Rating Advisory

May 10, 2018 | Mumbai Adarsh BirmechaO rigin al Template12 3

Vasanth and Co
Advisory as on May 10, 2018

This rating advisory is provided in relation to the rating of Vasanth and Co

The key rating sensitivity factors for the rating include:

 Capital expenditure (capex) plans and their funding mix

 Support to group companies
 Capital withdrawal
 Succession planning

CRISIL Ratings has a policy of keeping its accepted ratings under constant and ongoing
monitoring and review. Accordingly, it seeks regular updates from companies on business and
financial performance. CRISIL is yet to receive adequate information from Vasanth and Co (VC)
to enable it to undertake a rating review. CRISIL is taking all possible efforts to get the rated entity
to cooperate with its rating process for enabling it to carry out the rating review.

CRISIL views information availability risk as a key factor in its assessment of credit risk. (Please
refer to CRISIL Ratings publication dated April 30, 2012 - 'Information Availability - a key risk
factor in credit ratings')

If VC continues to delay the provisioning of information required by CRISIL to undertake a rating

review then, in accordance with circular SEBI/HO/MIRSD/MIRSD4/CIR/P/2016/119 dt Nov 1,
2016 and SEBI/HO/MIRSD/ MIRSD4/ CIR/ P/ 2017/ 71 dt June 30, 2017 issued by Securities and
Exchange Board of India, CRISIL will carry out the review based on best available information
and issue a press release.

About The Firm

Established as a proprietorship concern in 1978 in Tamil Nadu by Mr. H Vasanthakumar, VC is a
dealer of consumer electronics, home appliances, and mobile phones.

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This disclaimer forms part of and applies to each credit rating report and/or credit rating rationale that we provide (each a “Report”). For the
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Please note: This advisory should not be construed as a rating reaffirmation.

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 Rating Rationale
February 23, 2017 | Mumbai

Vasanth and Co
Rated amount enhanced

Rating Action
Total Bank Loan Facilities Rated Rs.55 Crore (Enhanced from Rs.43 Crore)
Long Term Rating CRISIL A-/Stable (Reaffirmed)
1 crore = 10 million
Refer to annexure for Details of Instruments & Bank Facilities

Detailed Rationale
CRISIL's rating on the long-term bank facilities of Vasanth and Co (VC) continues to reflect the firm's established
position in the consumer electronics and home appliances retail business in Tamil Nadu. The rating also factors in
firm' healthy financial risk profile because of low gearing and strong debt protection metrics and efficient working
capital management. . These strengths are partially offset by geographical concentration in revenue profile and
exposure to intense competition.

Key Rating Drivers & Detailed Description

Strengths
* Established market position: The firm has been retailing electronic products for more than three decades,
resulting in 63 showrooms in Tamil Nadu, besides a showroom each in Puducherry and Bengaluru. Also, product
portfolio is diverse and the firm has established relationship with 40 brands.

* Healthy financial risk profile: Total outside liabilities to tangible networth (TOLTNW) ratio was healthy at 1.21
times as on March 31, 2016. Debt protection metrics were comfortable, with interest coverage and net cash accrual
to total debt ratios of 13.94 times and 89%, respectively, for fiscal 2016.

* Efficient working capital management: Gross current assets were low at 58 days as on March 31, 2016,
because of average inventory of 45 days and collection cycle of just 7 days. Hence, return on capital employed was
high at 20-25%.

Weakness
* Geographical concentration in revenue profile and exposure to intense competition: Majority of sales are
from Tamil Nadu, which exposes VC to any unforeseen region-specific event. Furthermore the firm faces intense
competition from other retailers such as Viveks, Croma, Ezone, and NEXT, could restrict the firm's bargaining power
with suppliers and customers over the medium term.
Outlook: Stable
CRISIL believes VC will continue to benefit over the medium term from its established market position and healthy
financial risk profile. The outlook may be revised to 'Positive' if scale of operations and margins increase following
stabilisation of new showrooms. The outlook may be revised to 'Negative' if cash accrual declines due to slowdown in
industry or increase in competition, large, debt-funded capital expenditure affects capital structure, or if proprietor
withdraws significant capital or invests in group entities.

About the Firm

Established as a proprietorship concern in 1978 in Tamil Nadu by Mr. H Vasanthakumar, VC is a dealer of consumer
electronics, home appliances, and mobile phones.

Net profit was Rs 26.53 crore on sales of Rs 797 crore in fiscal 2016, against a net profit of Rs 22.6 crores on sales
of Rs 632.5 crore in fiscal 2015.

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Any other information: Not applicable

Note on complexity levels of the rated instrument:

CRISIL complexity levels are assigned to various types of financial instruments. The CRISIL complexity levels are
available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL complexity levels for instruments that
they consider for investment. Users may also call the Customer Service Helpdesk with queries on specific
instruments.

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Annexure - Details of Instrument(s)

Name of Coupon Rate Issue Size

ISIN Date of Allotment Maturity Date Rating Assigned with
Instrument (%) (Rs.Crore)

NA Cash Credit NA NA NA 25 CRISIL A-/Stab

NA Long Term Loan NA NA 31-10-2018 9.58 CRISIL A-/Stab

Proposed Cash
NA NA NA NA 15.42 CRISIL A-/Stab
Credit Limit

Working Capital
NA NA NA NA 5 CRISIL A-/Stab
Demand Loan

Annexure - Rating History for last 3 Years

Current 2017 (History) 2016 2015 2014

Instrument Type Quantum Rating Date Rating Date Rating Date Rating Date Rating

Fund-based Bank LT/S CRISIL A- No Rating No Rating No Rating No Rating

55
Facilities T /Stable Change Change Change Change
Table reflects instances where rating is changed or freshly assigned. 'No Rating Change' implies that there was no rating change under the release.

Annexure - Details of various bank facilities

Current facilities Previous facilities
Amount Amount
Facility Rating Facility Rat
(Rs.Crore) (Rs.Crore)
CRISIL A- CRIS
Cash Credit 25 Cash Credit 25
/Stable /Sta
CRISIL A- CRIS
Long Term Loan 9.58 Long Term Loan 9.58
/Stable /Sta
Proposed Cash Credit CRISIL A- Proposed Cash Credit CRIS
15.42 3.42
Limit /Stable Limit /Sta
Working Capital Demand CRISIL A- Working Capital Demand CRIS
5 5
Loan /Stable Loan /Sta
Total 55 -- Total 43 -

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Links to related criteria
CRISILs Approach to Financial Ratios
CRISILs Bank Loan Ratings - process, scale and default recognition
Rating criteria for manufaturing and service sector companies
Rating Criteria for Retailing Industry
CRISILs Bank Loan Ratings
Criteria for rating Short-Term Debt (including Commercial Paper)
The Rating Process
Understanding CRISILs Ratings and Rating Scales

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Ratings from CRISIL Rating are statements of opinion as of the date they are expressed and not statements of fact or recommendations to purchase, hold, or sell any
securities / instruments or to make any investment decisions. Any opinions expressed here are in good faith, are subject to change without notice, and are only current as
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5
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