India Ratings and Research (Ind-Ra), a part of Fitch group, has affirmed Jubilant Consumer Private Limited’s (JCPL) Long-Term Issuer Rating at ‘IND BBB-’, with stable outlook.
The ratings reflect the potential financial support from the Jubilant Bhartia Group (JBG) and JCPL’s readily monetisable assets (RMAs) in the form of a 44.94 per cent stake worth INR53.1 billion in Jubilant FoodWorks Limited (JFW), said Ind-Ra.
The agency said that JCPL’s operational scale remains small, despite inheriting the businesses of erstwhile Jubilant Fresh Pvt Ltd and adding a few other segments in FY16 and FY17. The majority (54%) of the revenue is generated from the sale of cut vegetables to JFW.
Besides, JCPL’s profitability has been affected, as it has entered into new business segments (Go Gourmet, canned food and ready to eat, customised food solutions) during FY17 and FY18. Fixed costs incurred on new ventures and low EBITDA margin in the existing segments pressure EBITDA for JCPL.
Ind-Ra expects EBITDA margins of new ventures to gradually improve, as additional fixed expenses would reduce.