(in crore) Non-Fund Based Limits 9.00 [ICRA]A4; reaffirmed. Fund Based Limits 5.75 [ICRA]B reaffirmed; Stable outlook assigned

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1 January 11, 2017 Instrument* Topline Lamination Private Limited Rated Amount (in crore) Rating Action Non-Fund Based Limits 9.00 [ICRA]A4; reaffirmed Fund Based Limits 5.75 reaffirmed; Stable outlook assigned Unallocated Limits 0.25 /A4 reaffirmed; Stable outlook assigned Total *Instrument Details are provided in Annexure-1 Rating Action ICRA has reaffirmed the long-term rating of (pronounced ICRA B) 1 on the Rs crore fund-based facility of Topline Lamination Pvt. Ltd. (TLPL). ICRA has also reaffirmed the short-term rating of [ICRA]A4 (pronounced ICRA A four) on the Rs crore 2 non fund-based bank facilities. It has also reaffirmed the longterm/short-term rating of /A4 on the Rs crore 3 unallocated limits. The outlook on the long-term rating is Stable. Rationale ICRA s rating reaffirmation takes into account healthy growth in operating income, however accompanied by decline in company s operating profitability and increased leverage in capital structure. ICRA s ratings continue to take into account the high competition in the transformer parts industry which limits TLPL s bargaining power and results in subdued margins. The ratings also continue to factor in the vulnerability of the company s profitability to raw material price fluctuations, as well as adverse foreign exchange fluctuations, as the forex transactions are not fully hedged. The ratings further continue to be subdued on account of the company s modest scale of operations, its high gearing and weak coverage indicators. However, the ratings continue to derive comfort from the extensive experience of the promoters and the company s established relationships with its key customers enabling it to procure repeat orders. Going forward, the company s ability to attain a sustained improvement in scale in a profitable manner, while maintaining an optimal capital structure and optimal working capital intensity, will be the key rating sensitivities. Key rating drivers Credit Strengths Established track record of promoters in metal trading, distribution and processing industry Diversified client base with established customer relationship as evident from the repeat orders 1 For complete rating scale and definitions, please refer to ICRA's website or other ICRA Rating Publications lakh = 1 crore = 10 million lakh = 1 crore = 10 million

2 Credit Weakness Weak financial profile characterized by high gearing, weak debt protection metrics and low cash accruals Working capital-intensive operations mainly on account of stretched receivables Vulnerability of margins to any adverse movements in foreign exchange rates; however, partial hedging mitigates the risk to some extent Exposure to commodity price risk given that the procurement is not always order backed. Competitive and fragmented industry structure continues to exert pressures on the company s revenue growth and profitability. Description of key rating drivers highlighted above: The operational profile of TLPL is weak because of its modest scale of operations, which restricts it s economies of scale and also limits is bargaining power with respect to its customers. In addition, low value additive nature of business also constrains the margins of the company. Although the management has stated that their raw material procurement is mostly order backed, an increase in inventory days exposes the company to risk of a high cost inventory in a fluctuating market conditions. Low-entry barriers in terms of capital expenditure and technical knowhow required has resulted in the presence of a large number of players in the market which further constrains the margins of the company. Furthermore, elongated receivables have led to consistently high working capital requirements over the past few years. The working capital requirement has primarily been funded by bank borrowings, leading to leveraged capital structure. Analytical approach: Not Applicable Links to applicable Criteria Corporate Credit Ratings: A Note on Methodology About the Company: Incorporated in 2004, TLPL is a closely held private limited company; it is operated and managed by the Gupta family. TLPL is the proprietor of T.I. Industries, under whose name the business operations are carried out. The company primarily manufactures transformer lamination cores and strips using C.R.G.O. (Cold-rolled grain oriented) steel. TLPL recorded a net profit of Rs crore on an operating income of Rs crore in FY2016 as against a net profit of Rs crore on an operating income of Rs crore in the previous year. 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 Type Current Rating Rated amount (Rs. Crores) Month-year & Rating Chronology of Rating History for the past 3 years Month- year & Rating in FY2016 January 2017 December Cash Credit Long Term SLC Long Term Letter of Credit Short Term Unallocated Long Term/Short Term 0.25 (Stable) (Stable) [ICRA]A4 (Stable)/A4 [ICRA]A4 /A4 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 Name of the instrument Date of issuance Annexure-1 Details of Instrument Coupon rate Maturity Date Size of the issue (Rs. Cr) Current Rating and Outlook Cash Credit (Stable) SLC (Stable) Letter of Credit [ICRA]A4 Long Term/ Short Term Unallocated (Stable)/A4 Source: TLPL s sanction letter. Name and Contact Details of the Rating Analyst(s): Sabyasachi Majumdar sabyasachi@icraindia.com Manish Ballabh manish.ballabh@icraindia.com Gaurav Singla gaurav.singla@icraindia.com Rashmi Agarwal rashmi.agarwal@icraindia.com Name and Contact Details of Relationship Contacts: Jayanta Chatterjee jayantac@icraindia.com 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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