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The ratings reflect
Similarly, the margins of the Company showed improvement due to increase in topline and better procurement of cotton at reasonable price indicating an improvement in profitability. However, the COVID-19 will have negative impact going forward and the production and the business will be affected overall. The financial profile of the Company is characterized by moderate leveraging and low coverages. The Company took additional debt to finance BMR. Material improvement in cash flows, in line with upcoming debt obligations, remains imperative.
The 'Rating Watch' signifies COVID-19 outbreak and a challenging economic environment. The entire textile chain is expected to be impacted due to the lockdown in
The ratings are dependent upon the sponsor support and management's ability to improve margins, profitability and the Company's competitive position in the industry. This includes keeping the debt levels manageable. Any deterioration in margins or coverages amidst prolonged lockdown will have a negative impact on the ratings.
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