Rating Advisory

February 24, 2021 | Mumbai Adarsh BirmechaOri ginal Te mplate123

Rajkamal Carpets
Advisory as on February 24, 2021

This rating advisory is provided in relation to the rating of Rajkamal Carpets

The key rating sensitivity factors for the rating include:

Upward factors
*Increase in revenue and operating margin, leading to net cash accrual of over Rs 15.00 million per fiscal
*Improvement in the financial risk profile

Downward factors
*Substantially low revenue or operating margin, resulting in net cash accrual of less than Rs 10.00 million per fiscal
*Sharp increase in working capital requirement or withdrawal of unsecured loans, thereby further weakening the financial
risk profile, especially liquidity

CRISIL Ratings has a policy of keeping its accepted ratings under constant and ongoing monitoring and review.
Accordingly, it seeks regular updates from companies on business and financial performance. CRISIL Ratings is yet
to receive adequate information from Rajkamal Carpets (RC) to enable it to undertake a rating review. CRISIL Ratings
is taking all possible efforts to get the rated entity to cooperate with its rating process for enabling it to carry out the
rating review.

CRISIL Ratings views information availability risk as a key factor in its assessment of credit risk. (Please refer to
CRISIL Ratings’ criteria available at the following link,
https://www.crisil.com/content/dam/crisil/criteria_methodology/basics-of-ratings/assessing-information-adequacy-
risk.pdf)

If RC continues to delay the provisioning of information required by CRISIL Ratings to undertake a rating review then,
in accordance with circulars SEBI/HO/MIRSD/MIRSD4/CIR/P/2016/119 dt Nov 1, 2016, SEBI/HO/MIRSD/ MIRSD4/
CIR/ P/ 2017/ 71 dt June 30, 2017 and SEBI/HO/MIRSD/CRADT/CIR/P/2020/2 dt January 3, 2020 issued by
Securities and Exchange Board of India, CRISIL Ratings will carry out the review based on best available information
and issue a press release.

About the firm

RC was established in 1994 as a partnership firm by Mr Anshul Bansal, Mr Konark Bansal, Mr Pradeep Bansal, and Mr
Sanjay Bansal. Initially, the firm only manufactured carpets, bed sheets, and other allied products. In 2004, it ventured into
the hospitality sector. It currently operates Big Bite, a restaurant and hotel with two banquet halls at Meerut, Uttar Pradesh.

Please note: This advisory should not be construed as a rating reaffirmation.

About CRISIL Ratings Limited

CRISIL Ratings pioneered the concept of credit rating in India in 1987. With a tradition of independence, analytical rigour and
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 Rating Rationale
January 24, 2020 | Mumbai

Rajkamal Carpets
'CRISIL B+/Stable' assigned to bank debt

Rating Action
Total Bank Loan Facilities Rated Rs.9.9 Crore

Long Term Rating CRISIL B+/Stable (Assigned)

1 crore = 10 million
Refer to annexure for Details of Instruments & Bank Facilities

Detailed Rationale
CRISIL has assigned its 'CRISIL B+/Stable' rating to the long-term bank facility of Rajkamal Carpets (RC).

The rating reflects a modest scale of operations and an average financial risk profile. These weaknesses are partially
offset by the extensive experience of the partners in the hotels and resorts industry and healthy product diversity.

Analytical Approach
Unsecured loans (Rs 8.19 crore as on March 31, 2019) from the partners have been treated as 75% equity and 25%
debt as these loans bear low interest cost and are expected to remain in the business over the medium term.

Key Rating Drivers & Detailed Description

Weaknesses
* Modest scale of operations: Revenue was modest at Rs 5.07 crore in fiscal 2019, in the intensely
competitive hotels and resorts industry. However, revenue is likely to increase over the medium term as a new
banquet hall got operational in November 2019 and revenue was Rs 5.20 crore for the six months through December
2019.

* Average financial risk profile: The networth was modest at Rs 7.85 crore and the gearing high at 1.41
times, as on March 31, 2019. Debt protection metrics are estimated to have been moderate, with interest coverage
and net cash accrual to adjusted debt ratios of 2.25 times and 0.08 time, respectively, in fiscal 2019.

Strengths
* Extensive industry experience of the partners: The partners have an experience of over 20 years in the
hotels and resorts industry. This has given them an understanding of the dynamics of the market, and enabled them
to establish relationships with suppliers and customers.

* Healthy product diversity: The company is an established player and has been in operations for over 25
years, It manufactures carpets, bed sheets, and other allied products. It also operates a restaurant and hotel under
the name Big Bite that has two banquet halls.

Liquidity Stretched
Liquidity may remain under pressure over the medium term on account of large repayment obligation. Expected net
cash accrual of Rs 125 lakh, would be barely sufficient to meet debt obligation of Rs 123 lakh, in fiscal 2021. The
current ratio was low at 0.83 time as on March 31, 2019, on account of large CPLTD and advance from a customer.
However, need-based funding support from the partners should support liquidity.

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Outlook: Stable
CRISIL believes RC will continue to benefit from the extensive industry experience of the partners.

Rating Sensitivity factors

Upward Factors
* Increase in revenue and operating margin, leading to net cash accrual of over Rs 1.50 crore per fiscal
* Improvement in the financial risk profile

Downward Factors
* Substantially low revenue or operating margin, resulting in net cash accrual of less than Rs 1.00 crore per fiscal
* Sharp increase in working capital requirement or withdrawal of unsecured loans, thereby further weakening the
financial risk profile, especially liquidity

About the Firm

RC was established in 1994 as a partnership firm by Mr Anshul Bansal, Mr Konark Bansal, Mr Pradeep Bansal, and
Mr Sanjay Bansal. Initially, the firm only manufactured carpets, bed sheets, and other allied products. In 2004, it
ventured into the hospitality sector. It currently operates Big Bite, a restaurant and hotel with two banquet halls at
Meerut, Uttar Pradesh.

Key Financial Indicators

As on/for the period ended March 31 Unit 2019 2018
Operating income Rs crore 5.07 5.31
Reported profit after tax (PAT) Rs crore 0.34 0.36
PAT margin % 6.65 6.76
Adjusted debt/adjusted networth Times 5.05 2.89
Interest coverage Times 2.62 3.48

Any other information: Not applicable

Note on complexity levels of the rated instrument:

CRISIL complexity levels are assigned to various types of financial instruments. The CRISIL complexity levels are
available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL complexity levels for instruments that
they consider for investment. Users may also call the Customer Service Helpdesk with queries on specific
instruments.

Annexure - Details of Instrument(s)

Name of Date of Coupon Maturity Issue Size Rating Assigned with
ISIN instrument Allotment Rate (%) Date (Rs Cr) Outlook
NA Term Loan NA NA Jun-25 9.90 CRISIL B+/Stable

Annexure - Rating History for last 3 Years

Start of
Current 2020 (History) 2019 2018 2017 2017

Outstanding
Instrument Type Amount Rating Date Rating Date Rating Date Rating Date Rating Rating

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 Fund-based Bank LT/S CRISIL
Facilities T 9.90 B+/Stable -- -- -- -- --

All amounts are in Rs.Cr.

Annexure - Details of various bank facilities

Current facilities Previous facilities

Amount Amount
Facility (Rs.Crore) Rating Facility (Rs.Crore) Rating

CRISIL
Term Loan 9.9 B+/Stable -- 0 --

Total 9.9 -- Total 0 --

Links to related criteria

CRISILs Approach to Financial Ratios

Rating criteria for manufaturing and service sector companies

CRISILs Bank Loan Ratings

The Rating Process

Understanding CRISILs Ratings and Rating Scales

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About CRISIL Limited

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About CRISIL Ratings

CRISIL Ratings is part of CRISIL Limited (“CRISIL”). We pioneered the concept of credit rating in India in 1987. CRISIL is registered in India
as a credit rating agency with the Securities and Exchange Board of India (“SEBI”). With a tradition of independence, analytical rigour and
innovation, CRISIL sets the standards in the credit rating business. We rate the entire range of debt instruments, such as, bank loans,
certificates of deposit, commercial paper, non-convertible / convertible / partially convertible bonds and debentures, perpetual bonds, bank
hybrid capital instruments, asset-backed and mortgage-backed securities, partial guarantees and other structured debt instruments. We have
rated over 24,500 large and mid-scale corporates and financial institutions. CRISIL has also instituted several innovations in India in the rating
business, including rating municipal bonds, partially guaranteed instruments and microfinance institutions. We also pioneered a globally
unique rating service for Micro, Small and Medium Enterprises (MSMEs) and significantly extended the accessibility to rating services to a
wider market. Over 1,10,000 MSMEs have been rated by us.

CRISIL PRIVACY

CRISIL respects your privacy. We may use your contact information, such as your name, address, and email id to fulfil your request and service your account
and to provide you with additional information from CRISIL.For further information on CRISIL’s privacy policy please visit www.crisil.com.

DISCLAIMER

This disclaimer forms part of and applies to each credit rating report and/or credit rating rationale that we provide (each a “Report”). For the avoidance of doubt, the term
“Report” includes the information, ratings and other content forming part of the Report. The Report is intended for the jurisdiction of India only. This Report does not
constitute an offer of services. Without limiting the generality of the foregoing, nothing in the Report is to be construed as CRISIL providing or intending to provide any
services in jurisdictions where CRISIL does not have the necessary licenses and/or registration to carry out its business activities referred to above. Access or use of this
Report does not create a client relationship between CRISIL and the user.

We are not aware that any user intends to rely on the Report or of the manner in which a user intends to use the Report. In preparing our Report we have not taken into
consideration the objectives or particular needs of any particular user. It is made abundantly clear that the Report is not intended to and does not constitute an investment
advice. The Report is not an offer to sell or an offer to purchase or subscribe for any investment in any securities, instruments, facilities or solicitation of any kind or
otherwise enter into any deal or transaction with the entity to which the Report pertains. The Report should not be the sole or primary basis for any investment decision
within the meaning of any law or regulation (including the laws and regulations applicable in the US).

Ratings from CRISIL Rating are statements of opinion as of the date they are expressed and not statements of fact or recommendations to purchase, hold, or sell any
securities / instruments or to make any investment decisions. Any opinions expressed here are in good faith, are subject to change without notice, and are only current as of
the stated date of their issue. CRISIL assumes no obligation to update its opinions following publication in any form or format although CRISIL may disseminate its opinions
and analysis. CRISIL rating contained in the Report is not a substitute for the skill, judgment and experience of the user, its management, employees, advisors and/or clients
when making investment or other business decisions. The recipients of the Report should rely on their own judgment and take their own professional advice before acting on
the Report in any way.CRISIL or its associates may have other commercial transactions with the company/entity.

Neither CRISIL nor its affiliates, third party providers, as well as their directors, officers, shareholders, employees or agents (collectively, “CRISIL Parties”) guarantee the
accuracy, completeness or adequacy of the Report, and no CRISIL Party shall have any liability for any errors, omissions, or interruptions therein, regardless of the cause,
or for the results obtained from the use of any part of the Report. EACH CRISIL PARTY DISCLAIMS ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING,
BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE. In no event
shall any CRISIL Party be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal
fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of any part of the Report even if advised of the
possibility of such damages.

CRISIL Ratings may receive compensation for its ratings and certain credit-related analyses, normally from issuers or underwriters of the instruments, facilities, securities or
from obligors. CRISIL’s public ratings and analysis as are required to be disclosed under the regulations of the Securities and Exchange Board of India (and other applicable
regulations, if any) are made available on its web sites, www.crisil.com (free of charge). Reports with more detail and additional information may be available for subscription
at a fee – more details about CRISIL ratings are available here: www.crisilratings.com .

7
CRISIL and its affiliates do not act as a fiduciary. While CRISIL has obtained information from sources it believes to be reliable, CRISIL does not perform an audit and
undertakes no duty of due diligence or independent verification of any information it receives and / or relies in its Reports. CRISIL keeps certain activities of its business units
separate from each other in order to preserve the independence and objectivity of the respective activity. As a result, certain business units of CRISIL may have information
that is not available to other CRISIL business units. CRISIL has established policies and procedures to maintain the confidentiality of certain non-public information received
in connection with each analytical process. CRISIL has in place a ratings code of conduct and policies for analytical firewalls and for managing conflict of interest. For details
please refer to: https://www.crisil.com/en/home/our-businesses/ratings/regulatory-disclosures/highlighted-policies.html

CRISIL’s rating criteria are generally available without charge to the public on the CRISIL public web site, www.crisil.com. For latest rating information on any instrument of
any company rated by CRISIL you may contact CRISIL RATING DESK at CRISILratingdesk@crisil.com, or at (0091) 1800 267 1301.

This Report should not be reproduced or redistributed to any other person or in any form without a prior written consent of CRISIL.

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