The [ICRA]B+ and [ICRA]A4 ratings assigned to the Rs.3.60 crore unallocated limits of the company have also been revised to [ICRA]D.

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1 January 03, 2017 Jeyenkay Petrogels Private Limited Instrument* Rated Amount Rating Action (In Crore) Long-term Fund Based Limit 3.40 Revised to [ICRA]D from [ICRA]B+ Short-term Non-Fund Based Limit Revised to [ICRA]D from [ICRA]A4 Unallocated limits 3.60 Revised to [ICRA]D from [ICRA]B+/[ICRA]A4 Total *Instrument Details are provided in Annexure-1 Rating Action ICRA has revised the long-term rating assigned to the Rs crore fund based limit of Jeyenkay Petrogels Private Limited (JPPL or the company ) 2 to [ICRA]D (pronounced ICRA D) from [ICRA]B+ (pronounced ICRA B plus). ICRA has also revised the short-term rating assigned to the Rs crore non-fund based limits of the company to [ICRA]D (pronounced ICRA D) from [ICRA]A4 (pronounced ICRA A four). The [ICRA]B+ and [ICRA]A4 ratings assigned to the Rs.3.60 crore unallocated limits of the company have also been revised to [ICRA]D. Rationale The ratings revision takes into account the irregularity in debt servicing and overdrawals from the cash credit account by JPPL over the last few months. The ratings continue to factor in the stretched financial profile of the company characterized by thin profitability, weak debt protection metrics and leveraged capital structure. The company s liquidity position remains stretched and it relies heavily on its creditors to fund its working capital operations which, coupled with the high debt levels, resulted in a TOL/TNW of times as on March 31, The rating is further constrained by the company s presence in the highly fragmented petrogel and specialty oil industry, characterised by intense competition, which limits its pricing flexibility. The prices of the company s key raw materials are derived from the highly volatile crude prices, which expose JPPL s margins to raw material price volatility. Furthermore, with more than 50% of the raw material requirement met through imports, the company s margins remain vulnerable to volatility in foreign currency exchange rates. The ratings however continue to factor in the established experience of the promoter in the petrogel and specialty oil industry. ICRA also notes the fiscal benefits enjoyed by the company in the form of sales tax exemptions by virtue of its factory location in Silvassa. Going forward, the company s ability to regularise its debt servicing, effectively manage its working capital requirements and infuse equity to trim down its debt levels will be the key rating sensitivities. Key rating drivers Credit Strengths Established experience of the promoter in the petrogel and specialty oil industry Fiscal incentives derived by virtue of the factory unit located in Silvassa during FY lakh = 1 crore = 10 million 2 For complete rating scale and definitions, please refer to ICRA's website or other ICRA Rating Publications

2 Credit Weakness Irregularity in debt servicing and overdrawals from the cash credit account by JPPL over the last few months Stretched financial risk profile characterized by thin profitability, weak debt protection metrics and leveraged capital structure Stretched liquidity position following high inventory levels which has also led to stretched payables resulting in high TOL/TNW of times as on March 31,2016 Profitability susceptible to movements in the prices of raw materials, which are crude oil derivatives Susceptibility of margins to adverse fluctuations in foreign exchange rates Industry characterized by strong competition from organized and unorganized players Description of key rating drivers highlighted above: JPPL s financial profile is characterised by a stretched liquidity position arising from high inventory levels. The company mainly procures raw materials in anticipation of demand and maintains an inventory of raw materials of upto 60 days. JPPL often undertakes bulk purchases towards the end of the year in order to avail discounts which elevates its inventory levels further. Owing to a low net-worth base, the company funds its working capital requirements largely by availing external borrowings and through its creditors resulting in a TOL/TNW of times as on 31 st March, Consequently, JPPL s capital structure remains highly leveraged. Furthermore, the company s profitability remains thin leading to weak debt protection metrics. Owing to its stretched liquidity position and weak financial profile, the company has delayed its debt servcing and made overdrawals from its cash credit account over the last few months. The prices of the company s key raw materials comprising base oils, crystal wax, slack wax and paraffin wax are derived from the highly volatile crude prices. Since the company procures inventory in anticipation of demand, its margins remain vulnerable to raw material price volatility. Furthermore, the company s presence in the highly fragmented petrogel and specialty oil industry which is characterised by intense competition limits its pricing flexibility and thereby its ability to effectively pass on increase in raw material prices to customers. Also, with more than 50% of the raw material requirement met through imports, the company s margins remain vulnerable to volatility in foreign currency exchange rates. Nevertheless, JPPL s promoter, Mr. Nilesh Patel has been associated with the petrogel and specialty oil industry since over two decades. Under his leadership, the company has established strong ties with its customers entailing repeat orders. JPPL s manufacturing facility is located at Dadra and Nagar Haveli and by virtue of its location, it is entitled to complete exemption of sales tax till December, Thus, sales made by the company do not carry the component of sales tax resulting in reduced cost for the buyers thereby giving it an edge over its competitors. Analytical approach: For arriving at the ratings, ICRA has taken into account the debt servicing track record of JPPL, its business risk profile, financial risk drivers and management profile. Links to applicable Criteria Corporate Credit Rating A Note on Methodology About the Company: Jeyenkay Petrogels Pvt. Ltd. (JPPL) was initially established as a partnership concern in the year 2007 and was later converted to a private limited company in The company has been promoted by Mr. Nilesh Patel who has an experience of over 20 years in the manufacturing of petrogels. JPPL manufactures petrogels like jellies, waxes, industrial oils, lubricating oils, transformer oils, greases, paraffins, plasticizing oils, emulsifiers, cutting oils and special grade oils. The company has its registered office at Ghatkopar, Mumbai and manufacturing facility at Silvassa having a production capacity of 15,000 tonnes per annum. JPPL reported a net profit after tax and depreciation of Rs crore on an operating income of Rs crore for the year-ending March 31, 2016 (provisional). Status of non-cooperation with previous CRA: Not Applicable Any other information: Not Applicable

3 Rating History for last three years: Table: Rating History S.No Name of Instrument Current Rating Chronology of Rating History for the past 3 years Type Rated amount (Rs. Crores) Rating Rating in FY2016 Rating in FY2015 Rating in FY2014 Dec-16 Nov-15 Apr-14 Oct-13 1 Cash Credit Long Term Fund based 3.40 [ICRA]D [ICRA]B+ [ICRA]BB- (Stable) [ICRA]BB- (Stable) 2 Letter of Credit/ Buyers Credit Short Term Non-fund based [ICRA]D [ICRA]A4 [ICRA]A4 [ICRA]A4 3 Bank Guarantee Short Term Non-fund based 0.05* [ICRA]D [ICRA]A4 [ICRA]A4 [ICRA]A4 4 Unallocated limits Long Term/ Short Term 3.60 [ICRA]D [ICRA]B+/ [ICRA]A4 [ICRA]BB- (Stable)/ [ICRA]A4 [ICRA]BB- (Stable)/ [ICRA]A4 * Sub-limit of Letter of credit Interchangeability of CC and LC limits upto Rs.2 cr Complexity level of the rated instrument: ICRA has classified various instruments based on their complexity as "Simple", "Complex" and "Highly Complex". The classification of instruments according to their complexity levels is available on the website

4 Annexure-1 Details of Instrument Name of the instrument Date of issuance Coupon rate Maturity Date Size of the issue (Rs. Cr) Current Rating and Outlook Cash Credit [ICRA]D Letter of Credit/ Buyers Credit [ICRA]D Bank Guarantee * [ICRA]D Unallocated limits [ICRA]D * Sub-limit of Letter of credit Interchangeability of CC and LC limits upto Rs.2 cr Source: JPPL

5 Name and Contact Details of the Rating Analyst(s): Mr. Subrata Ray Mr. Rupa Pandey Mr. Suprio Banerjee Mr. Roshni Suvarna Name and Contact Details of Relationship Contacts: About ICRA Limited: ICRA Limited was set up in 1991 by leading financial/investment institutions, commercial banks and financial services companies as an independent and professional investment Information and Credit Rating Agency. Today, ICRA and its subsidiaries together form the ICRA Group of Companies (Group ICRA). ICRA is a Public Limited Company, with its shares listed on the Bombay Stock Exchange and the National Stock Exchange. The international Credit Rating Agency Moody s Investors Service is ICRA s largest shareholder. For more information, visit Copyright, 2017, ICRA Limited. All Rights Reserved Contents may be used freely with due acknowledgement to ICRA ICRA ratings should not be treated as recommendation to buy, sell or hold the rated debt instruments. ICRA ratings are subject to a process of surveillance, which may lead to revision in ratings. An ICRA rating is a symbolic indicator of ICRA s current opinion on the relative capability of the issuer concerned to timely service debts and obligations, with reference to the instrument rated. Please visit our website or contact any ICRA office for the latest information on ICRA ratings outstanding. All information contained herein has been obtained by ICRA from sources believed by it to be accurate and reliable, including the rated issuer. ICRA however has not conducted any audit of the rated issuer or of the information provided by it. While reasonable care has been taken to ensure that the information herein is true, such information is provided as is without any warranty of any kind, and ICRA in particular, makes no representation or warranty, express or implied, as to the accuracy, timeliness or completeness of any such information. Also, ICRA or any of its group companies may have provided services other than rating to the issuer rated. All information contained herein must be construed solely as statements of opinion, and ICRA shall not be liable for any losses incurred by users from any use of this publication or its contents.

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