Press Release December 31, 2024 RED FORT PPE INDUSTRIES PRIVATE LIMITED Rating Assigned

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
Bank Loan Ratings	43.38	ACUITE BB | Stable | Assigned	-
Bank Loan Ratings	16.62	-	ACUITE A4+ | Assigned
Total Outstanding	60.00	-	-
Total Withdrawn	0.00	-	-

Rating Rationale

Acuité has assigned its long term rating of ‘ACUITE BB’ (read as ACUITE Double B) and short-term rating of ‘ACUITÉ A4+’ (read as ACUITE A Four plus) on the Rs 60.00 Cr. bank facilities of Red Fort PPE Industries Private Limited (RFPIPL). The outlook is 'Stable'. Rationale for Rating Assigned The rating assigned factors in the experienced management, moderate scale of operations and satisfactory working capital management. However, the rating is constrained by moderate financial risk profile, marked by low net worth and moderate gearing, capex and susceptibility of profitability to raw material prices.

About the Company

RFPIPL, was incorporated in 2019, is based in Mumbai. The company is primarily engaged in the business of manufacture & sale of personal protective equipment & allied products. The directors of the company include Mr. Rajuram Bhaguram Saran & Mr. Chhotu Rajuram.

Unsupported Rating

­­Not Applicable

Analytical Approach

Acuite has considered the standalone business and financial risk profile of RFPIPL to arrive at the rating.

Key Rating Drivers

Strengths

­­Experienced management and moderate scale of operations The company is managed by Mr. Rajuram Bhaguram Saran, Mr. Chhotu Rajuram and a team of experienced personnel. The directors possess over 10 years of experience in this line of business. The longstanding experience of the promoters has helped the company to establish comfortable relationships with key suppliers and customers. It is also evident through the marginally improved scale of operations, with revenue of Rs.30.85 Cr. in FY24 as against Rs.26.38 Cr. in FY23. Furthermore, the company has achieved a revenue of around Rs 16.27 Cr. (Est) till October 2024 and is expected to achieve a revenue of around Rs 38.00 Cr for FY25. Acuite believes that the company is expected to benefit from the experienced management team. Moderate Working Capital Management The working capital operations of the company are moderate in nature marked by GCA of 132 days in FY2024 against 128 days in FY2023. The debtors’ days stood at 36 days as on March 31, 2024, as against 63 days as on March 31,2023. The inventory days for the company stood at 80 days in FY2024 as against 49 days in FY2023. Additionally, creditors’ days stood at 31 days in FY2024, compared to 101 days in the previous year. Furthermore, the reliance on working capital limits remained moderate with utilization at around 42% over the last 2 months ending September 2024. Acuite believes that the working capital operations of the company will continue to remain moderate, however any changes in working capital cycle will remain as a key rating sensitivity.

Weaknesses

­Moderate Financial Risk Profile The financial risk profile of the company is marked moderate on account of low net worth, moderate gearing and debt protection metrics., The net worth of the company stood at Rs.18.01 Cr. as on 31st March 2024 as compared to Rs 11.28 Cr. as on 31st March 2023. Acuite has considered unsecured loans worth Rs. 9.01 crore as on March 31,2024 as quasi equity as the management has undertaken to maintain the amount in the business over the medium term. The gearing of the company stood moderate at 1.20 times as on 31st March 2024 as compared to 0.28 times as on 31st March 2023. Further, debt protection metrics stood moderate with debt service coverage ratio (DSCR) at 5.21 times in FY2024 as compared to 10.04 times in the previous year. The Debt-EBITDA of the company stood at 3.94 times in FY2024 as against 0.61 times in FY2023. The company has initiated a capital expenditure of approximately Rs.42 Cr., primarily financed through term loans. The new unit is anticipated to commence commercial operations from April 2025. This ongoing capital expenditure likely to improve its scale however it would impact the financial risk profile of the company in the near term. Acuité believes that the operating and financial risk profile of the company is expected to remain moderate over the medium term and any adverse impact on the same due to debt funded capex would remain as key rating sensitivity. Susceptibility of profitability to raw material prices The profitability margins of the company remain vulnerable to any fluctuations in the raw material prices. The major raw material for this industry is fabrics and fluctuation in the prices of same may put pressure on profitability levels. The susceptibility of the margins to changes in the raw materials price is inherent in this industry. The EBITDA margin of the company stood at 17.82% in FY2024 as against 19.19% in FY2023.

Rating Sensitivities

Ability to continuously improve its scale of operations while maintaining adequate profitability. Changes in financial risk profile and debt funded capex Working capital management.

Liquidity Position

Adequate

The company's liquidity position is marked as adequate, on account of its moderate net cash accruals of Rs. 4.11 Cr. in FY2024 as against its maturity debt obligations of around Rs. 0.68 Cr. Further, it is expected that the company will generate cash accruals in the range of around Rs. 3.79 – Rs. 6.36 Cr. as against maturing repayment obligations of around Rs.2.52 – Rs.3.32 Cr. over the medium term. However, the working capital management of the company is moderate marked by GCA days of 132 days in FY2024 as against 128 days in FY2023. The current ratio stands at 1.32 times as on 31st March 2024 as against 1.59 times as on 31st March 2023. The average bank limit utilization for the past 2 months ending September 2024 is moderate averaging around 42% percent. Acuite believes that liquidity position of the company will continue to remain adequate with steady cash accruals and buffer available from the moderately utilised working capital limits.

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.	30.85	26.38
PAT	Rs. Cr.	3.60	3.23
PAT Margin	(%)	11.66	12.26
Total Debt/Tangible Net Worth	Times	1.20	0.28
PBDIT/Interest	Times	40.83	21.62

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

­­None

Any other information

­­None

Applicable Criteria

• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm • Manufacturing Entities: https://www.acuite.in/view-rating-criteria-59.htm • Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.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 :

­­Not Applicable

Annexure - Details of instruments rated

Lender’s Name ISIN Facilities Date Of Issuance Coupon Rate Maturity Date Quantum (Rs. Cr.) Complexity Level Rating Saraswat Bank Not avl. / Not appl. Bank Guarantee (BLR) Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 2.00 Simple ACUITE A4+ | Assigned Saraswat Bank Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 2.00 Simple ACUITE BB | Stable | Assigned Saraswat Bank Not avl. / Not appl. Letter of Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 7.62 Simple ACUITE A4+ | Assigned Saraswat Bank Not avl. / Not appl. Letter of Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 2.00 Simple ACUITE A4+ | Assigned Saraswat Bank Not avl. / Not appl. PC/PCFC Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 5.00 Simple ACUITE A4+ | Assigned Not Applicable Not avl. / Not appl. Proposed Term Loan Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 4.36 Simple ACUITE BB | Stable | Assigned Saraswat Bank Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 23 Jan 2030 12.60 Simple ACUITE BB | Stable | Assigned Saraswat Bank Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 30 Sep 2031 11.25 Simple ACUITE BB | Stable | Assigned Saraswat Bank Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 02 Sep 2032 3.50 Simple ACUITE BB | Stable | Assigned Saraswat Bank Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 02 Sep 2032 9.67 Simple ACUITE BB | Stable | Assigned

Contacts

Mohit Jain Senior Vice President - Rating Operations Amay Gupta 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.