- Commercial paper programme - Rs. 25 crore Rating : P1 (reaffirmed)
- Non-convertible debenture - Rs. 25 crore Rating : A (reaffirmed)
Crisil has reaffirmed its "A" rating assigned for VIP Industries Ltd's Rs25-crore non-convertible debenture programme and the "P1" rating for the company's Rs25-crore commercial paper programme.
The reaffirmed ratings reflect the moderate financial risk profile of the company, characterised by high level of investments in the group companies, relatively higher gearing and moderate interest coverage indicators, average cash flow generation in relation to its liability profile, and marginal improvement in working capital management.
The reaffirmed ratings also reflect the company's favourable market position in the premium and mid-price luggage segments, partly offset by strong competition faced from the unorganised sector in the low priced luggage segment, and the moulded furniture businesses, stable nature of sales to the Canteen Stores Department and the economies of scale arising out of a large scale of operations.
VIP Industries Ltd, a D.G.Piramal group company, is primarily engaged in the manufacturing of moulded luggage, soft luggage, and moulded furniture. While the retail sales of the luggage are done through Blow Plast Ltd, another D G Piramal group company, institutional sale are handled by VIP Industries. During 1998-99, VIP Industries reported operating income of Rs230.50 crore and a net profit of Rs8.55 crore.