Rationale

 The ratings reaffirmation of ACPL Exports Private Limited (ACPL) factors in the company’s established operational track record and extensive experience of its promoters in the silver jewellery exports business. ACPL’s revenue moderated to some extent (an operating income of Rs.156.91 crore in FY2024 against Rs. 158.35 crore in FY2023) due to relatively lower order inflow amid some slowdown in demand witnessed in the export market. Nonetheless, there was slight improvement in the operating margins (8.53% in FY2024 against 8.21% in FY2023) and the overall financial profile remained adequate, as marked by steady accrual generation, comfortable capital structure and adequate liquidity profile. Moreover, the company is likely to report a modest revenue growth in the current fiscal on the back of some improvement in demand. The ratings, however, remain constrained by ACPL’s modest scale of operations, which coupled with intensely competitive and fragmented nature of the jewellery industry, limits the pricing flexibility of industry participants including ACPL. Moreover, the company continues to face geographical concentration risk as the major portion of its sales comes from a single market (the US), although ACPL has made efforts to diversify its customer base over the years. The ratings further factor in the working capital intensive nature of operations owing to high inventory requirements and susceptibility of ACPL’s operating margins to volatility in silver prices and foreign exchange rates, although it partially hedges against foreign exchange risks through forward contracts. The Stable outlook on the long-term rating reflects ICRA’s opinion that ACPL will continue to benefit from its established operational track record and some improvement in demand for its products, enabling it to maintain an adequate financial profile.