Omax Cotspin Private Limited
Instrument Amount Rating Action
Cash Credit Rs. 12.50 crore [ICRA]BB+ (stable); revised from [ICRA]BB-
Term Loan Rs. 29.32 crore [ICRA]BB+ (stable); revised from [ICRA]BB-
Bank Guarantee Rs. 2.50 crore [ICRA]A4+; revised from [ICRA]A4
EPC cum FBP/FBD Rs. 14.00 crore [ICRA]A4+; revised from [ICRA]A4
FLC * Rs. (5.00) crore [ICRA]A4+; revised from [ICRA]A4
*Sub limit of cash credit
ICRA has revised the long-term rating assigned to the Rs. 41.82-crore1 long-term facilities of Omax Cotspin
Private Limited (OCPL)2 to [ICRA]BB+ (pronounced ICRA double B plus) from [ICRA]BB- (pronounced ICRA
double B minus). ICRA has also revised the short-term rating assigned to the Rs. 16.50-crore non-fund based
short-term facilities to [ICRA]A4+ (pronounced ICRA A four plus) from [ICRA]A4 (pronounced ICRA A four).
The revised rating favourably considers the established track record of OCPL’s promoters in the cotton industry
through group concern ‘Patel Cotton Industries’ (rated [ICRA]BB-) and operational support extended by the
same for procurement of quality raw cotton for its predominantly export customers. The ratings also positively
consider OCPL’s revenues generated from diversified markets consisting of domestic as well as exports
customers and a strong clientele base of reputed global garment retailers like H&M, Decathlon, Arvind Ltd., etc.
Further, the rating takes positive cues from consistent growth in operating income due to strong demand from
OCPL’s customers leading to a steady increase in production levels for the past four years. This has led to a
better financial risk profile with improvements seen in gearing levels and coverage indicators.
However, the ratings are constrained by the company’s susceptibility towards price fluctuation risk which has
been witnessed in the recent past as cotton prices were highly volatile and OCPL’s limitation to fully pass on
the increased price burden to customers due to intense competition and fragmented nature of the industry.
ICRA also notes the vulnerability of the company’s growth towards cyclicality prevailing in the textile industry,
which is likely to lead to fluctuations in demand. Moreover, as the company derives a significant part of its
revenue through exports; it is also vulnerable to foreign exchange fluctuation risks despite the company’s
mitigating the risk through partial hedging.
Company Profile
Omax Cotspin Private Limited (OCPL) was incorporated in May 2011 by Mr. Jayesh Patel and Mr. Arun Patel.
With significant experience of the promoters in the cotton industry through group concern ‘Patel Cotton
Industries’ and considering positive prospects, the promoters planned for a forward integration by setting up a
spinning unit to manufacture 24s-40s combed hosiery yarn. OCPL was initially established with the plan of
installing a cotton ring spinning plant with an installed capacity to manufacture 3500 MTPA of 30s -40s combed
hosiery yarn at 36s count by utilising 17952 spindles which was further expanded to 24480 spindles at an overall
enhanced capacity of 5220 MTPA at 36s count in March 2014.
Recent Results
For the year ended March 31, 2016, the company reported an operating income of Rs.167.95 crore and a PAT
of Rs. 5.96 crore.
September 2016
1
100 lakh = 1 crore = 10 million
2
For complete rating scale and definitions, please refer to ICRA’s website [Link] or other ICRA Rating
Publications.
For further details, please contact:
Analyst Contacts:
Mr. Subrata Ray (Tel. No. +91 22 6114 3408)
subrata@[Link]
Parul Goyal Narang (Tel No. +91-11-23357940)
[Link]@[Link]
Satishkumar Santwani(Tel No. +91-79-40271559)
[Link]@[Link]
Relationship Contacts:
Mr. Jayanta Chatterjee (Tel. No. +91-80-43326401)
jayantac@[Link]
© Copyright, 2016, ICRA Limited. All Rights Reserved
Contents may be used freely with due acknowledgement to ICRA
ICRA ratings should not be treated as recommendation to buy, sell or hold the rated debt instruments. ICRA ratings are subject to a process of
surveillance, which may lead to revision in ratings. An ICRA rating is a symbolic indicator of ICRA’s current opinion on the relative capability
of the issuer concerned to timely service debts and obligations, with reference to the instrument rated. Please visit our website [Link] or
contact any ICRA office for the latest information on ICRA ratings outstanding. All information contained herein has been obtained by ICRA
from sources believed by it to be accurate and reliable, including the rated issuer. ICRA however has not conducted any audit of the rated issuer
or of the information provided by it. While reasonable care has been taken to ensure that the information herein is true, such information is
provided ‘as is’ without any warranty of any kind, and ICRA in particular, makes no representation or warranty, express or implied, as to the
accuracy, timeliness or completeness of any such information. Also, ICRA or any of its group companies may have provided services other than
rating to the issuer rated. All information contained herein must be construed solely as statements of opinion, and ICRA shall not be liable for any
losses incurred by users from any use of this publication or its contents.
Registered Office
ICRA Limited
1105, Kailash Building, 11th Floor, 26, Kasturba Gandhi Marg, New Delhi 110001
Tel: +91-11-23357940-50, Fax: +91-11-23357014
Corporate Office
Mr. Vivek Mathur
Mobile: +91 9871221122
Email: vivek@[Link]
Building No. 8, 2nd Floor, Tower A, DLF Cyber City, Phase II, Gurgaon 122002
Ph: +91-124-4545310 (D), 4545300 / 4545800 (B) Fax; +91- 124-4050424
Mumbai Kolkata
Mr. L. Shivakumar Mr. Jayanta Roy
Mobile: +91 9821086490 Mobile: +91 9903394664
Email: shivakumar@[Link] Email: jayanta@[Link]
3rd Floor, Electric Mansion A-10 & 11, 3rd Floor, FMC Fortuna
Appasaheb Marathe Marg, Prabhadevi 234/3A, A.J.C. Bose Road
Mumbai—400025, Kolkata—700020
Board : +91-22-61796300; Fax: +91-22-24331390 Tel +91-33-22876617/8839 22800008/22831411,
Fax +91-33-22870728
Chennai Bangalore
Mr. Jayanta Chatterjee Mr. Jayanta Chatterjee
Mobile: +91 9845022459 Mobile: +91 9845022459
Email: jayantac@[Link] Email: jayantac@[Link]
5th Floor, Karumuttu Centre 'The Millenia'
634 Anna Salai, Nandanam Tower B, Unit No. 1004,10th Floor, Level 2 12-14, 1 & 2,
Chennai—600035 Murphy Road, Bangalore 560 008
Tel: +91-44-45964300; Fax: +91-44 24343663 Tel: +91-80-43326400; Fax: +91-80-43326409
Ahmedabad Pune
Mr. L. Shivakumar Mr. L. Shivakumar
Mobile: +91 9821086490 Mobile: +91 9821086490
Email: shivakumar@[Link] Email: shivakumar@[Link]
907 & 908 Sakar -II, Ellisbridge, 5A, 5th Floor, Symphony, [Link]. 210, CTS 3202, Range
Ahmedabad- 380006 Hills Road, Shivajinagar,Pune-411 020
Tel: +91-79-26585049, 26585494, 26584924; Fax: Tel: + 91-20-25561194-25560196; Fax: +91-20-
+91-79-25569231 25561231
Hyderabad
Mr. Jayanta Chatterjee
Mobile: +91 9845022459
Email: jayantac@[Link]
4th Floor, Shobhan, 6-3-927/A&B. Somajiguda, Raj
Bhavan Road, Hyderabad—500083
Tel:- +91-40-40676500