Crisil lowers rating of Lakhani group
Crisil has lowered the rating for cash credit and term loan from 'BB+' which indicates moderate degree of safety to 'C' which reflects high risk of default. The short-term rating is lowered from A4+ to A4. The group has short and long term loan of Rs 208.9 crore.
Lowering the ratings, Crisil has said that the downgrade reflects pressure on Lakhani group's liquidity, marked by its continuous high utilisation of its bank limits, resulting from its large working capital requirements. Crisil is of the view that the group will continue to face pressure in servicing its debt over the medium term. However, it added the rating weakness is partially offset by the group's position in the footwear industry and experience gained by its promoters and its established brands.
Crisil has lowered rating of seven group companies of Lakhani group Lakhani Footwear (Rs 11.8 crore), Lakhani Armaan Shoes (Rs 24.5 crore), Lakhani Shoes & Apparels (Rs 43.4 crore), Lakhani Shoes (Rs 16.5 crore), Lakhani Rubber Products (Rs 45.2 crore), Mascot Footcare (Rs 35.3 crore) and Lakhani Rubber Works (Rs 32 crore).
Crisil said that downgrade of all seven entities is because all these entities have the same promoters and senior management; common procurement, marketing and finance functions, and are in the similar line of businesses.