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Hi Physix Laboratory Private Limited April 01, 2021 Rating Amount Facilities/Instruments Ratings Rating Action (Rs. crore) CARE BB; Stable; Rating moved to ISSUER Long Term Bank ISSUER NOT COOPERATING* 24.11 NOT COOPERATING Facilities (Double B; Outlook: Stable category ISSUER NOT COOPERATING*) 24.11 Total Bank Facilities (Rs. Twenty-Four Crore and Eleven Lakhs Only) Details of instruments/facilities in Annexure-1

Detailed Rationale & Key Rating Drivers CARE has been seeking information from Hi Physix Laboratory India Private Limited (HPLPL)to monitor the rating vide e- mail communications dated September 25,2020, October 28,2020, December 31,2020, January 04,2021, February 03,2021, February 25,2021, March 26,2021 and numerous phone calls. However, despite our repeated requests the company has not provided the requisite information for monitoring the rating. In line with the extant SEBI guidelines, CARE has reviewed the rating on the basis of the best available information which however, in CARE’s opinion is not sufficient to arrive at a fair rating. The rating on HPLPL bank facilities will now be CARE BB; Stable/CAREA4; ISSUER NOT COOPERATING* Users of this rating (including investors, lenders and the public at large) are hence requested to exercise caution while using the above ratings. The rating assigned to the bank facilities of HPILPL continues to takes into account modest scale of operations with moderate capitalisation, moderate capital structure with moderate debt coverage indicators and stretched liquidity position. The rating is further constrained on account of project stabilization risk associated with the cap-ex undertaken. The above constraints partially outweigh the comfort derived from the experience and qualification of the promoters, healthy profitability margins, long association with reputed clientele, and presence of HPIPL in a niche segment of testing and calibration. Detailed description of the key rating drivers At the time of last rating on March 12,2020 the following were the rating strengths and weaknesses:

Detailed description of the key rating drivers

Key Rating Weaknesses Modest scale of operation with moderate capitalization: The scale of operations of the company as reflected by total operating income (TOI) registered a de-growth by 13.32% and continues to remain modest at Rs.25.06 crore in FY20 as compared to Rs.28.91 crore in FY19. During 11MFY21, ended February 28, 2021, the company has achieved TOI of Rs.22.95 crore. The net-worth base also remained moderate at Rs.16.25 crore as on March 31, 2020. The size of operations remains modest which restricts the financial flexibility of the company in times of industry downturn and deprives it from benefits of scale. Moderate capital structure and debt coverage indicators: The relatively moderate net-worth base of the company as compared to the high debt profile resulted in a moderate capital structure as marked by overall gearing ratio of 1.85x as on March 31, 2020 (as compared to 2.03x as on March 31, 2019). The improvement in the same was mainly on account of the scheduled repayment of loans and accretion of profits to reserves during the year. Moreover, with healthy profitability and moderate gearing levels, the debt coverage indicators though deteriorated continues to remain moderate as reflected by interest coverage ratio of 3.59x and total debt to gross cash accruals of 3.58x as at the end of FY20. Project stabilization risk: HPIPL had completed its construction of building for testing of telecommunication and solar panels and is in process of purchase of machinery for EMI/EFC (Electromagnetic Interface) testing and telecommunication testing equipment. The total cost of the capex is Rs.12.68 crore. HPIPL had incurred Rs.10.50 crore as on March 03, 2020 toward construction and purchase of machinery funded through term loan and internal accruals. The stabilization and commercialization of the said project remains crucial to the overall financial risk profile of the company. Lower than envisaged level of cash flow generation from the debt funded capex will remain as the key rating monitorable.

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Key Rating Strengths Experienced and qualified promoters: HPIPL is promoted by first-generation entrepreneur Mr. Pankaj Rai (Founder Chairman and CEO) having an experience of two decades in the industry through HPIPL, Hi Physix Laboratories (HPL) and Perfect Instrumentation (PI). He is supported by a team of qualified and experienced professionals. Over the years, HPIPL has developed market for its services and established good relations with various customers. Long association with reputed and diversified clientele base With the promoters’ extensive industry experience coupled with marketing effort, the company has been able to establish strong relationship with its customers. The company is associated with reputed customers which are a part of Crompton Greaves Consumer Electricals Limited, Panasonic, Surya Roshni Limited (rated CARE A1+/ CARE A1+ as on February 10,2021), Syska LED Lights Private Limited, Halonix Technologies Private, enterprise Limited (CARE AAA; Stable as on July 28, 2020), Osram Lightings Private Limited, Philips India Limited, Bajaj Electricals Limited, LG Electronics Inida Private Limited, (rated CARE BBB-; Stable/CARE A3 as on Jan 29,2021), , Onida Electronics, Haier, Canadian Solar, TATA power Solar Systems Limited and others. These companies have respectable position in their respective industries. Because of the reputed clientele, the credit risk remains low. In the past also HPIPL has been able to get repeat orders from these clients. Healthy profitability margins: The profitability margins of the company though improved and continues to remain healthy during the year. The PBILDT margin stood at 53.25% in FY20 (as compared to 49.85% in FY19). Further the PAT margin stood at 10.62% in FY20 (as compared to 15.21% in FY19). The decline in PAT margin was mainly on account of increase in interest and finance charges. However, despite the same profitability remains healthy. Presence in niche segment of testing and calibration: HPIPL is one of the few companies that provide complete solar panel testing, photometry testing and complete testing facility for LED products with C type Mirror Goniophotometer. Being one of the leaders to introduce new facilities gives the company competitive advantage over its competitors. HPIPL is accredited by National Accreditation Board for Testing and Calibration Laboratories (NABL)Department of Science & Technology, Government of India. NABL is member of International Laboratory Accreditation Cooperation (ILAC) Asia Pacific Laboratory Accreditation Cooperation (APLAC) which ensures international acceptability of its results. HPIPL laboratory is recognized by Bureau of Indian Standards (BIS)Ministry of Consumer Affairs, Government of India and under its Laboratory Recognition Scheme for Testing (in the areas of electro –technical, optical, thermal and mechanical). HPIPL is accredited for its testing facilities according to IS & IEC 17025:2005 specifications. The company derives majority of its revenues from manufacturing industry, where the demand and industry performance is cyclical in nature, and is dependent on the overall economy. The operating performance of HPIPL is dependent on overall performance of end user industry.

Liquidity Position Liquidity remained stretched marked by tightly matched accruals to repayment obligation and modest cash balance of Rs.0.07 crore as on March 31, 2020. Thus, limiting the financial flexibility of the company. Its capex requirements are modular and expected to be funded using debt which might further impact the liquidity amidst the performance of end user industry. The working capital requirements are met by internal accruals and cash credit facility which is utilized to the extent of 50% for last 12 months ended February 28, 2021.

Analytical approach: Standalone Applicable Criteria Policy in respect of Non-cooperation by issuer Criteria on assigning Outlook to Credit Ratings CARE’s Methodology for Services Sector Companies CARE’s Policy on Default Recognition Financial ratios – Non-Financial Sector

About the Company HPIPL was incorporated on 29 September 2009 and is engaged in the business of providing testing and calibration services mainly to Electrical equipment companies at its facility located at MIDC, Ranjangaon, Pune. The company provides services like testing facilities for electronic testing, photometric testing, electrical testing etc. and calibration facilities like electro technical, optical, thermal, mechanical etc.

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Brief Financials (Rs. crore) FY19 (Audited) FY20 (Audited) Total operating income 28.91 25.06 PBILDT 14.41 13.35 PAT 4.40 2.66 Overall gearing (times) 2.03 1.85 Interest coverage (times) 4.43 3.59

Status of non-cooperation with previous CRA: Not Applicable Any other information: Not Applicable Rating History for last three years: Please refer Annexure-2

Annexure-1: Details of Instruments/Facilities Size of the Name of the Date of Coupon Maturity Rating assigned along with Issue Instrument Issuance Rate Date Rating Outlook (Rs. crore) Fund-based - LT- CARE BB; Stable; ISSUER - - March ,2026 23.11 Term Loan NOT COOPERATING* Fund-based - LT- CARE BB; Stable; ISSUER - - - 1.00 Bank Overdraft NOT COOPERATING* *Issuer did not cooperate; Based on best available information

Annexure-2: Rating History of last three years Current Ratings Rating history Date(s) & Name of the Type Rating Date(s) & Date(s) & Date(s) & Sr. Amount Rating(s) Instrument/Bank Rating(s) Rating(s) Rating(s) No. Outstanding assigned Facilities assigned in assigned in assigned in (Rs. crore) in 2017- 2020-2021 2019-2020 2018-2019 2018 1)CARE BB; CARE BB; Stable 1)CARE BB; Stable; ISSUER Fund-based - LT- (12-Mar-20) Stable 1. LT 23.11 NOT - - Term Loan 2)CARE BB; (10-Jan-19) COOPERATING* Stable

(26-Jul-19) 1)CARE BB; CARE BB; Stable 1)CARE BB; Stable; ISSUER Fund-based - LT- (12-Mar-20) Stable 2. LT 1.00 NOT - - Bank Overdraft 2)CARE BB; (10-Jan-19) COOPERATING* Stable

(26-Jul-19) *Issuer did not cooperate; Based on best available information

Annexure 3: Complexity level of various instruments rated for this Company Sr. Name of the Instrument Complexity Level No. 1. Fund-based - LT-Bank Overdraft Simple 2. Fund-based - LT-Term Loan Simple

Note on complexity levels of the rated instrument: CARE has classified instruments rated by it on the basis of complexity. This classification is available at www.careratings.com. Investors/market intermediaries/regulators or others are welcome to write to [email protected] for any clarifications.

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Contact Us Media Contact Mradul Mishra Contact no. – +91-22-6837 4424 Email ID – [email protected]

Analyst Contact: Name: Prateechee Misra Tel: 020-4000 9000 Email: [email protected]

Relationship Contact Mr. Aakash Jain Contact no. : 020 4000 9090 Email ID: [email protected]

About CARE Ratings: CARE Ratings commenced operations in April 1993 and over two decades, it has established itself as one of the leading credit rating agencies in India. CARE is registered with the Securities and Exchange Board of India (SEBI) and also recognized as an External Credit Assessment Institution (ECAI) by the Reserve Bank of India (RBI). CARE Ratings is proud of its rightful place in the Indian capital market built around investor confidence. CARE Ratings provides the entire spectrum of credit rating that helps the corporates to raise capital for their various requirements and assists the investors to form an informed investment decision based on the credit risk and their own risk-return expectations. Our rating and grading service offerings leverage our domain and analytical expertise backed by the methodologies congruent with the international best practices. Disclaimer CARE’s ratings are opinions on the likelihood of timely payment of the obligations under the rated instrument and are not recommendations to sanction, renew, disburse or recall the concerned bank facilities or to buy, sell or hold any security. CARE’s ratings do not convey suitability or price for the investor. CARE’s ratings do not constitute an audit on the rated entity. CARE has based its ratings/outlooks on information obtained from sources believed by it to be accurate and reliable. CARE does not, however, guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. Most entities whose bank facilities/instruments are rated by CARE have paid a credit rating fee, based on the amount and type of bank facilities/instruments. CARE or its subsidiaries/associates may also have other commercial transactions with the entity. In case of partnership/proprietary concerns, the rating /outlook assigned by CARE is, inter-alia, based on the capital deployed by the partners/proprietor and the financial strength of the firm at present. The rating/outlook may undergo change in case of withdrawal of capital or the unsecured loans brought in by the partners/proprietor in addition to the financial performance and other relevant factors. CARE is not responsible for any errors and states that it has no financial liability whatsoever to the users of CARE’s rating. Our ratings do not factor in any rating related trigger clauses as per the terms of the facility/instrument, which may involve acceleration of payments in case of rating downgrades. However, if any such clauses are introduced and if triggered, the ratings may see volatility and sharp downgrades.

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