Press Release July 30, 2024 STERLING AND WILSON PRIVATE LIMITED Rating Assigned

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
Bank Loan Ratings	1653.61	ACUITE BB | Stable | Assigned	-
Bank Loan Ratings	476.39	-	ACUITE A4+ | Assigned
Total Outstanding	2130.00	-	-

Rating Rationale

­Acuite has assigned its long-term rating of ‘ACUITÉ BB' (read as ACUITE double B) and short-term rating of ‘ACUITÉ A4+’ (read as ACUITE A four plus) on the Rs. 2130.00 Cr. bank facilities of Sterling and Wilson Private Limited (SWPL). The outlook is ‘Stable’.  Rationale for Rating The rating assigned takes into account strong parentage of SWPL along with its improved financial risk profile. The company is a part of Shapoorji Pallonji Group and is engaged in multiple business verticals namely MEP services, substation and transmission lines, operation & maintenance services, hybrid energy division etc. The company in FY2024 initiated divesting its data centre division and as a part of this transaction received sale proceeds of Rs. 700 Cr in FY2024. The proceeds were utilised towards repayment of its term loan obligations in March 2024 and as on date, no major term loan is outstanding in the books of SWPL. The overall gearing improved to 0.64 times as on March 31, 2024 (Prov.) as against 1.07 times as on March 31, 2023 and 1.01 times as on March 31, 2022. The gearing is estimated to remain below unity over the near to medium term. The rating however, is constrained by weak operating performance of SWPL. The company in FY2024 (Prov.) generated a revenue of Rs. 1791.43 Cr. as against Rs.1384.06 Cr. in FY23 and Rs. 2198.41 Cr. in FY22. The absolute EBITDA of the company stood at Rs. -116.15 Cr. in FY24(Prov.) compared against Rs. -443.80 Cr. in FY23 and Rs. -240.20 Cr. in FY22. Also, the EBITDA margin stood at -6.48% in FY24 (Prov.) as compared to -32.07% in FY23 and -10.93% in FY22. The operating performance in FY2024 has recorded a significant improvement vis-à-vis FY2023, though it continued to generate losses at operating level. The improvement is primarily driven by various cost efficiency measures undertaken by the company across its division, reduction in employee costs, downsizing of regional offices to reduce overhead costs etc. Also the company aims to bid for higher ticket size and higher margin orders which would aid it improve on its margins further. Acuite estimates the operating performance of the company to improve further in near to medium term. The rating also takes note of significant exposure of the company in its loss-making subsidiary entities. However, the planned write off and estimated collection of receivables from these entities in the near to medium term is expected to improve the liquidity position of SWPL. Going forward, the company’s ability to turnaround its operating performance while maintaining its financial risk profile and liquidity position will remain a key rating monitorable.

About the Company

­Incorporated in 1974, Mumbai based Sterling and Wilson Private Limited is an electromechanical engineering company providing MEP services. Other business verticals of the Company include substation and transmission lines, data center solutions, operation & maintenance services, and hybrid energy division.  Currently Mr. Khurshed Yazdi Daruvala, Mr. Zarine Yazdi Daruvala, Mr. Vinod Bhandawat, Mr. Umesh Narain Khanna and Mr. Vasanth Ramesan are the directors of the company. The company is promoted by Shapoorji Pallonji and Company Private Limited (66.33%), Mr. Khurshed Daruvala (33.18%) and other (0.49%).

Unsupported Rating

­Not Applicable

Analytical Approach

­Acuite has considered the standalone business and financial risk profile of Sterling and Wilson Private Limited (SWPL) to arrive at the rating.

Key Rating Drivers

Strengths

­Strong Parentage, long track record of operations and diverse product profile Sterling and Wilson Private Limited (SWPL) is a part of Shapoorji Pallonji Group and is promoted by Shapoorji Pallonji and Company Private Limited (SPCPL) and Mr. Khurshed Daruvala. Established in 1927 as Wilson Electric Works, SWPL was incorporated in 1974. SWPL is an electro-mechanical engineering company providing MEP services. Other business verticals of the Company include substation and transmission lines, data center solutions, operation & maintenance services, and hybrid energy division. SWPL’s diverse portfolio includes high voltage and low voltage electrical systems, HVAC systems, diesel generating sets (DG Sets), solar power generation, structured data cabling, integrated fire alarm system, security systems, etc. The company is under process and is expected to complete its divestment in the data center division in FY2025. Average Financial Risk Profile SWPL’s financial risk profile remains average marked by average debt protection metrics albeit moderate net worth and relatively low gearing. The net worth of the company stood at Rs. 906.86 Cr. as on March 31, 2024(Prov.) compared against Rs.1083.44 Cr. as on March 31, 2023, and Rs. 1409.12 Cr. as on March 31, 2022. The gearing level of the company improve to 0.64x as on March 31, 2024(Prov.) as against 1.07x as on March 31, 2023, and 1.01x as on March 31, 2022. The company has a total debt of Rs. 576.65 Cr. as on March 31, 2024 (Prov.) as against Rs.1159.42 Cr. as on March 31, 2023, and Rs.1417.48 Cr. as on March 31, 2022. SWPL received Rs.700.00 Cr. from selling off their data centre unit and used these proceeds to pay off the debt in FY24. Furthermore, the debt protection matrices of the company improved with interest-coverage-ratio and debt-service- coverage-ratio of 0.20 times and 0.03 times for FY24(Prov.) as against -2.46 times and -2.53 times in FY23 respectively. Also, the debt to EBITDA of the company stood at 18.31x for FY24(Prov.) as against -3.32x for FY23 and 4.78 in FY22.

Weaknesses

­Weak Operating Performance albeit expected improvement in near to medium term The company in FY2024 (Prov.) generated a revenue of Rs. 1791.43 Cr. as against Rs.1384.06 Cr. in FY23 and Rs. 2198.41 Cr. in FY22. The absolute EBITDA of the company stood at Rs. -116.15 Cr. in FY24(Prov.) compared against Rs. -443.80 Cr. in FY23 and Rs. -240.20 Cr. in FY22. Also, the EBITDA margin stood at -6.48% in FY24 (Prov.) as compared to -32.07% in FY23 and 10.93% in FY22. The operating performance in FY2024 has recorded a significant improvement vis-à-vis FY2023, though it continued to generate losses at operating level. The improvement is primarily driven by various cost efficiency measures undertaken by the company across its division, reduction in employee costs, downsizing of regional offices to reduce overhead costs etc. Also, the company aims to bid for higher ticket size and higher margin orders which would aid it to improve on its margins further. Driven by these measures, the operating profitability of the company is estimated to improve in the near to medium term. The company’s total outstanding unexecuted orderbook value as on March, 2024 stood at Rs. 2545.50 Cr, which provides near term revenue visibility. SWPL’s net profit (PAT) stood at Rs. -150.53 Cr. in FY24(Prov.) as against Rs. -559.41 Cr. in FY23 and Rs 121.21 Cr. in FY22. Also, the PAT margin stood at -8.40% in FY24 as against -40.42% in FY23 and 5.51% in FY22. The reduction in FY2024 losses is driven by increased other income. The other income majorly constitutes of interest income on loans to subsidiary and other related parties and write back of provision for bad and doubtful debts. Going forward, the company’s ability to improve on its profitability levels while maintaining its scale of operations will be a key rating monitorable. High exposure towards subsidiary entities The company as on March 31, 2024 (Prov.) had a total exposure of Rs.1582.15 Cr towards its subsidiary entities, which are largely loss making, in the form of loans and advances or investments. This exposure is estimated to be written down by ~Rs.700 Cr in FY2025 and a significant proportion of balance exposure is estimated to be written off/received back by FY2026. Working Capital intensive operations SWPL’s working capital operations continue to be intensive marked by Gross Current Asset days (GCA) of 600 days for FY24(Prov.) as against 918 days for FY23 and 722 days in FY22. While the inventory level stood low over the last three years ended March 31, 2024 (prov.), the receivables days stood at 207 days for FY24(Prov.) as against 295 days for FY23 and 228 days in FY22. The improvement in receivable days is majorly on account of improved collection efficiency from its projects. The creditor days stood at 260 days in FY24 as against 258 and 242 in FY23 and FY22 respectively.

Rating Sensitivities

Improvement in scale of operation and profitability margins while maintaining the capital structure and liquidity position. Elongation of the working capital cycle. Reduction in exposure towards its loss-making subsidiary entities.

Liquidity Position

Stretched

­SWPL has stretched liquidity position marked by insufficient net cash accruals against its maturing debt obligation. The company had a negative net cash accrual of Rs. -132.97 Cr. in FY24(Prov.) as against the maturing debt obligation of Rs. 748.00 Cr. during the same period. SWPL was able to service its debt repayment obligations of Rs. 748.00 Cr. in March 2024 in a timely manner. The gap was funded through sale proceeds of data centre division. The company is expected to generate a net cash accrual of ~Rs. 47 to ~Rs. 135 Cr. over the medium term against the negligible maturing debt obligation during the same period. The company has cash and cash equivalents of Rs. 28.14 Cr. as on 31st March 2024 (Prov.).

Outlook: Stable

­Acuité believes that SWPL will maintain a ‘Stable’ outlook over the medium term owing to its experienced management, long track record of operations and improved financial risk profile. The outlook may be revised to 'Positive' if the company demonstrates substantial and sustained growth in its revenues and profitability from the current levels and reduction in exposure towards its loss making subsidiary entities. Conversely, the outlook may be revised to 'Negative' in case the company registers lower than expected growth in revenues and profitability or deterioration in its working capital management due to further pile up of receivables leading to deterioration in its financial risk profile and liquidity or increase in exposure towards its loss making subsidiaries.

Other Factors affecting Rating

­None

Key Financials

Particulars	Unit	FY 24 (Provisional)	FY 23 (Actual)
Operating Income	Rs. Cr.	1791.43	1384.06
PAT	Rs. Cr.	(150.53)	(559.41)
PAT Margin	(%)	(8.40)	(40.42)
Total Debt/Tangible Net Worth	Times	0.64	1.07
PBDIT/Interest	Times	0.20	(2.46)

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 • Infrastructure Sector: https://www.acuite.in/view-rating-criteria-51.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

Date Name of Instruments/Facilities Term Amount (Rs. Cr) Rating/Outlook 03 May 2021 Commercial Paper Program Short Term 400.00 ACUITE A3 (Downgraded & Withdrawn from ACUITE A1+)

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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 IDBI Bank Ltd. Not avl. / Not appl. Bank Guarantee (BLR) Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 123.00 Simple ACUITE BB | Stable | Assigned DBS Bank Ltd Not avl. / Not appl. Bank Guarantee (BLR) Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 50.00 Simple ACUITE BB | Stable | Assigned ICICI Bank Ltd Not avl. / Not appl. Bank Guarantee (BLR) Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 95.00 Simple ACUITE BB | Stable | Assigned IDFC First Bank Limited Not avl. / Not appl. Bank Guarantee (BLR) Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 52.80 Simple ACUITE BB | Stable | Assigned Indusind Bank Ltd Not avl. / Not appl. Bank Guarantee (BLR) Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 39.00 Simple ACUITE BB | Stable | Assigned Yes Bank Ltd Not avl. / Not appl. Bank Guarantee (BLR) Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 37.57 Simple ACUITE BB | Stable | Assigned Axis Bank Not avl. / Not appl. Bank Guarantee (BLR) Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 15.50 Simple ACUITE BB | Stable | Assigned RBL Bank Not avl. / Not appl. Bank Guarantee (BLR) Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 2.00 Simple ACUITE BB | Stable | Assigned Union Bank of India Not avl. / Not appl. Bank Guarantee (BLR) Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 651.00 Simple ACUITE BB | Stable | Assigned Exim Bank Not avl. / Not appl. Bank Guarantee (BLR) Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 200.00 Simple ACUITE BB | Stable | Assigned State Bank of India Not avl. / Not appl. Bank Guarantee (BLR) Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 126.54 Simple ACUITE BB | Stable | Assigned ICICI Bank Ltd Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 12.00 Simple ACUITE BB | Stable | Assigned IDFC First Bank Limited Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 1.00 Simple ACUITE BB | Stable | Assigned Union Bank of India Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 76.00 Simple ACUITE BB | Stable | Assigned State Bank of India Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 24.00 Simple ACUITE BB | Stable | Assigned IDBI Bank Ltd. Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 6.00 Simple ACUITE BB | Stable | Assigned Yes Bank Ltd Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 0.05 Simple ACUITE BB | Stable | Assigned Axis Bank Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 5.00 Simple ACUITE BB | Stable | Assigned Union Bank of India Not avl. / Not appl. Letter of Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 224.00 Simple ACUITE A4+ | Assigned State Bank of India Not avl. / Not appl. Letter of Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 29.46 Simple ACUITE A4+ | Assigned Not Applicable Not avl. / Not appl. Proposed Long Term Bank Facility Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 116.15 Simple ACUITE BB | Stable | Assigned Not Applicable Not avl. / Not appl. Proposed Short Term Bank Facility Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 153.93 Simple ACUITE A4+ | Assigned DBS Bank Ltd Not avl. / Not appl. Secured Overdraft Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 21.00 Simple ACUITE BB | Stable | Assigned Indusind Bank Ltd Not avl. / Not appl. Working Capital Demand Loan (WCDL) Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 6.00 Simple ACUITE A4+ | Assigned IDBI Bank Ltd. Not avl. / Not appl. Working Capital Demand Loan (WCDL) Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 9.00 Simple ACUITE A4+ | Assigned DBS Bank Ltd Not avl. / Not appl. Working Capital Demand Loan (WCDL) Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 54.00 Simple ACUITE A4+ | Assigned

­*Note: There is a one-way interchangeability from Letter of credit limit of Rs. 224.00 Cr. to Bank Guarantee limit for Union Bank of India. Bank guarantee facility and the letter of credit facility are fully interchangeable for State Bank of India. The Cash credit limit of Rs. 76.00 Cr. from Union Bank of India includes a sub limit of Rs. 46.00 Cr. as working capital demand loan (WCDL). The Cash credit limit of Rs. 12.00 Cr. from ICICI Bank includes a sub limit of Rs. 12.00 Cr. working capital demand loan (WCDL). The working capital demand loan (WCDL) limit of Rs. 6.00 Cr. from IndusInd Bank includes a sub limit of Rs. 2.40 Cr. as Cash credit.

Contacts

Analytical Details	Contact Details
Mohit Jain Senior Vice President - Rating Operations Tel: 022–49294017 mohit.jain@acuite.in Nidhi Gala Associate Analyst - Rating Operations Tel: 022-49294065 nidhi.gala@acuite.in	Contact details exclusively for investors and lenders Mob: +91 8591310146 Email ID: analyticalsupport@acuite.in Tel: 022-49294011 rating.desk@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.