Rating Rationale

18 Oct 2022

Wildcraft India Limited (Erstwhile Wildcraft India Pvt Ltd)

Brickwork Ratings upgrades/assigns ratings for the Bank Loan Facilities of Rs. 155.07
Crores of Wildcraft India Limited

Particulars:
Tenure
Amount (Rs.in Crs) Rating@
Previous
Facility** Previous Present (29 Sep 2021) Present

Fund Based
BWR A/Stable BWR A+/ Stable
90.00 100.50 Long
Cash Credit Reaffirmation Upgrade
Term
- BWR A+/ Stable
Term Loan 0.00 5.07 Assignment
Inland Bills Purchased/
Invoice Discounting 10.00 10.00 BWR A2+ BWR A1
Short
WCDL (90.00) (100.50) Reaffirmation Upgrade
Term
Sub-Total 100.00 115.57
Non Fund Based
Letter of Credit 20.00 39.50 BWR A1
Letter of Credit# (35.00) (50.00) Short BWR A2+ Upgrade
Term Reaffirmation
Bank Guarantee (30.00) (32.00)
Sub-Total 20.00 39.50
(Rupees One Hundred Fifty Five Crores and Seven
Total 120.00 155.07 Lakhs Only)
*Please refer to BWR website www.brickworkratings.com/ for the definition of the ratings;
**Details of the bank loan facilities are provided in Annexure-I; # Sublimit of various FB/NFB limits.
@This rating pertains to an existing assignment received prior to 6 October 2022.

Rating Action/Outlook
The upgrade of the rating of Wildcraft India Limited, erstwhile Wildcraft India Pvt Ltd,
(Wildcraft or the company) by Brickwork Ratings (BWR) factors the continuous improvement in
the company’s financial performance for two consecutive fiscals, FY21 and FY22, backed by an
improvement in the operating metrics and a similar growth momentum in H1FY23. The
company has been able to maintain its business profile during the last 2 years by its timely foray
into the Personal Protection Gear (PPG) segment in FY21 and then with an improvement in the
core business segments (gear, clothing and footwear) despite two relatively disruptive quarters in
FY22. With the resumption of normalcy and adoption of the hybrid work models by offices pan-
India, BWR expects the company to be better placed to leverage its established brand and

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register strong revenue growth from the core segments in FY23. The company has already
achieved sales (primarily from core segments, along with the luggage segment) to the tune of
~Rs.300 Crs in H1FY23, which is nearly ~80% of the core segment sales in FY22. With the
improvement in the scale of operations of its main segments, the company’s operations have
remained positive at the EBITDA level of the past two years, and the EBITDA margins are
improving on a YOY basis.
The ratings continue to factor in the multiple product lines, focused investment in branding and
infrastructure, comfortable gearing level and diversified customer base. However, the ratings
remain constrained by the modest scale of operations, forex risks, low profitability, working-
capital-intensive operations and competition from domestic and international players in the
adventure equipment and outdoor gear business.

BWR believes the company’s business risk profile will be maintained over the medium term.
The outlook may be revised to Positive if there is a sustained increase in the scale of operations
with significant growth in the company’s core segments, an improvement in profitability and the
sustenance of the gearing and debt coverage metrics, resulting in an improved financial risk
profile. The outlook may be revised to Negative in case there is a significant impact on the
company’s regular business due to any subsequent mutations of Covid-19, margins not
improving as anticipated and/or increased bank loan utilisations leading to a deterioration in the
gearing and debt coverage metrics, thus weakening the company’s financial risk profile.

Key Rating Drivers

Credit Strengths-:
● Experienced management: The promoters have extensive experience in manufacturing
outdoor products and a long operational track record of nearly two decades; this is
expected to continue to drive the company’s business growth over the medium term. In
addition, the management is supported by strategic investors and recently inducted
independent directors with varied experiences, thereby adding strength to the board of
directors.

● Branding, visibility and established track record: The company's brand WILDCRAFT
has a strong recall and market presence on a pan-India basis, with several corporate tie-
ups and good market penetration. The company has wide distribution channels such as its
own outlets/franchises, corporate/institutions, modern trade and online shopping portals.
With the improvement in the scale of operations, the company increased its exclusive
business outlets by ~44% during FY22.

● Established relations with reputed and diversified clientele:

The company has a wide distribution network with exclusive and multi-brand outlets,
Modern Trade with Big Bazaar, Shoppers’ Stop and Central, among others, along with an
online presence through Flipkart, Myntra and its own website. The company also supplies
to various government agencies on a time-to-time basis. The customer base remains

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 diversified, with the top five clients accounting for ~30% (PY:29%) of the total sales
during FY22.

● Diversified product portfolio:

The company's core segment comprises gear ranging from rucksacks, backpacks, travel
gear, camping gear, tents, sleeping bags and accessories, clothing and footwear. The
company’s core segments accounted for ~52% (PY: 23%) of the total operating income
(TOI), and the apparel segment accounted for ~26% (PY:13%) and the luggage segment
accounted for ~ 15% (PY:2.64%) during FY 22. During FY21, the company’s core
business segments were adversely impacted by covid-19-related disruptions and led to
diversification, with the production and sale of PPG (masks and reusable and disposable
hazmat suits), which accounted for ~60% of the TOI.

● Moderate financial risk profile: The company’s TOI was Rs.403.24 Crs in FY22 as
against Rs.494.92 Crs in FY21. Decline in revenue during FY22 was primarily due to
two disruptive quarters and declining contribution from the non-core PPG segment. The
company recorded an EBITDA of Rs.37.60 Crs in FY22 (PY Rs.38.18 Crs). The
company recorded an increase in PAT of Rs.14.24 Crs in FY22 (PY Rs.1.44 Crs) on
account of deferred tax provisions. BWR notes the improvement in the EBITDA and
PAT margins to 9.32% and 3.53% during FY22 from 7.71% and 0.29% during FY21,
aided by increased revenue contribution from higher margin segments. Debt protection
metrics continue to remain adequate with the ISCR and DSCR of 2.82 times and 3.13
times as on 31 March 2022 as against 2.91 times and 2.78 times as on 31 March 2021,
respectively. The gearing remained comfortable at 0.25 times (PY:0.23 times) as on 31
March 2022 . During 6MFY23, the company has provisionally booked a TOI of
Rs.319.10 Crs.

Credit Risks-:
● Intense competition, given fragmented market: The company faces stiff competition
from domestic and international players involved in the similar line of business due to the
fragmented market, which limits the pricing flexibility and bargaining power of
customers, thereby placing pressure on the company’s revenues and margins.

● Susceptibility to volatility in raw material prices and forex rates: The company’s
margins are affected by changes in input prices such as fabric and tape prices in the
absence of any pricing flexibility with customers. The company is also exposed to
fluctuations in foreign currency exchange rates, with nearly 33% (PY: 20%) of the total
raw material procurement derived through imports during FY22. The increase in imports
during FY22 was primarily on account of an increase in income from the luggage
segment, which remained primarily import-dependent at Rs.62.35 Crs during FY 22 (PY:
Rs.13.09 Crs). The company does not hedge its forex risk.

● Working-capital-intensive operations: The company’s operations remain working-

capital-intensive primarily on account of higher inventory days. The company

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 has been able to offset the higher inventory level with a similar level of payables,
resulting in a cash conversion cycle of ~1-1.5 months. With the company's envisaged
increased scale of operations, the cash conversion cycle is expected to be higher. The
company’s ability to manage its working capital requirement continues to be monitorable.

Analytical Approach: Standalone

BWR has adopted a standalone approach while assigning the ratings and has applied its rating
methodology as detailed in the Rating Criteria below (hyperlinks provided at the end of this
rationale). The company does not have any subsidiary.
Rating Sensitivities
The company’s ability to increase its scale of operations from its core business on a sustained
basis, achieving the envisaged profitability and effectively managing its working capital will be
key rating sensitivities.

Upward:
● Higher-than-expected revenue growth and operating margins in the core business segments
● Sustained comfortable financial risk profile and a steady increase in liquid surplus, supported
by healthy cash accruals
Downward:
● Slower-than-expected improvement in revenue and operating profitability, mainly due to
delayed demand recovery in the core business, also impacting cash generation
● Stretched working capital cycle, leading to material weakening of the credit metrics, for
instance, the gearing above 1.00 time, ISCR below 3 times and DSCR below 2 times
Liquidity Position: Adequate
The company’s liquidity indicators are considered to be adequate as the EBITDA of Rs.37.60
Crs was sufficient to meet the interest and finance charges of Rs.13.34 Crs during FY22. The
working capital utilisation has remained below 50% for the previous six months ended 31
August 2022. The net cash accruals of Rs.32.50 Crs during FY22 were sufficient to cover the
repayment obligations of Rs.5.86 Crs during FY22. The debt repayment obligations of Rs.6.76
Crs during FY23 and Rs.5.77 Crs during FY24 are expected to be adequately covered through
an annual net cash accrual of ~ Rs.100 Crs The cash and cash equivalents position of the
company has also improved with unencumbered cash in hand improving to Rs.12.09 Crs as on
31 March 2022 as against Rs.1.80 Crs as on 31 March 2021. The current ratio remained stable at
1.40 times as on 31 March 2022 as against 1.31 times as on 31 March 2021.
About the Company
Wildcraft India Limited, erstwhile Wildcraft India Pvt Ltd, (Wildcraft) was incorporated in 1998
in Bengaluru. The company was rechristened as a public limited company w.e.f 15 July 2022. It
is engaged in the manufacturing and trading of outdoor products with a diversified product
profile ranging from gear, equipment and apparel to footwear. The company markets its products
under the Wildcraft brand while it has several sub-brands catering to varied customer and
product segments. The company designs, develops, manufactures and distributes outdoor gear
products such as rucksacks, backpacks, travel gear, camping gear, tents, sleeping bags and

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 accessories, along with clothing such as jackets, cheaters, huskies, T-shirts, shirts and footwear.
The company has its manufacturing unit in Bengaluru, Karnataka.
Mr. Siddharth Sood and Mr. Gaurav Dublish are the whole time Directors. Mr. Bharat Singh (the
Nominee Director of Sequoia Capital) and Mr. Anand Subramaniam Krishnan (the Nominee
Director of FW Himalaya Limited) are the investor directors, and Mr. Harish Hassan
Visweswara, Mr.Shantharaju Bangalore Siddaiah and Mr.Vidya Sarathy are the independent
directors.

Financial Indicators
Key Parameters Units FY21 FY22
Result Type Audited Audited
Operating Revenue Rs. Crs. 494.92 403.24
EBITDA Rs. Crs. 38.18 37.60
Net Profit Rs. Crs. 1.44 14.23
Tangible Net Worth Rs. Crs. 200.52 217.66
Total Debt / Tangible Net Worth Times 0.23 0.25
Current Ratio Times 1.31 1.40

Key Covenants of the facility rated: The terms of sanction include standard covenants
normally stipulated for such facilities.
Status of non-cooperation with previous CRA - NA

Rating History For The Previous Three Years [including withdrawal and suspended]
Facilities Current Rating (2022) 2022 2021 2020 2019
(History)
Type Tenure Amount Rating Date Rating Date Rating Date Rating Date Rating
Fund Based LT 100.50 BWR A+ NA NA 29 BWR A 25Sep2 BWR A 08July BWR A
Stable Sep Stable 020 Stable 2019 Stable
(Upgrade) 21 Reaffirm Reaffirmati Reaffirmation
ation on
Fund Based LT 5.07 BWR A+ NA NA NA NA NA NA NA NA
Stable
(Assignment)
FB ST (100.50) NA NA 29 BWR 25Sep2 BWR A2+ 8July BWR A2+
Sublimit BWR A1 Sep A2+ 020 Reaffirmati 2019 Reaffirmation
Non Fund ST 39.50 (Upgrade) NA NA 21 Reaffirm on
Based ation
NFB ST (82.00) NA NA
Sublimit
Grand Total 155.07 (Rupees One Hundred Fifty Five Crores and Seven Lakhs Only)

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Complexity Levels of the Instruments: Simple

For more information, visit

www.brickworkratings.com/download/ComplexityLevels.pdf Hyperlink/Reference to

Applicable Criteria

● General Criteria ● Manufacturing Companies

● Approach to Financial Ratios ● Short Term Debt

Analytical Contacts

Vineetha Ann Varughese Saakshi Kanwar

Senior Rating Analyst Associate Director Ratings
vineetha.v@brickworkratings.com saakshi.k@brickworkratings.com

1860-425-2742 I media@brickworkratings.com

Wildcraft India Limited (Erstwhile Wildcraft India Pvt Ltd)

ANNEXURE I
Details of Bank Facilities rated by BWR
Sl. No. Name of the Type of Facilities Long Term
Short Term Total
Bank (Rs. Crs.)
(Rs. Crs.) (Rs. Crs.)
1 Cash Credit 70.00 - 70.00
2 Term Loan 5.07 - 5.07
3 WCDL (70.00) (70.00)
HDFC Bank
4 Letter of Credit - (35.00) (35.00)
5 Bank Guarantee - (25.00) (25.00)
6 Cash Credit 30.00 - 30.00
7 WCDL - (30.00) (30.00)
8 Invoice Discounting - 10.00 10.00
9 Letter of Credit - 20.00 20.00
10 Axis Bank Letter of Credit - (15.00) (15.00)
11 Bank Guarantee - (2.00) (2.00)
12 Cash Credit 0.50 - 0.50
13 WCDL - (0.50) (0.50)
14 ICICI Bank Letter of Credit - 19.50 19.50
15 Bank Guarantee - (5.00) (5.00)
TOTAL - (Rupees One Hundred Fifty Five Crores and Seven Rupees Only) 155.07

Apart from the facilities mentioned above, the company has subordinated debt from SIDBI and ECLGS facilities
from HDFC Bank which is not being rated at the request of the client.

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