Rating Rationale Brickwork Ratings has reaffirmed ‘BWR BB+’ for the Bank Loan Facilities of Suvidhi Rayons Private Limited. Brickwork Ratings (BWR) has assigned the following Rating1 for the Bank Loan Facilities aggregating ₹ 33.45 Cr of Suvidhi Rayons Pvt. Ltd. (SRPL or the ‘company’): Facility* Fund Based Rating History (December 2013) Limits (₹ Cr) Previous Present Tenure Present Cash Credit 28.00 28.00 Term Loan 7.79 5.45 Corporate Loan 1.61 0.00 Reaffirmed BWR BB+ BWR BB+ Long Term (BWR Double B Plus) (BWR Double B Plus) (Outlook : Stable) (Outlook : Stable) Total 37.40 33.45 INR Thirty Three Crores and Forty Five Lakhs only *Availed from State Bank of India BWR has principally relied upon the audited financial statements up to FY14, projected financial statements for FY15, publicly available information and information/clarifications provided by the company's management. The rating continues to factor the promoters’ extensive industry experience, increasing revenues, established relationships of SRPL with its customers, locational advantages and its presence in the low-end of the textile value chain targeting low and medium income bracket customers. The ratings are, however, constrained by decline in profitability, below average debt protection metrics, volatility associated with raw material prices, intense competition from other players in the textile industry and the working-capital-intensive nature of business. Company Background Suvidhi Rayons Private Limited, Bhilwara, Rajasthan was originally incorporated as Suvidhi Capvest Pvt Ltd in 1997 and was engaged in investment activities. Subsequently, in 2002, SRPL amended its business objective to deal in the textile business and simultaneously changed its name to Suvidhi Rayons Private Limited. SRPL has two manufacturing units at RIICO Industrial Area, Bhilwara with an installed capacity of 104 Lakh meters per annum and a total of 108 looms. SRPL is engaged in the manufacture of unfinished (grey)/synthetic fabrics (forming 70% of the total production) sold as raw cloth in the form of Grey fabrics to Reliance Industries (Only Vimal). Finished Fabrics forming 30% of the total production is used to make shirtings and suitings by the company itself under the registered brand name of' 'SANTRO SUITINGS'. 1 Please refer to www.brickworkratings.com for definition of the Ratings www.brickworkratings.com 1 28 Jan 2015 During FY14, the company has ventured into non-core business activities of toll booth and real estate development, construction etc. Management Profile The Board of Directors of SRPL comprises Shri Rajesh Kumar Jain, Managing Director, Shri Milap Chand Jain, Shri Kamal Jain, Smt. Sushila Devi Jain and Shri Nitin Kumar Jain. SRPL has experienced and competent professionals to handle its business activities. Financial Performance Net revenue from operations increased from Rs. 98.04 Cr during FY13 to Rs. 116.28 Cr during FY14. Operating profit margin declined during FY14 to 5.40% from 7.66% during FY13. However, net profit margins marginally increased from 1.11% during FY13 to 1.57% during FY14. Tangible Net Worth as at March 31, 2014 was Rs 23.85 Cr. On a provisional basis, SRPL has reported sales of Rs 87 Cr approx. for the period April-December 2014 Rating Outlook The rating outlook is expected to be stable over the current year. The ability of the company to improve the profitability margins, diversify its revenue and client profile, enhance its geographical presence, improve its capital structure and manage its working capital efficiently would remain the key rating sensitivities. Analyst Contact Relationship Contact [email protected] [email protected] Phone Media Contact 1-860-425-2742 [email protected] Disclaimer: Brickwork Ratings (BWR) has assigned the rating based on the information obtained from the issuer and other reliable sources, which are deemed to be accurate. BWR has taken considerable steps to avoid any data distortion; however, it does not examine the precision or completeness of the information obtained. And hence, the information in this report is presented “as is” without any express or implied warranty of any kind. BWR does not make any representation in respect to the truth or accuracy of any such information. The rating assigned by BWR should be treated as an opinion rather than a recommendation to buy, sell or hold the rated instrument and BWR shall not be liable for any losses incurred by users from any use of this report or its contents. BWR has the right to change, suspend or withdraw the ratings at any time for any reasons. www.brickworkratings.com 2 28 Jan 2015