Rating Advisory

March 08, 2022 | Mumbai

Sri Raam Dyeing Factory

Update as on March 08, 2022

This rating advisory is provided in relation to the rating of Sri Raam Dyeing Factory

The key rating sensitivity factors for the rating include:

Upward Factor

• Improvement in the revenue profile, and sustenance EBITDA margin at around 14%.
• Improvement in the working capital requirements.

Downward Factor

• Decline in the revenue profile and EBITDA margin of less than 9%.
• Stretch in the working capital requirements.

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 Sri Raam
Dyeing Factory (SRD) 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 SRD 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 Company

SRD is a proprietorship firm of Mr K S Chinnaiyan and based in Erode, Tamilnadu. SRD is
involved in the dyeing of yarn and fabric. It has installed capacity of 8 tonne per day (TPD) for
yarn dyeing and 7 TPD for fabric dyeing.
About CRISIL Ratings Limited (a subsidiary of CRISIL Limited)

CRISIL Ratings pioneered the concept of credit rating in India in 1987. With a tradition of
independence, analytical rigour and innovation, we set 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 33,000 large and mid-scale corporates and
financial institutions. We have also instituted several innovations in India in the rating business,
including ratings for municipal bonds, partially guaranteed instruments and infrastructure investment
trusts (InvITs).

CRISIL Ratings Limited (‘CRISIL Ratings’) is a wholly owned subsidiary of CRISIL Limited (‘CRISIL’).
CRISIL Ratings is registered in India as a credit rating agency with the Securities and Exchange
Board of India (‘SEBI’).
For more information, visit www.crisilratings.com

About CRISIL Limited

CRISIL is a global analytical company providing ratings, research, and risk and policy advisory
services. We are India's leading ratings agency. We are also the foremost provider of high-end
research to the world's largest banks and leading corporations.

CRISIL is majority owned by S&P Global, Inc, a leading provider of transparent and independent
ratings, benchmarks, analytics and data to the capital and commodity markets worldwide.

For more information, visit www.crisil.com

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This disclaimer is part of and applies to each credit rating report and/or credit rating rationale (‘report’)
that is provided by CRISIL Ratings Limited (‘CRISIL Ratings’). To avoid 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 Ratings providing or
intending to provide any services in jurisdictions where CRISIL Ratings does not have the necessary
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report does not create a client relationship between CRISIL Ratings and the user.

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to use the report. In preparing our report we have not taken into consideration the objectives or
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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 to
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).

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statements of fact or recommendations to purchase, hold or sell any securities/instruments or to make
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without notice, and are only current as of the stated date of their issue. CRISIL Ratings assumes no
obligation to update its opinions following publication in any form or format although CRISIL Ratings
may disseminate its opinions and analysis. The 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
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This report should not be reproduced or redistributed to any other person or in any form without
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CRISIL Limited.

CRISIL Ratings uses the prefix ‘PP-MLD’ for the ratings of principal-protected market-linked
debentures (PPMLD) with effect from November 1, 2011 to comply with the SEBI circular,
"Guidelines for Issue and Listing of Structured Products/Market Linked Debentures". The revision
in rating symbols for PPMLDs should not be construed as a change in the rating of the subject
instrument. For details on CRISIL Ratings' use of 'PP-MLD' please refer to the notes to Rating
scale for Debt Instruments and Structured Finance Instruments at the following link:
www.crisil.com/ratings/credit-rating-scale.html
 Rating Rationale
January 28, 2021 | Mumbai

Sri Raam Dyeing Factory

Ratings migrated to 'CRISIL BB/Stable'

Rating Action
Total Bank Loan Facilities Rated Rs.21.37 Crore
CRISIL BB/Stable (Migrated from 'CRISIL BB/Stable
Long Term Rating&
ISSUER NOT COOPERATING*'*)
& *Issuer did not cooperate; based on best-available information
1 crore = 10 million
Refer to Annexure for Details of Instruments & Bank Facilities

Detailed Rationale
Due to inadequate information, CRISIL Ratings, in line with SEBI guidelines, had migrated the rating of Sri Raam Dyeing
Factory (SRDF) to ‘CRISIL BB/Stable Issuer Not Cooperating'. However, the management has subsequently started sharing
requisite information, necessary for carrying out comprehensive review of the rating. Consequently, CRISIL is migrating the
rating on bank facilities of SRDF to ‘CRISIL BB/Stable’ from ‘CRISIL BB/Stable Issuer Not Cooperating’

The rating reflects extensive industry experience of the promoters and moderate financial profile. These strengths are
partially offset by exposure to intense competition, susceptibility to volatility in raw material prices and its working capital
intensive operations.

Key Rating Drivers & Detailed Description

Strengths:
Extensive industry experience of the partners: The promoter have an experience of over three decades in textile
industry. This has given them an understanding of the dynamics of the market, and enabled them to establish
relationships with suppliers and customers.

Moderate financial profile: SRDF capital structure is moderate marked by lower reliance on external funds yielding low
total outside liabilities to tangible networth (TOL/TNW) of 2.08 times for last three year ending on 31st March 2020.
SRDF debt protection measures have also been at healthy level due to leverage and healthy profitability.

Weaknesses:
Exposure to intense competition and susceptibility to volatility in raw material prices: Competition is intense in
the textile industry due to low entry barriers on account of limited capital and technology requirements and little
differentiation in end products. Moreover, revenue and profitability will remain susceptible to fluctuation in the prices of
raw material.

Working capital intensive operations: Gross current assets were around 150-170 days over the three fiscals ended
March 31, 2020. Its intensive working capital management is reflected in its gross current assets (GCA) of 172 days as
on March 31, 2020. Its large working capital requirements arise from its high debtor and inventory levels.
Liquidity: Adequate
Bank limit utilization was high around 90 percent for the past thirteen months ended November 2020. Cash accrual are
expected to be sufficient against term debt obligation over the medium term. Current ratio are moderate at 1.12 times on
March 31, 2020. Further, the firm has availed the COVID moratorium from the bank.
Outlook Stable
CRISIL believe SRDF will continue to benefit from the extensive experience of its partner, and established relationships with
clients.
Rating Sensitivity factors
Upward Factor
Improvement in the revenue profile, and sustenance EBITDA margin at around 14%.
Improvement in the working capital requirements.

Downward Factor
Decline in the revenue profile and EBITDA margin of less than 9%.
Stretch in the working capital requirements.
About the Company
SRD is a proprietorship firm of Mr K S Chinnaiyan and based in Erode, Tamilnadu. SRD is involved in the dyeing of yarn
and fabric. It has installed capacity of 8 tonne per day (TPD) for yarn dyeing and 7 TPD for fabric dyeing.
Key Financial Indicators
Particulars Unit 2020* 2019
Revenue Rs.Cr 49.02 42.42
Profit After Tax (PAT) Rs.Cr. 1.25 1.07
PAT Margin % 2.5 2.5
Adjusted debt/Adjusted networth Times 1.39 1.22
Interest coverage Times 3.18 2.97
*Provisional
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)

Issue
Name of Date of Coupon Maturity Complexity Rating Assigned with
ISIN Size
Instrument Allotment Rate (%) Date Levels Outlook
(Rs.Cr)
NA Cash Credit NA NA NA 6.5 NA CRISIL BB/Stable
Long Term
NA NA NA Mar-2025 13.2 NA CRISIL BB/Stable
Loan
Proposed
Long Term
NA NA NA NA 1.67 NA CRISIL BB/Stable
Bank Loan
Facility

Annexure - Rating History for last 3 Years

Start of
Current 2021 (History) 2020 2019 2018
2018
Outstanding
Instrument Type Rating Date Rating Date Rating Date Rating Date Rating Rating
Amount
CRISIL BB
Fund Based CRISIL /Stable(Issuer CRISIL CRISIL CRISIL
LT 21.37 -- 28-11-20 08-08-19 24-07-18
Facilities BB/Stable Not BB/Stable BB/Stable BB-/Stable
Cooperating)*
Withdrawn
-- -- -- 20-06-19 (Issuer Not -- --
Cooperating)*
All amounts are in Rs.Cr.
* - Issuer did not cooperate; based on best-available information

Annexure - Details of various bank facilities

 Current facilities Previous facilities
Amount Amount
Facility Rating Facility Rating
(Rs.Crore) (Rs.Crore)
CRISIL BB
CRISIL /Stable(Issuer
Cash Credit 6.5 Cash Credit 6.5
BB/Stable Not
Cooperating)*
CRISIL BB
CRISIL /Stable(Issuer
Long Term Loan 13.2 Long Term Loan 13.2
BB/Stable Not
Cooperating)*
CRISIL BB
Proposed Long Term CRISIL Proposed Long Term /Stable(Issuer
1.67 1.67
Bank Loan Facility BB/Stable Bank Loan Facility Not
Cooperating)*
Total 21.37 - Total 21.37 -

Links to related criteria

CRISILs Approach to Financial Ratios
CRISILs Bank Loan Ratings - process, scale and default recognition
CRISILs Approach to Recognising Default
CRISILs Criteria for rating short term debt
The Rating Process
Understanding CRISILs Ratings and Rating Scales
CRISILs Bank Loan Ratings

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About CRISIL Ratings Limited

CRISIL Ratings pioneered the concept of credit rating in India in 1987. With a tradition of independence, analytical rigour and
innovation, we set 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 33,000 large and mid-scale corporates and financial institutions. We have also instituted
several innovations in India in the rating business, including rating municipal bonds, partially guaranteed instruments and
infrastructure investment trusts (InvITs).

CRISIL Ratings Limited ("CRISIL Ratings") is a wholly-owned subsidiary of CRISIL Limited ("CRISIL"). CRISIL Ratings Limited is
registered in India as a credit rating agency with the Securities and Exchange Board of India ("SEBI").

For more information, visit www.crisil.com/ratings

About CRISIL Limited

CRISIL is a global analytical company providing ratings, research, and risk and policy advisory services. We are India's leading
ratings agency. We are also the foremost provider of high-end research to the world's largest banks and leading corporations.

CRISIL is majority owned by S&P Global Inc., a leading provider of transparent and independent ratings, benchmarks, analytics
and data to the capital and commodity markets worldwide

For more information, visit www.crisil.com

Connect with us: TWITTER | LINKEDIN | YOUTUBE | FACEBOOK

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DISCLAIMER

This disclaimer forms part of and applies to each credit rating report and/or credit rating rationale (each a "Report") that is provided by CRISIL Ratings Limited
(hereinafter referred to as "CRISIL Ratings") . 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 Ratings providing or intending to provide any services in jurisdictions where CRISIL Ratings 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 Ratings 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 Ratings 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 Ratings assumes no obligation to update its opinions following publication in any form or format although CRISIL
Ratings may disseminate its opinions and analysis. Rating by CRISIL Ratings 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 Ratings or its associates may have other commercial transactions
with the company/entity.

Neither CRISIL Ratings nor its affiliates, third party providers, as well as their directors, officers, shareholders, employees or agents (collectively, "CRISIL Ratings
Parties") guarantee the accuracy, completeness or adequacy of the Report, and no CRISIL Ratings 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 RATINGS' 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 Ratings 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 Rating'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 ratings by CRISIL Ratings are available here: www.crisilratings.com.
CRISIL Ratings and its affiliates do not act as a fiduciary. While CRISIL Ratings has obtained information from sources it believes to be reliable, CRISIL Ratings 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 Ratings
has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with each analytical process. CRISIL
Ratings 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

Rating criteria by CRISIL Ratings are generally available without charge to the public on the CRISIL Ratings public web site, www.crisil.com. For latest rating
information on any instrument of any company rated by CRISIL Ratings 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 Ratings.

All rights reserved @ CRISIL Ratings Limited. CRISIL Ratings Limited is a wholly owned subsidiary of CRISIL Limited.

CRISIL Ratings uses the prefix ‘PP-MLD’ for the ratings of principal-protected market-linked debentures (PPMLD) with effect from November 1, 2011 to comply with
the SEBI circular, "Guidelines for Issue and Listing of Structured Products/Market Linked Debentures". The revision in rating symbols for PPMLDs should not be
construed as a change in the rating of the subject instrument. For details on CRISIL Ratiings' use of 'PP-MLD' please refer to the notes to Rating scale for Debt
Instruments and Structured Finance Instruments at the following link: www.crisil.com/ratings/credit-rating-scale.html