ICRA has assigned a long-term rating of 'BB' to the long-term and a short-term rating of 'A4' to the Rs 50 million non-fund based facilities of Singer India (SIL). The outlook on the long-term rating is 'Stable'. 

The ratings assigned takes into consideration the established brand name in the sewing machine industry and strong linkages, in terms of financial and operational support, from ultimate parent company, Singer Asia.

Also, SIL has a comfortable financial risk profile evidenced by debt-free status as of Mar. 31, 2013 and support from longer credit period from suppliers. However, the ratings are constrained by significant product concentration risk on sewing machines (accounted for 93.5% of sales in FY13), a mature product with subdued growth potential, limited operations being present only in assembly/trading of sewing machines and moderate profitability indicators.

On account of recurrent losses in the past, SIL became a sick unit that led to net worth being eroded and large haircuts taken by banks as well as creditors. Post equity infusion from the parent company, net worth witnessed some improvement, this coupled with strong revenue growth allowed the company to come out of the purview of BIFR in May 2013.

Although the company is gradually diversifying into the small home appliances segment, revenue ramp-up will depend on the company's ability to compete in the highly competitive and fragmented industry. Going forward, the company's ability to increase its scale of operations, improve profitability and maintain its working capital requirements in line with its trading business would be the key rating sensitivities. 

Shares of the company declined Rs 1.75, or 2.10%, to settle at Rs 81.50. The total volume of shares traded was 7,449 at the BSE (Monday).