for FY 23 for which the company has sufficient orders in hand. Ratings are however constrained by weak operating performance and exposure to intense competition, low liquidity level and delay in exports. The 'Stable' outlook indicates a low likelihood of rating change over the medium term. The rating outlook may be revised to 'Positive' in case the revenues and profits show sustained improvement. The rating outlook may be revised to 'Negative' if the revenues go down or profit margins are lower than expected.

KEY RATING DRIVERS

Credit Strengths:


Credit Risks:

ANALYTICAL APPROACH - Standalone

BWR has essentially relied upon the Standalone audited financial statements up to FY 2021- 2022, as well as publicly available information and the information/clarification provided by the Company and the Lenders. The standalone approach has been adopted as there is no dependability on other group companies.

RATING SENSITIVITIES

The ability of the Company to increase revenues , profitability and strengthen its financial risk profile would remain the key rating sensitivities.

Positive:

Negative:

LIQUIDITY INDICATORS - Stretched

The liquidity position of the company is stretched. The Current Ratio of the company for FY 21-22 is 0.83 implying cash flow problems to meet immediate/short term obligations. The cash and bank balance maintained by the company has also reduced from Rs4.76Cr and Rs5.25 Cr in FY19-20 and FY 20-21 to Rs2.14 Cr in FY 21-22. 

Cash Conversion Cycle was 51 days in FY 19-20 and reached 117 and 187 days in FY 20-21 and FY 21-22 respectively. The increase in CCC was due to the inventory built up as an effect of the Covid Pandemic. As the company has sufficient orders in hand and are slowly bouncing back to pre-pandemic levels the CCC is expected to improve. The Company has adopted a time-bound policy in the short term, to balance production to level which could avoid built up inventory and has taken special measures to bring down stocks to optimum levels.

As the Sales for FY22-23 is expected to improve with considerable orders in hand and with all barriers for export the company has projected adequate liquidity for the coming years 

.

ABOUT THE ENTITY

Euro Leder Fashion Limited, located in Chennai, was incorporated in 1992 as a private limited company and later reconstituted as a publicly listed company in 1994. The Company is an export unit and is engaged in the manufacturing of leather garments and finished leathers. With three manufacturing units located in Chennai, the Company has an installed capacity of manufacturing 2,00,000/- leather garments. The Company’s equity shares are listed on BSE. They are vendors for many International Reputed brands, Boutiques and Designers across Italy, Germany, USA, UK, Canada, Poland, Australia, France & Spain.

KEY FINANCIAL INDICATORS (Standalone)
Key Parameters Units FY 21-22
(Audited)
FY 20-21
(Audited)
Operating Revenue Rs.Crs. 36.31 38.21
EBITDA Rs.Crs. 1.09 1.18
PAT Rs.Crs. 0.31 0.21
Tangible Net Worth Rs.Crs. 13.73 13.42
Total Debt/TNW Times 1.35 1.43
Current Ratio Times 0.83 0.91

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

No

ANY OTHER INFORMATION

No

RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)
Facilities Current Rating (2022) 2022 (History) 2021 2020 2019
Type Tenure Amount
(Rs.Crs.)
Rating Date Rating Date Rating Date Rating Date Rating
Fund Based ST 18.00
BWR A4+
(removal from ISSUER NOT COOPERATING* category/Upgraded)
06May2022
BWR A4
(Reaffirmation/ISSUER NOT COOPERATING*)
17Mar2021
BWR A4
(Reaffirmation)
14Apr2020
BWR A4
(Downgrade)
19Feb2019
BWR A4+
(Reaffirmation)
FB SubLimit ST (10.00)
BWR A4+
(removal from ISSUER NOT COOPERATING* category/Upgraded)
NA
NA
NA
NA
NA
NA
NA
NA
Grand Total 18.00 (Rupees Eighteen Crores Only)
COMPLEXITY LEVELS OF THE INSTRUMENTS - Simple

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

Anithu Joseph

Ratings Analyst anithu.j@brickworkratings.com

Vidya Shankar

Principal Director - Ratings Board : +91 80 4040 9940 vidyashankar@brickworkratings.com
1-860-425-2742 | media@brickworkratings.com
Euro Leder Fashion Limited
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 Canara Bank PC/FDB/FBESanctioned _ 18.00 18.00
Total 0.00 18.00 18.00
TOTAL (Rupees Eighteen Crores Only)
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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 12,000 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.

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