By Neelam Agrawal

India Ratings and Research (Ind-Ra) has affirmed ratings on working capital facilities guaranteed by Firestar International Private Limited (FIPL, ‘IND A-’/Stable) and availed by Firestar Diamond Limited, Hong Kong (FDLHK) as under:

Instrument Type

Date of Issuance

Coupon Rate

Maturity Date

Size of Issue (million)

Rating/Outlook

Rating Action

Fund-based working capital facilities

-

-

-

USD35 (increased from USD30)

IND A-(SO)/Stable/A2+(SO)

Affirmed


KEY RATING DRIVERS

The ratings are based solely on the unconditional and irrevocable guarantee provided by FDLHK’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. Headquartered in Hong Kong, FDLHK’s core business activity is aligned to FIPL’s diamond trading business, facilitating procurement and distribution from and to Hong Kong’s global diamond trading centre.

 

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


RATING SENSITIVITIES

Negative: The following could lead to a negative rating action:

 - A rating downgrade for the guarantor; and/or

 - Weakening of linkages with the parent.

 

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


COMPANY PROFILE

FDLHK was incorporated as a wholly-owned subsidiary of Firestar Holding Limited (FHL, Hong Kong) in 2009 for trading of cut and polished diamonds. FHL is a 100% subsidiary of FIPL. In FY16, FDLHK reported revenue of USD260.95 million (up 9.45% yoy) and stable EBITDA margins of 2.3%. Its EBITDA/gross interest coverage and net debt/EBITDA improved to 3.4x in FY16 (FY15: 2.9x) and 3.8x (3.9x), respectively, supported by an absolute EBITDA growth. In 1HFY17, the company reported revenue of USD115.1 million and operating EBITDA margins of 2%. The company’s maximum average use of fund-based facilities for the 12 months ended November 2016 was 95%.


RATING HISTORY

Instrument Type

Current Rating/Outlook

Historical Rating/Outlook

Rating Type

Outstanding Limits (million)

Rating

13 April 2016

Fund-based working capital facilities

Long-term/ Short-term

USD35

IND A-(SO)/Stable/IND A2+(SO)

IND A-(SO)/Stable/IND A2+(SO)


COMPLEXITY LEVEL OF INSTRUMENTS

Bank facilities are instruments with low complexity levels, where the relationship between the inherent risk factors and intrinsic return characteristics is straightforward.

 

For more information, visit https://www.indiaratings.co.in/complexity-indicators

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.

ABOUT INDIA RATINGS AND RESEARCH

India Ratings and Research (Ind-Ra) is India's most respected credit rating agency committed to providing India's credit markets accurate, timely and prospective credit opinions. Built on a foundation of independent thinking, rigorous analytics, and an open and balanced approach towards credit research, Ind-Ra has grown rapidly during the past decade, gaining significant market presence in India's fixed income market. 

Ind-Ra currently maintains coverage of corporate issuers, financial institutions (including banks and insurance companies), finance and leasing companies, managed funds, urban local bodies and project finance companies. 

Headquartered in Mumbai, Ind-Ra has six branch offices located in Ahmedabad, Bengaluru, Chennai, Delhi, Hyderabad and Kolkata. Ind-Ra is recognised by the Securities and Exchange Board of India, the Reserve Bank of India and National Housing Bank. 

India Ratings is a 100% owned subsidiary of the Fitch Group.

For more information, visit www.indiaratings.co.in.

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