(The following was released by the rating agency)
KOLKATA/SINGAPORE, June 19 (Fitch) Fitch Ratings has
upgraded knitwear company Rupa & Company Limited's (Rupa)
National Long-Term rating to 'Fitch A(ind)' from 'Fitch
A-(ind)'. The Outlook is Stable.
A list of additional rating actions is provided at the end
of this commentary. The upgrade reflects improvement in Rupa's
overall financial profile over the past two financial years
(year end March). Revenue increased to INR7,110m in FY12 from
INR6,500m in FY11 and INR5,325m in FY10, while operating EBITDA
margins rose to 12.7% from 10.6% and 8.2% during the same
period. Gross financial leverage improved to 1.95x from 2.67x
and 2.85x and interest coverage to 4.63x from 4.67x and 7.5x,
respectively. The improvement was driven by a favourable change
in the product mix leading to better operating EBITDA margins.
Fitch believes this will be sustained by Rupa's strong branding
across all product segments of the industry and its strong
distribution network of around 1,000 distributors.
A positive rating guideline would be further improvement of
its gross leverage below 1x on a sustained basis. A negative
rating guideline would be increase in its gross leverage above
2x on a sustained basis. Rupa listed its shares on the Bombay
Stock Exchange Limited and the National Stock Exchange Limited
in September 2011. Rupa continued to be a leading knit wear
company with a pan-India presence.
It has offices in Kolkata, Delhi, Tripur and Bengaluru.
Fitch has also taken action on Rupa's bank loans, as
follows: Long-term loans of INR240m (reduced from INR354m):
upgraded to National Long-Term 'Fitch A(ind)' from 'Fitch
A-(ind)' Fund-based limits of INR1,500m (increased from
INR1,150m): upgraded to National Long-Term 'Fitch A(ind)' from
'Fitch A-(ind)' and affirmed at National Short-Term 'Fitch
A1(ind)' Non-fund-based limits of INR100m (reduced from
INR130m): affirmed at National Short-Term 'Fitch A1(ind)'
Proposed INR500m fund-based limits: assigned final National
Long-Term 'Fitch A(ind)' and National Short-Term 'Fitch A1(ind)'