Chandan Textiles
Instrument Amount in Rs. Crore Rating Action
February 2016
Fund Based-Cash Credit 3.00 [ICRA]B assigned
Fund Based-Term Loan 3.30 [ICRA]B assigned
Total 6.30
ICRA has assigned a long-term rating of [ICRA]B (pronounced ICRA B)1 to Rs. 3.00 crore cash credit facility
and Rs. 3.30 crore term loan facility of Chandan Textiles.
The rating is constrained by modest scale of operations, leveraged capital structure, high working capital
intensity of operations and weak debt protection metrics of the firm. ICRA notes the vulnerability of the firm’s
profitability margins to adverse fluctuations in raw material prices and vulnerability of cash flows to seasonality
inherent in the textile industry. The rating also takes into consideration the intense competition from organized
and unorganized players, leading to low bargaining power with customers and pressure on the profitability
levels of the firm. Besides, the rating also takes into account the risks inherent in the proprietorship nature of
the firm, inter alia, the limited ability to raise capital and risk of capital withdrawal.
The assigned rating, however, derives comfort from long standing experience of the firm’s promoter in textile
industry. The rating also take into account established relationships with its customers which translates into
repeat business lending stability to volumes and established association with suppliers ensuring timely supply
of raw materials. The rating also benefits from the firm’s proximity to raw material suppliers which helps the firm
to reduce its raw material transportation cost.
Firm Profile
Chandan Textiles is a proprietorship firm established in the year 2002 by Mr. Chandan Malhotra. The firm is
engaged in the business of manufacturing and trading of pure silk fabrics like chiffon, georgette and crape. The
concern generates ~70% of the revenue from the state of Karnataka, followed by 20% from Kolkata and the
rest from other states.
Recent results
The firm reported a profit after tax (PAT) of Rs. 0.04 crore on an operating income of Rs. 19.68 crore in 2014-
15 as against a PAT of Rs. 0.18 crore on an operating income of Rs. 23.49 crore in 2013-14.
February 2016
For further details please contact:
Analyst Contacts:
Mr. K. Ravichandran, (Tel. No. +91-44-45964301)
ravichandran@[Link]
Relationship Contacts:
Mr. Jayanta Chatterjee (Tel. No. +91-80-43326401)
jayantac@[Link]
1
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Publications
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