ICRA has revised the long term rating assigned to the Rs. 16.10 crore term loans (PY Rs. 18.5 crore) and Rs. 15.0 crore cash credit facility of Orbit Exports Limited (OEL or the company) to LBBB- (pronounced L triple B minus) with stable outlook from LBB+ (L double B plus) with stable outlook assigned earlier. ICRA has also revised the short term rating assigned to the Rs. 11.0 crore short term fund based working capital facilities of the company to A3 (pronounced A three) from A4+ (pronounced A four plus) assigned earlier. The short term fund based facilities are a sublimit of the long term fund based working capital facilities such that the outstanding does not exceed Rs. 15.0 crore at any time.
The revision in ratings takes into account of strengthening of financial profile of the company with improvement in profitability; moderate capital structure supported by capital infusion, comfortable coverage indicators and controlled working capital intensity. The ratings revision also takes into account the track record of the current management in turnaround of operational and financial position of the company. The improvement in financial profile of the company can be attributed to the increased focus on higher value-add products like gift wrapping and fancy fabrics that are likely to support margin expansion. Further, the anti-dumping duty on certain fancy and decorative products imposed by the US on imports from China augurs well for the company. The ratings also factor in favourably, established customer relationship and diversified clientele of the company. The ratings are however constrained by fragmented and competitive market in which the company operates resulting in absence of pricing power, which can result in pressure on profitability due to volatility in raw material costs and demand. The increased contribution from exports has resulted in increased vulnerability of company’s earnings to volatility in foreign currency rates that are partially mitigated through hedging contracts with banks.
Commenting on being revised to LBBB- rating, Mr. Pankaj Seth, Managing Director, Orbit Exports Ltd said, “We feel immensely proud on strengthening our financial profile & improving the profitability which resulted in the altering of our ratings. We will always try to set higher standards towards the improvement of our company and will always give our best to sustain our investor’s faith.”
About Orbit Exports Limited:
Incorporated in 1984 as a private limited company, OEL was converted into a public limited company by offering its equity shares to the public via IPO in 1994. The company is a government recognized star export house engaged in the business of manufacture and sale of woven fabric, velvet cloth and fancy textiles (made ups). The company has manufacturing set up at Jalgaon, Erandol, Surat and Dombivali, with total of 78 looms and an annual production capacity in the range of upto 33.8 lakh meters of grey fabric and 20 lakh pieces of made ups.