Brickwork assigns 'BWR A' rating to Surana Corporation

BWR has also assigned the rating of BWR A1 for the Company’s Non-fund based credit facilities of Rs 1,126.08 Cr. The rating “BWR A1” indicates very strong degree of safety regarding timely payment of financial obligations and lowest credit risk.

The rating, inter alia, factors the Company’s experienced management, its strong market position in South India, pricing and hedging policies and benefits accruing due to the Nominated Agency status conferred on the company. However, the rating is constrained by the overall nature of the gold jewellery and bullion business which requires substantial working capital finance, thin margin, volatility in price of gold, government policy intervention, and the current state of the rupee.

Surana Corporation Ltd, incorporated in the year 1991 is primarily engaged in the manufacture of gold jewellery for wholesale and exports and bullion trading via import of gold & silver. It is also engaged in wind power generation with a capacity of 24.75 MW. The company has increased focus on the manufacture of gold jewellery and offers a variety of jewellery including rings, necklaces, bracelets, earrings, pendants, bangles, chains and coins for domestic & overseas consumption. Their exports are majorly to Singapore, Hong Kong, Dubai, Bangkok, Malaysia and Zurich.

Total revenues of the company grew by ~63% to Rs 8,666 Cr in FY12 from Rs 5,320Cr in FY11. Approximately 1% of total revenue contribution comes from wind power generation. The company’s operating margin declined to 1.75% in FY12 from 2.41% in FY11 and the PAT margin declined to 0.78% in FY12 from 1.09% in FY11 mainly on account of high gold prices coupled with higher taxes & depreciation charges. Net worth improved to Rs 377 Cr in FY12 from Rs 235 Cr in FY11. The company made a preferential allotment of equity shares amounting to Rs 75 Cr in FY12. Long Term Debt stood at Rs 155 Cr in FY 12 (Rs 210 Cr FY11). The Company’s debt equity ratio improved from 1.57 in FY11 to 0.73 in FY12.

Disclaimer: Brickwork Ratings (BWR) has assigned the rating based on the information obtained from the issuer and other reliable sources, which are deemed to be accurate. BWR has taken considerable steps to avoid any data distortion; however, it does not examine the precision or completeness of the information obtained. And hence, the information in this report is presented “as is” without any express or implied warranty of any kind. BWR does not make any representation in respect to the truth or accuracy of any such information. The rating assigned by BWR should be treated as an opinion rather than a recommendation to buy, sell or hold the rated instrument and BWR shall not be liable for any losses incurred by users from any use of this report or its contents. BWR has the right to change, suspend or withdraw the ratings at any time for any reasons.

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