CARE Reaffirms A3+ Rating on Rajesh Exports’ Credit Facilities

Rajesh ExportsCARE Ratings reaffirmed the CARE A3+ rating assigned to jewelry manufacturer Rajesh Exports Ltd.’s short-term bank facilities worth $122 million (INR6.40 billion).

The rating continues to draw strength from the long-standing presence of Rajesh Exports in the industry, experienced management, strong brand image and strong presence in the export markets, said Karthik Raj, analyst at CARE Ratings.

He added that the cost advantage by virtue of having presence both in manufacturing and retailing of the gold jewelry business, presence of strong in house design team, efficient working-capital cycle management and huge cash balance are further supporting the rating.

However, the rating is constrained by low profit margins due to wholesale business, geographical concentration risk, working-capital intensive nature of operations and intense competition from various organized players in the retail segment operating in India’s southern states, Raj noted.

He stated that going forward the company’s ability to expand its retail operations to improve the margins by competing with the established players in retail sector will be the key rating sensitivities.

The Bangalore-based company, which sells its jewelry under the Shubh Jewellers brand in India, operates a total of 80 stores, mainly in the southern state of Karnataka. Rajesh Exports is planning an aggressive retail expansion program to help drive profit higher in the coming quarters. The company plans to establish 500 Shubh Jewellers stores by 2015.

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