Final Company Rating Report

Model Name : Company Code : Company Name : Industry Name : Assesment Type: Market Segment / Vertical :

Small and Medium Corporates - Manufacturing model 001353 EDISON PAINT CHEMICALS Paints Company Without Project SME Rating Year: 2010

Date: 05-May-2010

Summary Table Balance Sheet Year : Score : Grade :

2009 6.07 BBB

Rating Summary Borrower Rating Score Single-Scale Rating Meaning : Borrowers rated BBB are judged to offer moderate safety of timely payment of interest and principal for the present. However changing circumstances are likely to lead to a weakened capacity to re-pay interest and principal than for borrowers in higher rated grades. Previous Score Rating From score To score Rating Class
Investment Grade

6.07

BBB

5.75

6.50

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Model-Scale Rating Company Rating Industry Risk Management Risk Financial Risk Business Risk 6.07 4.77 6.00 7.60 5.52

SM A

SM A VI A AA+ BBB

Facility Rating % Effective LGD CASH CREDIT Long Term Loan - Rupee Facility Type Fund Based Combined 70.00 100.00 EL (%) 2.03 2.90 Obligor Rating BBB BBB Facility Rating FR5 FR8 Grade FR5 FR5 Combined Rating CR BBB CR BBB

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Filters Filter Name

Has the borrower / EPC contractor defaulted to any bank / IDBI / financial institution? Do the promoter / EPC contractor have a past criminal record? Is the promoter / EPC contractor on the RBI defaulters list / IDBI caution list / CIBIL list? Is the net worth of the promoter or promoter group adequate? Would this exposure exceed IDBI's prudential lending limits? Has the borrower approached IDBI / other institutions for a one-time settlement ('OTS') in the past? Has the borrower complied with all IDBI norms? Is the production capacity of the plant equal to or greater than the minimum economic size ('MES')? Are there any litigations / stay orders against the construction/operation of the project/borrower? Does the EPC contract have the minimum standard clauses? Have the necessary arrangements for land acquisition been done? Has the EPC contractor been identified and at least a draft agreement been signed?

Yes / No No No No Yes No No Yes Yes No Yes Yes No

Comments

Score Sheet For : EDISON PAINT CHEMICALS Risk Parameter Name Type : Company
Industry Risk Business Risk Market Position Comments:
4.77 5.52 5.60 VI BBB

Division

Value

Score

Grade

Strengths / Weaknesses

Company has good market position in local market and among small players.
6

Assessment of immediate buyers Comments: Good

Dependence on customers

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Score Sheet For : EDISON PAINT CHEMICALS Risk Parameter Name

Comments: Large number of customers
6

Division

Value

Score

Grade

Strengths / Weaknesses

Marketing and Selling arrangement Comments:

No formal contracts, but stable relationship with customers over a short period (1 to 3 years)
6

Proximity to Customers Comments:

Company derives limited cost benefit on account of low proximity to customers

4 W

Pricing / Bargaining power with customers Comments: Company has a number of customers to supply its offtake

Frequent changes in name, auditors, bankers Operating Efficiency Availability of power and other utilities Comments:

(Deflator)

5.43 6

Any two of the above facilities available

4 W

Nature of technology Comments: The level of technology used, although advanced is yet to be proven.

Availability of key raw materials Comments:

Raw material supply depends on extraneous factors and the company has entered into long-term contracts with raw material suppliers. However, the company's operations depend on the relationship with the suppliers and active management of raw material sourcing.
6

Availability of skilled manpower Comments: Skilled manpower easily available for the foreseeable needs of the company

Environment risk Comments:

Entity facing environmental problems and has taken some measures against it but not fool proof.
6

Capacity Utilization Comments:

Above average levels of capacity utilisation. Full capacity levels unachievable on account of operational bottlenecks.
4 W

Bargaining power with suppliers Comments: Supplier has other companies to target for selling its product

Factory Inspection Comments: Financial Risk Financial Flexibility Ability to raise Debt Factory inspections are frequent and timely.

10

7.60 6.00 10.00

AA+

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Score Sheet For : EDISON PAINT CHEMICALS Risk Parameter Name

Ability to raise debt from Banks / Financial Institutions Comments: Most Superior Ability
2.00 4 W

Division

Value

Score
10

Grade

Strengths / Weaknesses
S

Ability to raise Equity Ability to raise equity from Own sources Comments: Slightly below average Ability

Ability to raise equity from capital markets Comments: Past Financials Tangible Networth - Past Current Ratio - Past (Ratio) ROCE - Past (%) Net Profit Margin - Past (%) NCA/TD - Past (Ratio) Inventory and Receivables Days - Past (Days) Interest Coverage - Past (Ratio) TOL/TNW - Past (Ratio) Accounting Quality - Past DSCR - Past (Ratio) Contingent Liabilities Payables turnover Future Financials Interest Coverage - Projected (Ratio) TOL/TNW - Projected (Ratio) Tangible Networth - Projected
3.61 645.52

Lowest Ability
7.98 6

3.52

10

15.81

3.53

0.48

10

94.31

6.18

0.35

10

(Deflator)
4.80

10

(Deflator)
104.47

W S

8.09 8

0.64

10

800.59

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Score Sheet For : EDISON PAINT CHEMICALS Risk Parameter Name

Inventory and Receivables Days Projected (Days) Current Ratio - Projected (Ratio) ROCE - Projected (%) Net Profit Margin-Projected (%) NCA / TD - Projected (Ratio) DSCR-Future (Ratio) Payable turnover Management Risk Years of experience in the same line of business Constitution of the Borrower Comments:

Division

Value
99.91

Score
8

Grade

Strengths / Weaknesses
S

1.71

10

16.05

3.55

0.24

10

2.42

104.78

W A S

6.00 8.00 6.00

Limited company having existance less than 5 years/Partnership firm well established and having more than 5 years experience
6.00

Credentials and background of the promoters Comments:

Management is well respected with good business history. It is considered ethical by clientele and markets.
6.00 4.00 W

Competence / Technical skills of the management Management Succession Plans Comments:

Business shows uncertainty regarding the future allocation of key managerial roles.
6.00

Past Payment Record and Track record Comments: Debt obligation(s) are occasionally delayed for a few days

Ability to meet/Achievement of sales projection Comments: Marginally short of projection in the past year(s)

6.00

Assessment Case Flow Details Location

Saidapet - SME Saidapet - SME

User Name
C.dhanalakshmi S Christopher Jebakumar

User Level
1 2

Start Date
17-04-2010 04-05-2010

End Date
03-05-2010 05-05-2010

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Risk Gradation
From Score To Score Grade Common Scale
AA A BBB BBB BB+ BB BB B C D

Description

8.50 7.50 6.50 5.75 5.00 4.25 3.50 2.50 1.50 0.00

10.00 8.50 7.50 6.50 5.75 5.00 4.25 3.50 2.50 1.50

SM AAA SM AA+ SM AA SM A SM BBB SM BB+ SM BB SM B SM C SM D

Investment Grade - Good Credit Quality -High safety Investment Grade -Above Average Credit Quality adequate safety Investment Grade Investment Grade Sub-Investment Grade - Weak Credit Quality Sub-Investment Grade - Near default Credit Sub-Investment Grade - Near default Credit Sub-Investment Grade - Default Credit Sub-Investment Grade - High risk Default -Credit Loss

Case Initiated At
Saidapet - SME

Case Initiated By
C.dhanalakshmi

Initiation Date
17-Apr-2010

Case Finalised At
Saidapet - SME

Case Finalised By
S Christopher Jebakumar

Finalisation Date
05-May-2010

Borrower RAROC % :

53.50

Facility RAROC
Facility
CASH CREDIT Long Term Loan - Rupee

RAROC (%)
67.70 43.55

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Facility Gradation
Score
5.00

Grade
FR1

Description
The % effective Loss Given Default (LGD) is none or the least suggesting that at the event of default the loss to the Bank is least or none.

20.00

FR2

The % effective Loss Given Default (LGD) is marginally more than that calculated for FR 1 grade suggesting that at the event of default the loss to the Bank will be minimal.

35.00

FR3

The % effective Loss Given Default (LGD) is slightly more than that calculated for FR 2 grade suggesting that at the event of default the Bank's losses are marginally higher than the FR 2 grades.

50.00

FR4

The % effective Loss Given Default (LGD) is slightly more than that calculated for FR 3 grade suggesting that at the event of default the Bank's losses are marginally higher than the FR 3 grades.

65.00

FR5

The % effective Loss Given Default (LGD) is significant

75.00

FR6

The % effective Loss Given Default (LGD) though slightly lesser than the facilities rated as FR 7, the Bank is exposed to significant losses at the event of default.

85.00

FR7

The % effective Loss Given Default (LGD) is marginally lesser than the facilities rated as FR 8 suggesting that at the event of default the Bank is exposed to huge losses.

95.00

FR8

The % effective Loss Given Default (LGD) is the highest suggesting that at the event of default the loss to the Bank is maximum.

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Combined Gradation
Score
0.00

Grade
CR AAA

Description
The Expected Loss (function of PD & LGD) is nil or least suggesting that at the event of default the loss to the Bank is least or none.

0.14

CR AA+

The Expected Loss (function of PD & LGD) is marginally more than that calculated for CR 1 grade suggesting that at the event of default the loss to the Bank will be minimal.

0.44

CR AA

The Expected Loss (function of PD & LGD) is slightly more than that calculated for CR 2 grade suggesting that at the event of default the Bank's losses are marginally higher than the CR 2 grades. The Expected Loss (function of PD & LGD) is slightly more than that calculated for CR 3 grade suggesting that at the event of default the Bank's losses are marginally higher than the CR 3 grades. The Expected Loss (function of PD & LGD) is at moderate levels.

1.29

CR A

2.89

CR BBB

5.27

CR BB+

The Expected Loss (function of PD & LGD) is higher than that calculated for CR 5 grade.

13.21

CR BB

The Expected Loss (function of PD & LGD) is significant.

24.66

CR B

The Expected Loss (function of PD & LGD) is on the higher side.

28.64

CR C

The Expected Loss (function of PD & LGD) is marginally lesser than the facilities rated as CR 10 suggesting that at the event of default the Bank is exposed to huge losses.

100.00

CR D

The Expected Loss (function of PD & LGD) is the highest suggesting that at the event of default the loss to the Bank is maximum.

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Project Score Range :

From Score

To Score

Grade

Common Scale
BBB

Description

7.75

10.00

P1

Investment Grade

5.75

7.75

P2

BB+

Sub-Investment Grade - Weak Credit Quality Sub-Investment Grade - Near default Credit Sub-Investment Grade - Default Credit

4.25

5.75

P3

BB

2.25

4.25

P4

0.00

2.25

P5

Default -Credit Loss

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