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CARE Assigns 'A4+' Rating to Ambika Diamonds Bank Facilities
Sep 28, 2012 5:02 AM
By Dilipp S Nag
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RAPAPORT... CARE Ratings assigned “CARE A4+” rating to Ambika Diamonds' short-term bank facilities, estimated at $4.5 million (INR 240 million), based upon the capital deployed by the partners and the current financial strength of the firm.
The rating is primarily constrained by low profitability and cash accruals of Ambika along with its stretched working capital cycle, CARE stated. The rating is further constrained by the company's modest, albeit growing, scale of operations in a highly competitive and fragmented industry and foreign-exchange fluctuation risk, it added.
These constraints, however, are partially offset by the strength derived from a long operational track record and the experience of the partners, along with their financial support in the past and a moderate capital structure, the ratings agency noted.
CARE stated that the firm’s ability to improve its overall scale of operations and profitability, given competition and efficient management of this company's working capital cycle are the key rating sensitivities.
Established in 1988, Ambika is engaged in the trading and processing of rough and cut and polished diamonds. The firm derives approximately 80 percent of its revenue from the export market and the remainder from the domestic market.
As per the provisional results, Ambika’s net profit rose 67 percent year on year to $222,347 (INR 11.9 million) in the fiscal year that ended on March 31, 2012, CARE stated, while revenue increased 23 percent to $19.2 million (INR 1.03 billion).
*Note: All data was published in rupee. Any references to U.S. dollar amounts were made according to exchange-rate conversions by Rapaport News.
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Tags:
Ambika Diamonds, CARE Ratings, diamonds, Dilipp S Nag, India, rough
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