Brickwork reaffirms 'BWR AA-' rating to Trent`s NCD issue
Brickwork Ratings (BWR) has reaffirmed BWR AA- rating for Trent Ltd‘s (Trent) INR 75 Crore unsecured NCD Issue. Instruments with this rating are considered to have high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk.
July 06, 2012 / 19:35 IST
Brickwork Ratings (BWR) has reaffirmed BWR AA- rating for Trent Ltd’s (Trent) INR 75 Crore unsecured NCD Issue. Instruments with this rating are considered to have high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk.
The rating factors Trent’s established brand and store format –Westside, comfortable capital structure, strong Tata parentage and group support to fund expansion plans. The rating is however constrained by the company’s low profitability levels and underperformance of its Star Bazaar and Landmark store formats held in its subsidiaries. Trent, incorporated in the year 1952, is one of India’s leading retailers and is a part of the Tata Group. Trent owns the Westside chain of lifestyle stores across the country. Trent’s hypermarket business is operated by its subsidiary, Trent Hypermarket Ltd., under the banner ‘Star Bazaar’. Star Bazaar is an established player in this segment; the total number of stores at the end of FY12 was 15. The company plans to open more new stores in places such as Ahmedabad, Chennai, Mumbai etc. Trent’s tie-up with Tesco, UK’s leading retailer, gives it access to world class sourcing capabilities, supply chain expertise and technical capabilities, and extends a significant advantage to the company. It also has presence in the books and music retailing space through its subsidiary “Landmark Ltd”.At the consolidated level, in FY12, revenues have grown by 22% over FY11. However, the company registered an operating loss of INR 57 crore as compared to a profit of INR 13 crs in FY11. Net loss for the year stood at INR 46.4 crore as compared to a PAT of INR 2.53 crores in FY11. Trent Hypermarket Ltd. continues to be in the incubation stage due to expansion in the number of stores. Landmark Ltd. incurred losses owing to supply chain issues and increased competition. At the standalone level, Trent registered a 21% growth in revenues. However, the operating margin was under pressure from cost increases, winding down of Fashion Yatra format and restructuring of Sisley franchisee agreements. Operating margins contracted to -1.6% in FY12 from 5% in FY11. Net Profit margin in FY12 was 5.8% as against 6.4% in FY11. This is inclusive of a profit of INR 12.4 Crores on the sale of investments.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.To read the full report click on the attachment 
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