Press Release January 30, 2025 ACER INDIA PRIVATE LIMITED Rating Assigned and Reaffirmed

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
Bank Loan Ratings	836.40	ACUITE A- | Stable | Reaffirmed	-
Bank Loan Ratings	70.00	-	ACUITE A1 | Assigned
Bank Loan Ratings	175.00	-	ACUITE A1 | Reaffirmed
Total Outstanding	1081.40	-	-
Total Withdrawn	0.00	-	-

Rating Rationale

­Acuite has reaffirmed long term rating of 'ACUITE A-' (read as ACUITE A minus) on the Rs. 836.40 Cr. bank facilities and short term rating of 'ACUITE A1' (read as ACUITE A one) on the Rs. 175 Cr. bank facilities of Acer India Private Limited (AIPL). The Outlook is 'Stable'. Acuité has further assigned the short-term rating of 'ACUITE A1' (read as ACUITE A one) on the Rs.70 Cr. bank facilities of Acer India Private Limited.  Rationale for rating The rating takes into cognizance experienced management and strong parentage of the group company Acer Incorporated Taiwan, healthy revenues, healthy financial risk profile, adequate liquidity position; however these strengths are partly offset by intensive working capital , thin operating profitability margins and risks associated withe the contingent liabilities.

About the Company

­Karnataka based, Acer India Private Limited (AIPL), incorporated in 1999, the Company is a wholly owned subsidiary of Acer Incorporated Taiwan. The Company is into trading and manufacturing of computer systems and peripherals. It is a global major in hardware and electronics such as Desktop, Laptops, Notebook, Projectors, Monitor, Server, Tablet, and others. Mr Harish Kumar Kohli, managing director along with non-executive directors of Acer Incorporated Taiwan namely Mr. Hou Chih Yuan and Ms Chen Yu Ling are the present directors of the company.

Unsupported Rating

ACUITE BBB/Stable/A2

Analytical Approach

­Acuité has taken a standalone view of the business and financial risk profile of Acer India Private Limited (AIPL) to arrive at the rating. While arriving at the rating of AIPL, Acuité has taken into account a strong level of support from the Acer group given that Acer Group has a significant stake in AIPL, corporate guarantee provided by Acer Incorporated Taiwan on the bank facilities of AIPL.

Key Rating Drivers

Strengths

­Experienced management and strong parentage of Acer Incorporated Taiwan The company is backed by Mr. Harish Kumar Kohli, managing director along with non-executive directors of Acer Inc. Taiwan namely Mr. Hou Chih Yuan, and Ms. Chen Yu Ling. AIPL, a wholly owned subsidiary of Acer Inc. Taiwan, global major in personal computer/notebook market with strong brand presence in key geographies derives significant support from its parent in terms of the brand name, marketing globally, availing flexible credit period. Moreover, the corporate guarantees extended to AIPL by Acer Inc., Taiwan. Acuite believes that the experience management and strong parentage of Acer Inc Taiwan will leverage the business and will continue to benefit the company going forward. Healthy Revenues of the company The revenues of the company have increased to Rs. 4996.12 Cr. as on FY2024 as compared to Rs. 4089.84 Cr. due to increase in the quantity sold of the products and higher realisation per unit. Additionally, the company received higher amounts of Government orders and higher sales through E-Commerce majorly during festive seasons and the Acer group has gained market share and have risen from 6th highest to 4th highest PC/ notebook brand worldwide. Healthy financial profile The financial risk profile of the company is healthy marked by comfortable net worth, moderate gearing and comfortable debt protection metrics. The tangible net worth stood at Rs.247.34 Cr. as on March 31, 2024 as compared to Rs. 179.24 Cr. as on March 31,2023 due to accretion of reserves. AIPL remains debt free and its credit facilities are in the form of bank guarantees, which are used to provide earnest money deposits and performance guarantees about 7-10% for contract orders. Gearing stood at 0.04 times as on March 31, 2024. The interest coverage ratio stood at 23.40 times as on March 31, 2024 compared to 21.72 times as on March 31, 2023. The debt service coverage ratio stood stable at 17.84 times as on March 31, 2024 as compared to 17.03 times as on March 31, 2023. The TOL/TNW stood at 9.34 times as on March 31, 2024 compared to 8.54 times as on March 31, 2023 largely due to credit extension by Acer Inc. (Taiwan). Acuite believes that the company’s financial risk profile will remain healthy in medium term backed by steady cash accruals.

Weaknesses

­Thin operating profitability margins The operating margins although thin have increased to 0.92 percent in FY 2024 as compared to 0.71 percent as on FY 2023 on account of trading nature of its business and limited pricing flexibility owing to the intense competition in the industry. In addition to it, any obsolete models are sold at a discount in the market which at times lead to lower margins. Acuite believes that the margins of the company is expected to remain at similar low levels over the medium term.  Intensive working capital management The operations of the company have an intensive working capital requirement as reflected from Gross Current Assets of 183 days as on March 31, 2024 compared to 147 days as on March 31, 2023. The inventory days stood at 64 days as on March 31, 2024 as compared to 58 days as on March 31, 2023. The debtor days stood at 84 days as on March 31, 2024 compared to 40 days as on March 31, 2023. The creditor days stood at 155 days as on March 31, 2024 compared to 125 days as on March 31,2023. Acuite believes that working capital requirements are expected to remain intensive due to the elongated collection mechanism policy of the company over the medium term. Risks associated with contingent liabilities As of March 2024, AIPL reported contingent liabilities of Rs. 626.62 crore in income tax demands and Rs. 225.23 crore in indirect tax demands related to multiple assessment years between 2011 and 2018 based on transfer pricing. The company had received a favourable order in custom matters and value added tax for some of the disputed demands. The company has also received favourable orders for income tax matters at Income Tax  Appellite Tribunal (ITAT). Nonetheless, any adverse rulings in these ongoing legal cases can have an adverse impact on AIPL’s financial profile.

Rating Sensitivities

­­Movement in revenues and operating profitability margins ­Working capital cycle Crystallization of contingent liabilities

Liquidity Position

Adequate

­The liquidity is adequate marked by steady net cash accruals of Rs. 69.29 Cr. as on March 31, 2024 as compared to Rs. 28.92 Cr. as on March 31, 2023. The cash and bank balances stood at Rs. 113.76 Cr. as on March 31,2024 as compared to Rs. 184.18 Cr. as on March 31, 2023. The current ratio stood at 1.07 times as on March 31, 2024 from the last two years. The non fund based utilization is 38.94 percent ended 12 months, September 2024. Acuité believes that going forward the liquidity position of the company will remain adequate in the near to medium term in the absence of any capex plans and large net cash accruals against absence of any debt repayment obligation.

Outlook: Stable

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Other Factors affecting Rating

­None

Key Financials

Particulars	Unit	FY 24 (Actual)	FY 23 (Actual)
Operating Income	Rs. Cr.	4996.12	4089.84
PAT	Rs. Cr.	68.09	27.93
PAT Margin	(%)	1.36	0.68
Total Debt/Tangible Net Worth	Times	0.04	0.00
PBDIT/Interest	Times	23.40	21.72

Status of non-cooperation with previous CRA (if applicable)

­Not Applicable

Any other information

­None

Applicable Criteria

• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm • Service Sector: https://www.acuite.in/view-rating-criteria-50.htm • Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm • Group And Parent Support: https://www.acuite.in/view-rating-criteria-47.htm

Note on complexity levels of the rated instrument

­In order to inform the investors about complexity of instruments, Acuité has categorized such instruments in three levels: Simple, Complex and Highly Complex. Acuite’s categorisation of the instruments across the three categories is based on factors like variability of the returns to the investors, uncertainty in cash flow patterns, number of counterparties and general understanding of the instrument by the market. It has to be understood that complexity is different from credit risk and even an instrument categorized as 'Simple' can carry high levels of risk. For more details, please refer Rating Criteria “Complexity Level Of Financial Instruments” on www.acuite.in.

Rating History

Date Name of Instruments/Facilities Term Amount (Rs. Cr) Rating/Outlook 12 Dec 2024 Bank Guarantee (BLR) Long Term 85.00 ACUITE A- | Stable (Assigned) Bank Guarantee (BLR) Long Term 50.00 ACUITE A- | Stable (Assigned) Bank Guarantee (BLR) Long Term 25.00 ACUITE A- | Stable (Assigned) Bank Guarantee (BLR) Long Term 176.40 ACUITE A- | Stable (Assigned) Bank Guarantee (BLR) Long Term 25.00 ACUITE A- | Stable (Assigned) Bank Guarantee (BLR) Long Term 30.00 ACUITE A- | Stable (Assigned) Bank Guarantee (BLR) Long Term 20.00 ACUITE A- | Stable (Assigned) Bank Guarantee (BLR) Long Term 95.00 ACUITE A- | Stable (Assigned) Bank Guarantee (BLR) Long Term 180.00 ACUITE A- | Stable (Assigned) Bank Guarantee (BLR) Long Term 150.00 ACUITE A- | Stable (Assigned) Bank Guarantee (BLR) Short Term 30.00 ACUITE A1 (Assigned) Bank Guarantee (BLR) Short Term 50.00 ACUITE A1 (Assigned) Bank Guarantee (BLR) Short Term 20.00 ACUITE A1 (Assigned) Bank Guarantee (BLR) Short Term 5.00 ACUITE A1 (Assigned) Bank Guarantee (BLR) Short Term 70.00 ACUITE A1 (Assigned)

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Annexure - Details of instruments rated

Lender’s Name ISIN Facilities Date Of Issuance Coupon Rate Maturity Date Quantum (Rs. Cr.) Complexity Level Rating Yes Bank Ltd Not avl. / Not appl. Bank Guarantee (BLR) Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 20.00 Simple ACUITE A1 | Reaffirmed ICICI Bank Ltd Not avl. / Not appl. Bank Guarantee (BLR) Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 85.00 Simple ACUITE A- | Stable | Reaffirmed Axis Bank Not avl. / Not appl. Bank Guarantee (BLR) Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 50.00 Simple ACUITE A- | Stable | Reaffirmed Standard Chartered Bank Not avl. / Not appl. Bank Guarantee (BLR) Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 5.00 Simple ACUITE A1 | Reaffirmed HDFC Bank Ltd Not avl. / Not appl. Bank Guarantee (BLR) Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 25.00 Simple ACUITE A- | Stable | Reaffirmed Australia and New Zealand Banking Group Ltd Not avl. / Not appl. Bank Guarantee (BLR) Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 70.00 Simple ACUITE A1 | Reaffirmed CITI Bank Not avl. / Not appl. Bank Guarantee (BLR) Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 176.40 Simple ACUITE A- | Stable | Reaffirmed HSBC Not avl. / Not appl. Bank Guarantee (BLR) Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 50.00 Simple ACUITE A1 | Reaffirmed Kotak Mahindra Bank Not avl. / Not appl. Bank Guarantee (BLR) Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 25.00 Simple ACUITE A- | Stable | Reaffirmed Yes Bank Ltd Not avl. / Not appl. Bank Guarantee (BLR) Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 30.00 Simple ACUITE A- | Stable | Reaffirmed DBS Bank Ltd Not avl. / Not appl. Bank Guarantee (BLR) Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 20.00 Simple ACUITE A- | Stable | Reaffirmed Standard Chartered Bank Not avl. / Not appl. Bank Guarantee (BLR) Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 95.00 Simple ACUITE A- | Stable | Reaffirmed Australia and New Zealand Banking Group Ltd Not avl. / Not appl. Bank Guarantee (BLR) Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 180.00 Simple ACUITE A- | Stable | Reaffirmed HSBC Not avl. / Not appl. Bank Guarantee (BLR) Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 150.00 Simple ACUITE A- | Stable | Reaffirmed DBS Bank Ltd Not avl. / Not appl. Bank Guarantee (BLR) Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 30.00 Simple ACUITE A1 | Reaffirmed DBS Bank Ltd Not avl. / Not appl. Channel/Dealer/Vendor Financing Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 70.00 Simple ACUITE A1 | Assigned

*Annexure 2 - List of Entities (applicable for Consolidation or Parent / Group / Govt. Support)

­ Sr No. Company Name 1 Acer India Private Limited 2 Acer Incorporated Taiwan

Contacts

Mohit Jain Senior Vice President - Rating Operations Vedika Lahoti Associate Analyst - Rating Operations	Contact details exclusively for investors and lenders Mob: +91 8591310146 Email ID: analyticalsupport@acuite.in

About Acuité Ratings & Research

Acuité is a full-service Credit Rating Agency registered with the Securities & Exchange Board of India (SEBI). The company received RBI Accreditation as an External Credit Assessment Institution (ECAI) for Bank Loan Ratings under BASEL-II norms in the year 2012. Acuité has assigned ratings to various securities, debt instruments and bank facilities of entities spread across the country and across a wide cross section of industries. It has its Registered and Head Office in Kanjurmarg, Mumbai. Disclaimer: An Acuité rating does not constitute an audit of the rated entity and should not be treated as a recommendation or opinion that is intended to substitute for a financial adviser's or investor's independent assessment of whether to buy, sell or hold any security. Ratings assigned by Acuité are based on the data and information provided by the issuer and obtained from other reliable sources. Although reasonable care has been taken to ensure that the data and information is true, Acuité, in particular, makes no representation or warranty, expressed or implied with respect to the adequacy, accuracy or completeness of the information relied upon. Acuité is not responsible for any errors or omissions and especially states that it has no financial liability whatsoever for any direct, indirect or consequential loss of any kind, arising from the use of its ratings. Ratings assigned by Acuité are subject to a process of surveillance which may lead to a revision in ratings as and when the circumstances so warrant. Please visit our website (www.acuite.in) for the latest information on any instrument rated by Acuité. Please visit https://www.acuite.in/faqs.htm to refer FAQs on Credit Rating. Note: None of the Directors on the Board of Acuité Ratings & Research Limited are members of any rating committee and therefore do not participate in discussions regarding the rating of any entity.