Blow Plast gets P1

Crisil has assigned a `P1' (P one) rating to Rs. 10 crore short term debt programme of Blow Plast Limited (BPL).

The rating reflects the company's sustained market leadership position in the domestic luggage market on account of its strong brand name, wide product range, rapid introduction of new products and established distribution network; and the group's improving business position in the moulded office furniture systems business.

The rating is, however, constrained by the company's moderate financial risk profile as reflected by its stagnant sales, inherently low operating margins on account of trading nature of operations, moderate coverage ratios and its continued high degree of investments in group companies, which have not been providing adequate returns in the past.

The rating also incorporates the high degree of competitive pressures in the domestic luggage industry due to entry of aggressive new players and the presence of the large price- competitive unorganised sector. The company's ability to sustain its market position in the domestic luggage industry through continued new product innovations and enhance its financial position through improvement in margins and reduced exposure to group companies, would be critical for the company's future credit risk profile.

Blow Plast (BPL), part of the Dilip Piramal Group of companies, is mainly engaged in the marketing of the hard and soft luggage manufactured by the group company - VIP Industries (VIP). In addition, the company is also involved in the marketing of the `Elements' range of moulded office furniture, which are manufactured by a group company - Kemps & Co.

The company reported a profit after tax (PAT) of around Rs. 6.05 crores on net sales of Rs. 243.26 crores for the year ending March 31, 2000. During the first half of 2000-01, BPL has reported a PAT of Rs. 2.70 crores on net sales of Rs. 127.41 crores. While luggage products accounted for around 90 per cent of its sales, the balance is accounted by the company's moulded office furniture division.

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Section  : Business
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