CARE Ratings has notched up a tad the ratings of the bank facilities of V-Mart Retail Ltd (VMRL) aggregating Rs 53 crore.
The credit rating agency said the rating of the long-term bank facilities (Rs 45 crore) have been revised from ‘A’ to ‘A+’.
Instruments with ‘A’ rating are considered to have adequate degree of safety regarding timely servicing of financial obligations. Such instruments carry low credit risk. The ‘+’ modifier reflects the comparative standing within the category.
The rating of the short-term bank facilities (Rs 8 crore) have been revised from ‘A1’ to ‘A1+’.
Instruments with ‘A1’ rating are considered to have very strong degree of safety regarding timely payment of financial obligations. Such instruments carry lowest credit risk.
The agency said the revision in ratings of the bank facilities of VMRL takes into account the healthy financial risk profile backed by efficient operating parameters leading to consistent growth in operating income, stable profit margins and comfortable capital structure.
“The ratings continue to derive strength from the experienced promoters, widespread geographical coverage and large supplier base.
“However, these rating strengths are partially offset by the moderate scale of operations, working capital intensive nature of business and intense competition in the retail sector,” it added.
CARE Rating assessed that going forward, the company’s ability to increase the scale of operations in line with expansion in the number of stores as envisaged without any adverse impact on profitability and capital structure and efficient supply chain management shall be the key rating sensitivities.
VMRL is engaged in value retailing across three verticals -- Apparels, General Merchandise and ‘Kirana’ Bazaar.
VMRL’s operations are mainly spread in tier-2 and tier-3 cities of northern, eastern and western parts of the country.
Some of the major states in which the company operates are New Delhi, Gujarat, Madhya Pradesh, Uttar Pradesh, Bihar, Punjab and Rajasthan. As on June 30, 2016, the company was operating a total of 127 stores.