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Rating Update
July 23, 2018 | Mumbai

AAA Paper Limited

Update as on July 23, 2018

This update is provided in continuation of the rating rational below.

The key rating sensitivity factors for the rating include:

 Working capital requirements

 Operating income and operating margins
 Capital expenditure (capex) plans and their funding mix
 Fluctuations in product prices

CRISIL Ratings has a policy of keeping its accepted ratings under constant and ongoing monitoring and
review. Accordingly, CRISIL seeks regular updates from companies on the business and financial
performance. CRISIL is, however, awaiting adequate information from AAA Paper Limited (APL) which
will enable us to carry out the rating review. CRISIL will continue provide updates on relevant
developments from time to time on this credit.

CRISIL also identifies information availability risk as a key credit factor in the rating assessment as
outlined in its criteria ‘Information Availability Risk in Credit Ratings’.

About the Company

APL was incorporated in 1995 as Shardaji Duplex Boards Ltd, which was renamed in 2005. The
company, promoted by Mr Pramod Agarwal and his son Mr Apuve Goel. APL trades in waste paper,
which it procures from both the domestic and international markets.

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

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1301.

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 Rating Rationale
July 31, 2017 | Mumbai

AAA Paper Limited

'CRISIL BB-/Stable' assigned to bank debt

Rating Action
Total Bank Loan Facilities Rated Rs.28 Crore
Long Term Rating CRISIL BB-/Stable (Assigned)
1 crore = 10 million
Refer to annexure for Details of Instruments & Bank Facilities

Detailed Rationale
CRISIL has assigned its 'CRISIL BB-/Stable' rating to the long-term bank facility of AAA Paper Limited (APL).

The rating reflects the extensive experience of the promoters in the waste paper trading industry and their funding
support. These strengths are partially offset by modest debt protection metrics and exposure to intense competition
in the paper trading industry.

Analytical Approach
Unsecured loans of Rs 9.3 crore from the promoters as on March 31, 2017, have been treated as nether debt nor
equity. That's because these loans are subordinate to bank debt and are expected to remain in the business over the
medium term.

Key Rating Drivers & Detailed Description

Strengths
* Extensive industry experience of the promoters: The promoters have been in the waste paper trading industry
for over two decades, enabling them to establish a healthy relationship with customers and suppliers.

* Funding support from promoters: Promoters have consistently supported the company by extending unsecured
loans. Support from promoters is expected to continue over the medium term.

Weakness
* Modest debt protection metrics: In fiscal 2017, the interest coverage and net cash accrual to total debt ratios
were 1.24 times and 0.02 time, respectively, in line with fiscal 2016, and are expected to remain modest over the
medium term.

* Exposure to intense competition: The paper trading industry is highly fragmented due to the presence of many
small and medium sized players as the entry barriers are low. This restricts bargaining power, resulting in a low
operating margin of 2.1-2.7% over the three fiscals through 2017.
Outlook: Stable
CRISIL believes APL will benefit over the medium term from the extensive industry experience of its promoters. The
outlook may be revised to 'Positive' if the working capital cycle improves, cash accrual increases, or there is equity
infusion, leading to a better financial risk profile. The outlook may be revised to 'Negative' if the financial risk profile
deteriorates, most likely due to more-than-expected, debt-funded capital expenditure, or an increase in working
capital requirement.

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About the Company
APL was incorporated in 1995 as Shardaji Duplex Boards Ltd, which was renamed in 2005. The company, promoted
by Mr Pramod Agarwal and his son Mr Apuve Goel. APL trades in waste paper, which it procures from both the
domestic and international markets.

On a provisional basis, profit after tax (PAT) was Rs 0.42 crore on net sales of Rs 155 crore for fiscal 2017; PAT was
Rs 0.30 crore on net sales of Rs 172 crore for fiscal 2016.

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.

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Annexure - Details of Instrument(s)
Issue
Name of Date of Coupon Maturity Rating Assigned
ISIN Size
Instrument Allotment Rate (%) Date with Outlook
(Rs. Cr)
NA Cash credit NA NA NA 28 CRISIL BB-/Stable

Annexure - Rating History for last 3 Years

Start of
Current 2017 (History) 2016 2015 2014
2014

Instrument Type Quantum Rating Date Rating Date Rating Date Rating Date Rating Rating

CRISIL
Fund-based Bank LT/S
28 BB- -- -- -- -- --
Facilities T
/Stable
Table reflects instances where rating is changed or freshly assigned. 'No Rating Change' implies that there was no rating change under the release.

Annexure - Details of various bank facilities

Current facilities Previous facilities
Amount Amount
Facility Rating Facility Rating
(Rs.Crore) (Rs.Crore)
CRISIL BB-
Cash Credit 28 -- 0 --
/Stable
Total 28 -- Total 0 --

Links to related criteria

CRISILs Approach to Financial Ratios
CRISILs Bank Loan Ratings - process, scale and default recognition
Criteria for rating trading companies

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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.

4
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
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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.

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: http://www.crisil.com/ratings/highlightedpolicy.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 [email protected], 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.

All rights reserved @ CRISIL