C&S Electric Limited April 6, 2018

C&S Electric Limited April 6, 2018 Ratings Facilities Long-term Bank Facilities Term Loan Long-term Bank Facilities Cash Credit Short-Term Bank Facilities Amount 87.01 (enhanced from 18.60) 235 (enhanced from 210) 500 (enhanced from 440) Rating 1 CARE A; Stable (Single A; Outlook: Stable) CARE A; Stable (Single A; Outlook: Stable) CARE A1 (A One) Short-Term Bank Facilities Term Loan 15.00 CARE A1 (A One) Total 837.01 (Rupees Eight Hundred Thirty Seven crore and One lakh only) Details of instruments/facilities in Annexure-1 Rating Action Assigned Detailed Rationale & Key Rating Drivers The ratings for the bank facilities of C&S Electric Limited (CSEL) have been removed from Credit with developing implications on account of completion of amalgamation of CSEL with another promoter group company JVA Trading Private Limited (JVA). The ratings assigned to the bank facilities of CSEL continue to derive strength from the experienced and resourceful promoters, established and long track record of operations, diversified product profile with reputed customer base, comfortable order book position, and moderately comfortable financial risk profile. The ratings are, however, constrained by working capital-intensive nature of operations, increase in debt level and overall gearing on account of amalgamation of CSEL with JVA, susceptibility to fluctuation in commodity prices and funding support to the overseas subsidiaries. Going forward, CSEL s ability to increase its scale of operations while improving profitability and efficient management of working capital requirements shall be key rating sensitivities. Further, any higher-than-anticipated support from CSEL towards its subsidiaries impacting its financial risk profile shall be the key rating sensitivities. Detailed description of the key rating drivers Key Rating Strengths Experienced and resourceful promoters having strong technical capabilities CSEL is promoted by Mr Ravinder Nath Khanna, an IIT Kharagpur graduate and his brother, Mr Ashok Khanna, an IIT Chennai graduate. The founder-promoters of the company have extensive experience of about five decades in the industry; have successfully scaled up the business and diversified into new products. The second generation of the promoters, Mr Rishi Khanna, Mr Anuj Khanna and Mr Aditya Khanna, have been associated with the company for 18 years and manage the overall operations of CSEL. The promoters are supported by a strong professional management team. Established and long track record of operations, diversified product profile and reputed customer base CSEL, with an operational track record of more than five decades, is amongst the top 4 players in the switchgear business segment and a leading player in the busbar business with more than 50% share in Indian market. The company has a diversified and established customer base of several large corporates, leading equipment manufacturers, power generation and distribution companies, EPC contractors, oil and gas and realty companies. The company also exports to more than 85 countries, serving reputed international clients, with exports contributing about 18% of the gross revenue in FY17. Comfortable order book position 1 Complete definition of the ratings assigned are available at www.careratings.com and other CARE publications 1 CARE Ratings Limited

As on February 28, 2018, the company had an order book of Rs.535.33 crore (Rs.515.53 crore as on September 30, 2016). The company has developed strong relationships with its customers over the years who give repeat orders to the company. Further, significant portion of the company s sales is non-order book driven. Moderately comfortable financial risk profile During FY17, the company reported an increase of 3.44% in total income to Rs.1062.44 crore as compared to Rs.1027.13 crore during FY16. However, GCA was lower at Rs.58.75 during FY17 crore as compared to Rs.64.21 crore during FY16 on account of higher raw material prices and increase in interest cost. The overall gearing of 0.67x as on March 31, 2017 was higher than previous year (0.32x as on March 31, 2016) on account of amalgamation of CSEL with JVA, though improved marginally to 0.54x as on February 28, 2018 (provisional). The interest coverage ratio stood comfortable at 3.41x as on March 31, 2017 (3.79x as on March 31, 2016). The company s cash and cash equivalents balance stood healthy at about Rs.126.45 crore as on March 31, 2017 as compared to Rs.64.27 crore as on March 31, 2016. For 11MFY18 (provisional), the company has reported operating income of Rs.965.20 crore and PAT of Rs.17.74 crore. Industry Outlook The electrical equipments sector is likely to witness growth from the industrial and power segments in the long term, however, challenges remain in the near term on account of subdued activity in these segments. Although CSEL has established and diversified product portfolio, due to challenges witnessed in the industry, the ability of the company to grow operating income while improving profitability and efficient management of working capital would remain crucial. Also, improvement in the financial performance of the overseas subsidiaries of the company amidst a challenging global operating environment shall be crucial. Key Rating Weaknesses Working capital-intensive operations The operations of the company are working capital intensive in nature marked by high receivables days. However, the working capital cycle has improved over the years on account of improvement in average collection period. During FY17, the operating cycle of the company reduced to 99 days (116 days in FY16). The average utilization of fund-based working capital limits during 12 months ended February 2018 stood moderate at about 76%. Susceptible to fluctuation in commodity prices Raw material costs constitute about 65-70% of total costs for CSEL with the primary raw materials being copper, steel, silver and brass. Since all of these commodities are linked to global prices, the company is exposed to fluctuation in the same which could impact the profitability; if the company is unable to pass on the same to its customers. Funding support to the overseas subsidiaries During FY17, the company infused additional equity of Rs.11.53 crore in its subsidiary, C&S Electric International BV (CSEI), taking its total investment in CSEI to Rs.78.94 crore as on March 31, 2017 (Rs.67.41 crore as on March 31, 2016). Also, the company has an outstanding standby letter of credit (SBLC) given to CSEI, which stood at Rs.50.41 crore as on March 31, 2017 (Rs.65.27 crore as on March 31, 2016) and unsecured loan of Rs.3.45 crore as on March 31, 2017. Analytical approach: Standalone Applicable Criteria Criteria on assigning Outlook to Credit Ratings CARE s Policy on Default Recognition Criteria for Short Term Instruments Rating Methodology Manufacturing Companies Financial ratios Non-Financial Sector About the Company CSEL, formerly known as Controls & Switchgear Co. Limited, was established as a partnership firm in 1966 by Mr R. N. Khanna. Pursuant to a scheme of arrangement in the year 2008, the group companies, namely, C&S Lighting & Wiring Accessories Pvt. Ltd., C&S Protection & Control Ltd. and the switchgear division of Controls & Switchgear Contractors Ltd were amalgamated with CSEL, and the real estate division of the company was demerged. Also, during FY14, C&S Electric MV Private Limited (formerly known as C&S Efacec MV India Private Limited) was amalgamated with CSEL. CSEL is a leading manufacturer and supplier of electrical equipments and manufactures a wide range of electrical and electronic products such as low-voltage switchgear, power busbars, lighting, wiring accessories and electronic protection relays, which find application in various sectors including power & capital goods, infrastructure, oil & gas and realty. Apart from an established presence in India, the company exports its products to more than 85 countries. The company also offers electrical EPC solutions, where a majority of CSEL s products are supplied. 2 CARE Ratings Limited

Brief Financials FY16 (A) FY17 (A) Total operating income 1027.13 1062.44 PBILDT 97.16 92.21 PAT 39.08 32.56 Overall gearing (times) 0.32 0.67 Interest coverage (times) 3.79 3.41 A: Audited Status of non-cooperation with previous CRA: Not Applicable Any other information: Not Applicable Rating History for last three years: Please refer Annexure-2 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 care@careratings.com for any clarifications. Analyst Contact: Name: Mr Gautam Bafna Tel: 011-4533 3256 Mobile: 09891493443 Email: gautam.bafna@careratings.com About CARE Ratings: **For detailed Rationale Report and subscription information, please contact us at www.careratings.com 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 credit quality and are not recommendations to sanction, renew, disburse or recall the concerned bank facilities or to buy, sell or hold any security. 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. In case of partnership/proprietary concerns, the rating /outlook assigned by CARE is 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. 3 CARE Ratings Limited

Annexure-1: Details of Instruments/Facilities Name of the Instrument Fund-based - LT-Cash Credit Fund-based - LT-Term Loan Non-fund-based - ST- Fund-based - ST-Term loan Date of Issuance Coupon Rate Maturity Date Size of the Issue Rating assigned along with Rating Outlook - - - 235.00 CARE A; Stable - - Dec-2022 87.01 CARE A; Stable - - - 500.00 CARE A1 - - Dec-2018 15.00 CARE A1 Annexure-2: Rating History of last three years Sr. No. Name of the Instrument/Bank Facilities 1. Fund-based - LT-Term Loan 2. Fund-based - LT-Cash Credit Type Current Ratings Amount Rating Outstanding LT 87.01 CARE A; Stable LT 235.00 CARE A; Stable 2018-2019 Rating history 2017-2018 - 1)CARE A (Under Credit with - 1)CARE A (Under Credit with 2016-2017 1)CARE A (21-Nov-16) 2)CARE A- 1)CARE A (21-Nov-16) 2)CARE A- 2015-2016 1)CARE A- (27-Apr-15) 1)CARE A- (27-Apr-15) 3. Non-fund-based - ST- ST 500.00 CARE A1-1)CARE A1 (Under Credit with 1)CARE A1 1)CARE A2+ (21-Nov-16) (27-Apr-15) 2)CARE A2+ 4. Fund-based - ST-Term loan ST 15.00 CARE A1 - - - - 4 CARE Ratings Limited

CONTACT Head Office Mumbai Ms. Meenal Sikchi Mr. Ankur Sachdeva Cell: + 91 98190 09839 Cell: + 91 98196 98985 E-mail: meenal.sikchi@careratings.com E-mail: ankur.sachdeva@careratings.com Ms. Rashmi Narvankar Mr. Saikat Roy Cell: + 91 99675 70636 Cell: + 91 98209 98779 E-mail: rashmi.narvankar@careratings.com E-mail: saikat.roy@careratings.com CARE Ratings Limited (Formerly known as Credit Analysis & Research Ltd.) Corporate Office: 4th Floor, Godrej Coliseum, Somaiya Hospital Road, Off Eastern Express Highway, Sion (East), Mumbai - 400 022 Tel: +91-22-6754 3456 Fax: +91-22-6754 3457 E-mail: care@careratings.com AHMEDABAD Mr. Deepak Prajapati 32, Titanium, Prahaladnagar Corporate Road, Satellite, Ahmedabad - 380 015 Cell: +91-9099028864 Tel: +91-79-4026 5656 E-mail: deepak.prajapati@careratings.com BENGALURU Unit No. 1101-1102, 11th Floor, Prestige Meridian II, No. 30, M.G. Road, Bangalore - 560 001. Cell: +91 98407 54521 Tel: +91-80-4115 0445, 4165 4529 CHANDIGARH Mr. Anand Jha SCF No. 54-55, First Floor, Phase 11, Sector 65, Mohali - 160062 Chandigarh Cell: +91 85111-53511/99251-42264 Tel: +91-0172-490-4000/01 Email: anand.jha@careratings.com JAIPUR Mr. Nikhil Soni 304, Pashupati Akshat Heights, Plot No. D-91, Madho Singh Road, Near Collectorate Circle, Bani Park, Jaipur - 302 016. Cell: +91 95490 33222 Tel: +91-141-402 0213 / 14 E-mail: nikhil.soni@careratings.com KOLKATA Ms. Priti Agarwal 3rd Floor, Prasad Chambers, (Shagun Mall Bldg.) 10A, Shakespeare Sarani, Kolkata - 700 071. Cell: +91-98319 67110 Tel: +91-33- 4018 1600 E-mail: priti.agarwal@careratings.com NEW DELHI Ms. Swati Agrawal 13th Floor, E-1 Block, Videocon Tower, Jhandewalan Extension, New Delhi - 110 055. Cell: +91-98117 45677 Tel: +91-11-4533 3200 E-mail: swati.agrawal@careratings.com CHENNAI Unit No. O-509/C, Spencer Plaza, 5th Floor, No. 769, Anna Salai, Chennai - 600 002. Cell: +91 98407 54521 Tel: +91-44-2849 7812 / 0811 COIMBATORE T-3, 3rd Floor, Manchester Square Puliakulam Road, Coimbatore - 641 037. Tel: +91-422-4332399 / 4502399 PUNE Mr.Pratim Banerjee 9th Floor, Pride Kumar Senate, Plot No. 970, Bhamburda, Senapati Bapat Road, Shivaji Nagar, Pune - 411 015. Cell: +91-98361 07331 Tel: +91-20- 4000 9000 E-mail: pratim.banerjee@careratings.com CIN - L67190MH1993PLC071691 HYDERABAD Mr. Ramesh Bob 401, Ashoka Scintilla, 3-6-502, Himayat Nagar, Hyderabad - 500 029. Cell : + 91 90520 00521 Tel: +91-40-4010 2030 E-mail: ramesh.bob@careratings.com 5 CARE Ratings Limited