By Neelam Agrawal

India Ratings and Research (Ind-Ra) has assigned the USD109m fund-based working capital facilities guaranteed by Firestar International Private Limited and availed by Firestar Diamond FZE (FDFZE) IND A-(SO)/Stable/’IND A2+(SO)’ ratings. The rating is according to the national credit rating symbols and definitions prescribed by Securities and Exchange Board of India.

KEY RATING DRIVERS

The ratings are based solely on the unconditional and irrevocable guarantee provided by FDFZE’s ultimate parent company FIPL for the former’s working capital facilities. FIPL’s ratings are based on a consolidated view of its businesses and financials. 

For the guarantor’s rating rationale, please click here.


RATING SENSITIVITIES

Negative: A rating downgrade of the guarantor could be negative for the bank loan ratings. 

Positive:
A rating upgrade of the guarantor could be positive for the bank loan ratings.

The revocation of the corporate guarantee would warrant a review of the ratings.


COMPANY PROFILE

FDFZE is wholly owned subsidiary of Firestar Holdings Ltd., Hong Kong which is wholly held by FIPL. Established in 2009, FDFZE’s core business activity involves trading of cut and polished diamonds (93% of revenue in FY15) and the company is based in Dubai. It is also engaged in trading of diamond studded jewellery (7% of revenue in FY15). In FY15 the company reported revenue of USD444m (FY14: USD380m) and EBITDA of 8% (7%), EBITDA/net interest coverage was 5.39x (FY14: 6.23x) and adjusted net debt/EBITDA was 1.64x (FY14: 2.15x). For 9MFY16, the company’s revenue was USD367m, operating EBITDA interest cover was 7.01xand adjusted net debt/EBITDA was 1.48x. Working capital cycle increased to 123 days in 9MFY16 (FYE15: 118 days), mainly due to increased credit trading as the slowdown in the diamond industry shifted trend towards creditor funding. Its average maximum average fund-based utilisation for the 12 months ended December 2015 was 90%.



SOLICITATION DISCLOSURES

Additional information is available at www.indiaratings.co.in. The ratings above were solicited by, or on behalf of, the issuer, and therefore, India Ratings has been compensated for the provision of the ratings. 

Ratings are not a recommendation or suggestion, directly or indirectly, to you or any other person, to buy, sell, make or hold any investment, loan or security or to undertake any investment strategy with respect to any investment, loan or security or any issuer. 

DISCLAIMER

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Applicable Criteria

Analyst Names

  • Primary Analyst

    Neelam Agrawal

    Analyst
    India Ratings and Research Pvt Ltd Wockhardt Towers, 4th Floor, West Wing, Bandra Kurla Complex, Bandra East,Mumbai - 400051
    +91 22 40356115

    Media Relation

    Mihir Mukherjee

    Manager Corporate Communications and Investor Relations
    +91 22 40356121