By Neelam Agrawal

India Ratings and Research (Ind-Ra) has affirmed ratings on fund-based working capital facilities guaranteed by Firestar International Private Limited (FIPL, ‘IND A-’/Stable) and availed by Firestar Diamond BVBA (FDBVBA), and assigned proposed working capital facilities as under:

Instrument Type

Date of issuance

Coupon Rate

Maturity Date

Size of Issue (million)

Rating/Outlook

Rating Action

Fund-based working capital facilities

-

-

-

USD48 (increased from USD41)

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

Affirmed

Proposed working capital facilities*

-

-

-

USD2

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

Assigned

*The rating is provisional and shall be confirmed upon the sanction and execution of loan documents for the above facilities by FIPL to the satisfaction of Ind-Ra.

KEY RATING DRIVERS

The ratings are based solely on the unconditional and irrevocable guarantee provided by FDBVBA’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, with FDBVBA being strategically important for procurement of high quality diamonds for FIPL’s jewellery manufacturing business.

 

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

FDBVBA is 99% held by Firestar Holding Limited (Hong Kong) which is a 100% subsidiary of FIPL. Established in 2009, BVBA is engaged in the polishing and trading of rough, cut and polished diamonds and is based in Antwerp (Belgium). In FY16, FDBVBA reported revenue of USD241.6 million (up 10% yoy) and stable EBITDA of 2%. Its EBITDA/gross interest coverage declined marginally to 1.8x in FY16 (FY15: 2.0x). Net leverage, however, improved to 6.7x in FY16 (FY15: 7.6x) supported by higher absolute EBITDA. In 1HFY17, the company reported revenue of USD148.3 million and EBITDA margin of 1.3%. Its average maximum use of fund-based 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

USD48 (increased from USD41)

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

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

Proposed working capital facilities

Long-term/ Short-term

USD2

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

-


COMPLEXITY LEVEL OF INSTRUMENTS

Bank facilities are instruments with low complexity levels, where the relationship between 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

ALL CREDIT RATINGS ASSIGNED BY INDIA RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTPS://WWW.INDIARATINGS.CO.IN/RATING-DEFINITIONS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE WWW.INDIARATINGS.CO.IN. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. INDIA RATINGS’ CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE.

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