RATING RATIONALE Ballavpur Paper Mfg. Limited (BPML) 10Sep2019

Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of ₹. 42.04Crores of Ballavpur Paper Mfg. Limited (BPML or the “Company”)

Particulars

Amount (₹ Crs) Rating*

Facility Tenure Previous Previous Present Present (Oct.,2018)

Fund based 32.67 28.75 Long Term BWR D BWR D (Pronounced as (Pronounced as BWR D) BWR D) (Reaffirmed) 13.29 13.29 Short Term Non Fund Based

Total 45.96 42.04 (INR Forty Two Crores and Four Lakhs Only)

*Please refer to BWR website www.brickworkratings.com/ for definition of the ratings ​ ​ Complete details of Bank facilities is provided in Annexure-I

RATING ACTION:

Brickwork Ratings have Reaffirmed the ratings of BWR D to the bank loan liabilities of Rs.42.04Crs of Ballavpur Paper Mfg. Limited. The rating reaffirmation is based on the continued delays in servicing of debt obligations with one of the lenders and the decline in BPML’s total operating income in FY19(Provisional) due to temporary shutdown of facilities for modifications to the plant as per order by the Pollution Control Board, Kolkata.

KEY RATING DRIVERS: BPML has been consistently delaying its repayments against Term Loans with ICICI bank since May 2018. However, the Company is reportedly functioning well and the feedback from the other bankers is satisfactory. The repayments with all other bankers is regular.

ANALYTICAL APPROACH and APPLICABLE RATING CRITERIA For arriving at its ratings, BWR has considered the standalone performance of Ballavpur Paper Mfg. Ltd. BWR has applied its rating methodology as detailed in the Rating Criteria detailed below (hyperlinks provided at the end of this rationale).

1 RATING SENSITIVITIES Going forward, the Company’s ability to timely service its debt repayments, improve profitability and improve its liquidity position would remain the key rating sensitivities.

Positive: The ratings may be upgraded if BPML manages to report adequate net profitability ​ ​ that will result in improved liquidity and help timely servicing of its debt obligations on its own strength.

LIQUIDITY POSITION: STRETCHED BPML has reported stretched liquidity in FY18 with net cash accruals to total debt ratio of 0.11x due to high net losses during the year. Liquidity improved marginally as per FY19(Provisional), with reducing net losses resulting in net cash accruals to total debt ratio of 0.14x. During FY19, the average utilisation of bank limits is at 85%.

Company Financial Performance Total operating income was down 17% y-o-y to Rs.117.76Crs in FY19 (Provisional) in contrast to a 6% rise in operating Income in FY18 driven by improved sales realisations. Sales realisations continued to improve in FY19(Provisional) that helped a 143 basis points increase in operating margins during the year. A sharper rise in raw material costs had led to a reduction in operating margins in FY18. Higher fixed costs resulted in net losses in FY18 and FY19(Provisional). Net Worth is at Rs.42.04 crs as on March 31, 2018.

Key Financial Indicators (Rs. in Crs) ​ Key Parameters Units 2017 2018 Result Type Aud. Aud. Operating Revenue Rs. in Crs 133.85 141.88

EBITDA Rs. in Crs 10.87 6.79 PAT Rs. in Crs 3.77 (4.26) Tangible Net worth Rs. in Crs 46.41 42.14

Total Debt/Tangible Net worth Times 0.83 0.82

Current Ratio Times 1.01 1.00

About the Company Incorporated in August 2006, Ballavpur Paper Mfg. Ltd. (BPML) is into manufacturing of Kraft paper using waste paper with an installed capacity of 39600 MT per annum. Kraft paper is primarily used in making corrugated boxes used in industrial packaging. Production was more

2 than 110% of its capacity in the last three years. The manufacturing unit is located on 17 acres of land in the outskirts of , . The Company has a coal-based captive power plant of 3.5 MW.

Status of non-cooperation with previous CRA Crisil, vide its press release dated October 11,2018 has maintained “Issuer Not Cooperating” Crisil D ratings on the bank loans of Ballavpur Paper Mfg. Ltd.. The CRA had migrated the ratings to Issuer Not Cooperating category in view of its inability to carry out a review of the ratings due to non submission of requisite information by the company on August 07, 2018.

Rating History

S.No Facility Current Rating Rating History

Type Amount Rating 03,Oct.,2018 20, Mar, 2017 2016 (₹ Crs) BWR BB+ Not Fund Long 28.75 BWR D BWR D (BWR Double B Plus) rate Based Term (Pronounce (Pronounced (Outlook: Stable) d d as BWR D) as BWR D) Not Non Fund Short (Reaffirmed (Downgraded BWR A4+ 13.29 rate Based Term ) ) (BWR A Four Plus) d

Total 42.04 (₹Forty Two Crores and Four Lakhs Only)

Hyperlink/Reference to applicable Criteria

● General Criteria

● Approach to Financial Ratios

● Manufacturing Sector

● Short Term Debt

3 Analytical Contacts Investor Contacts

Vidya Shankar Senior Director - Ratings B :+91 80 4040 9940 Satish Nair [email protected] Director - Global Market Development & Investor Relations M : +91 7738875550 Madhu Sonthalia S B : +91 22 6745 6666 Ratings Analyst [email protected] D : +91 90739 18942 B :+91 80 4040 9940 [email protected] 1-860-425-2742

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About Brickwork Ratings

Brickwork Ratings (BWR), a SEBI registered Credit Rating Agency, accredited by RBI and empaneled by NSIC, offers Bank Loan, NCD, Commercial Paper, MSME ratings and grading services. NABARD has empaneled Brickwork for MFI and NGO grading. BWR is accredited by IREDA & the Ministry of New and Renewable Energy (MNRE), Government of . Brickwork Ratings has Canara Bank, a leading public sector bank, as its promoter and strategic partner. BWR has its corporate office in Bengaluru and a country-wide presence with its offices in Ahmedabad, Chandigarh, Chennai, Hyderabad, Kolkata, Mumbai and New Delhi along with representatives in 150+ locations.

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 examine 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 liable 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

4 Annexure-I (₹ Crores)

Name of the Bank Facilities Tenure Previous Present Limits Limits

State Bank of India Cash Credit Long 4.00 4.00 Term Standby Line of Credit - -

Term Loans 2.85 2.11

Letter of Credit Short 8.00 8.00 Term Bank Guarantee -- --

Forward Contract 0.24 0.24

Axis Bank Cash Credit Long 7.25 7.25 Term Term Loan -- --

Letter of Credit 4.75 4.75 Short Bank Guarantee Term (0.50) (0.50) (as a sublimit of Cash Credit)

Forward Contract 0.30 0.30

ICICI Bank Term Loan Long 18.57 15.39 Term

Total(₹ Forty Two Crores and Four Lakhs Only) 45.96 42.04

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