Brickwork Ratings India Pvt Ltd. : 23 January 2014 Brickwork Ratings assigns ‘BWR B’ for the Fund Based Bank Credit Facilities aggregating Rs. 5.95 Cr of Navin Cotex

Rating Rationale

Brickwork Ratings assigns 'BWR B' for the Fund Based Bank Credit Facilities aggregating ₹ 5.95 Cr of Navin Cotex

Brickwork Ratings (BWR) has assigned the following Rating1 for the Bank Credit Facilities of
Navin Cotex (or the 'Firm').

Facility	Limit (₹ Cr)	Tenure	Rating
Cash Credit	5.00	Long Term	BWR B (Outlook: Stable)
Term Loan*	0.95	Long Term	BWR B (Outlook: Stable)
Total	5.95	(INR Five Crores and Ninety Five Lakhs only)

*Term Loan outstanding as on January 17 2014

The Rating has, inter alia, factored the long experience of the partners in the cotton ginning industry, demand for cotton in the national and international market, and the locational advantage the Firm enjoys as it is located in the largest cotton growing belt in India. The Rating is however constrained by limited track record of the Firm, volatility in raw material prices (MSP), low net worth, thin profitability margins, and weak debt protection metrics.

Background:

Navin Cotex is a partnership firm which was established in September 2010. It is a family concern with 4 partners Sri Banshilal Tayal, Smt. Usha Tayal, Sri Rahul Tayal and Smt. Puja Tayal. Sri Rahul Tayal is the managing partner of the Firm. The office is located at Barwani, Madhya Pradesh and the Cotton Ginning Factory is located in Sillod, Aurangabad, Maharashtra
The firm is involved in ginning of cotton, a process which separates cotton seeds from the cotton lint. The lint is then pressed and packed into bales and sold to spinning mills, and the cotton seeds are sold to the oil millers. The Firm is also involved in trading of Cotton Lint and seeds, which accounts for around 20% of the revenue. The installed capacity is 200 bales/day. Around
150-200 bales of cotton is ginned per day. The Firm deals with 2 varieties of cotton, DCH and
MECH 1 type which are procured from the Sillod Mandi. Sales to exporters account for 25% of the sales and, interstate and intrastate sales account for 25% and 50% respectively.

1 Please refer to www.brickworkratings.comfor definition of the Rating

www.brickworkratings.com 1 23 Jan 2014

Financial Performance:

During FY13, the net revenue from operations increased by 153.15% from ₹ 16.01 Cr. in FY12 to
₹ 40.53 Cr. in FY13. The net profit margin has declined from 0.29% in FY12 to 0.13% in FY13. The debt-equity ratio stands at 1.98 times as on 31st March, 2013. Total Borrowings stood at

₹ 4.27 Cr. and the Tangible Net Worth stood at ₹ 2.16 Cr in FY13.

Rating Outlook:

The Firm's performance over the next year is expected to be stable. The company's ability to
improve its profitability margins, to manage input costs and achieve an optimal capital structure by infusion of capital, would be the key rating sensitivities going forward.

Analyst Contact	Relationship Contact
[e-mail]	[e-mail]
Phone	Media Contact
1-860-425-2742	[e-mail]

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 e xamine 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 l iable 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 23 Jan 2014