Intex Technologies India Limited March 01, 2019

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1 Ratings Facilities/Instruments Long-term Bank Facilities Short-term Bank Facilities Amount (Rs. crore) Total (Rs. Four hundred Twelve crore Twenty Eight Lacs only) Details of instruments/facilities in Annexure-1 Intex Technologies India Limited March 01, 2019 Rating 1 CARE BB+; ISSUER NOT (Double B Plus; ISSUER NOT ) CARE A4+; ISSUER NOT (A Four Plus; ISSUER NOT ) Rating Action Issuer not cooperating, Revised from CARE BBB; Negative (Triple B; Outlook: Negative) on the basis of best Issuer not cooperating, Revised from CARE A3 (A Three) on the basis of best Detailed Rationale & Key Rating Drivers CARE has been seeking information from Intex Technologies India Limited (ITIL) to monitor the ratings vide communications/letters dated Jan 16, 2019; Jan 15, 2019; Jan 14, 2019; Jan 08, 2019 and numerous phone calls. However, despite our repeated requests, the company has not provided the requisite information for monitoring the ratings. In line with the extant SEBI guidelines, CARE has reviewed the rating on the basis of the best which however, in CARE s opinion is not sufficient to arrive at a fair rating. Further, ITIL has not paid the surveillance fees for the rating exercise as agreed to in its Rating Agreement. The rating on ITIL s bank facilities will now be denoted as CARE BB+; Stable /CARE A4+; ISSUER NOT. Users of this rating (including investors, lenders and the public at large) are hence requested to exercise caution while using the above rating(s). The ratings have been revised on account of non-availability of operational or financial details to support the previous rating as the same have not been provided by the company. Detailed description of the key rating drivers At the time of last rating on Jul 20, 2018, the following were the rating strengths and weaknesses: Key Rating Weaknesses Moderation in financial risk profile and elongation in operating cycle: ITIL has witnessed a decline of 32% in its total operating income on a year on year basis in FY18. This was on account of decline in revenue contribution from the mobile segment during the year primarily on account of sharp decline in sales volume as well as realization from smart phones. In FY17, the launch of the 4G technology by Reliance Jio and influx of 4G enabled phones by Chinese and other international players impacted ITIL and other Indian players which were still caught up with 3G mobile phone inventories. The trend of declining sales has continued into FY18, with the share of mobile segment further reducing to 55% in overall revenue mix from 67% in FY17 & 78% in FY16. Decline in sales of mobile phones and consequently overall income has resulted in PBILDT margins of the company declining from 4.31% in FY16 to 2.57% in FY17 and further to 2.01% in FY18. Going ahead, the company is focusing on reduction in overheads through cost optimization and cost innovation initiatives. However, the improvement in profitability remains to be seen and will be a critical factor going forward. Further the overall gearing of the company has also increased from 0.45x as on March 31, 2017 to 0.51x as on March 31, The interest coverage indicators have sharply declined from 5.04x in FY17 to 2.32x in FY18 on the back of declining profitability & increased interest expense on account of increase in debt to fund the operations of the company. The slowdown in sales and maintenance of higher inventory has also resulted in operating cycle of the company increasing from 16 days during FY16 to 28 days during FY17 and further to 44 days in FY18. However, ITIL has managed to clear its old inventory of 2G/3G enabled phones and has streamlined its portfolio of 4G phones (over the last 8-10 months) & is in process of launching new 4G models in the latter half of the year. Further the collection period has also elongated from 23 days in FY17 to 33 2 Complete definitions of the ratings assigned are available at and in other CARE publications *Issuer did not cooperate; Based on best 1 CARE Ratings Limited

2 days in FY18 primarily due to higher collection period attributable to the consumer durable segment of approximately 30 days as compared to 10 days in the mobile segment. High level of competition in the IT hardware, consumer products and mobile segment: The Indian mobile handset industry is marked by high level competition with the market being highly price sensitive and value driven. The industry is fragmented with both domestic and foreign players, which has led to stiff price competition. Given the huge opportunity in smart phones and low entry barriers, many new players have entered the industry. Aggressive online sales recorded by new players and stiff competition faced by domestic players has substantially changed the market share picture in the industry. Both Indian Mobile and IT hardware market being highly price sensitive and value driven is fragmented with large number of unorganized players, which has led to stiff price competition and traditionally moderate-to-low margins. However, in the consumer durable segment, ITIL sells most of its products in tier II and tier III towns where people prefer to purchase through offline market where ITIL has strong distribution network. Dependence on imports & regulatory risk: ITIL sources its raw material largely through imports from overseas markets of Hong-Kong, Taiwan and China. The company is reliant on third party suppliers of its products with the R&D team of ITIL providing the design inputs to OEMs based in China, Hong-Kong and Taiwan. The company has been in this business since long and is able to maintain its relationship with the suppliers. Although, the company is exposed to general market related supply risk, it has taken various measures to diversify its supplier base over the last year. The company has also been rapidly moving towards inhouse manufacturing and indigenization of key components to reduce reliance on external supply. The company further remains susceptible to adverse impact on its business risk profile owing to any changes in the government policies regarding imports from countries like China, Hong Kong and Taiwan. Ongoing project: The company plans to produce/assemble entire requirement for its mobile handsets, IT peripherals and other consumer electronic goods indigenously in the coming fiscals. Consequently, ITIL had started the construction of a new manufacturing/assembling facility for mobiles phones, mobile accessories, washing machine and LED TVs at Kasna in Noida. The project is being funded through a mix of both debt and equity. However, as against the earlier envisaged timeline of Feb 2018, the project is now expected to be commissioned in the latter part of CY Key Rating Strengths Experienced Promoters and management team: Mr Narendra Bansal (Chairman and Managing Director) the promoter of the company, is a first generation entrepreneur with wide experience of over 25 years in the IT industry. After having graduated from University of Delhi in 1986, he started his business by trading in small electronic devices. In 1996, Mr Bansal incorporated ITIL, and started trading IT Hardware etc. The management team of ITIL comprising of officials who are technically qualified and highly experienced in their respective domains and manages the day to day operations of the company. Long track record of operations and established brand name: ITIL had established its dominance in computer peripherals segment through its brand INTEX and later on capitalized on the same for its mobile and consumer electronics segment. ITIL incurs significant expenses on marketing on building its Intex brand not only in the mobile phones and IT peripheral segments, but also in the consumer durables segment which registered a growth of 9% in sales during FY18 despite moderation in sales from its primary segment of mobiles. ITIL presently has 35+ different varieties of mobile handsets across the basic phone, touch-phone and smartphone segment. ITIL has tied up with leading film-stars across north, east and south India, to expand its brand recall and its panindia reach. Diversified product portfolio: ITIL has diversified portfolio of more than 250 products across different products verticals namely, Mobile handsets, Consumer Electronics (LED, Washing Machines, Refrigerators, ACs etc.) and IT Hardware (UPS, Note Book, PC, Monitor, Keyboard, Mouse, etc.) which contributed approximately 55%, 32% and 12%, respectively, to the total sales of products in FY18. The wide array of product offerings helps the company to withstand fluctuations in the market demand across various segments. With intense competition in the mobile segment and in order to offset the decline in sales of its feature and smart phones, the company is aggressively focusing towards the consumer durables segment. Widespread distribution network: ITIL has a well-established and wide distribution network across the country and established brand name. ITIL has a network of 30 stock and sales offices spread throughout the major cities in the country. The sales are routed through a distribution network comprising of 1,600+ distributors and 80,000+ dealers spread across the country. ITIL has established service touch points for easy mobile servicing and customer assistance. ITIL also has retail presence through its 100+ own brand stores under the brand name Intex Smart World. Further, the company s products are available at 250+ dedicated Point of Sale (PoS) present at reputed hyper market chains and specialty stores. 2 CARE Ratings Limited

3 Changing business model and organization wide improvements: The business model of the company is changing from that of importing and selling of completely Build Units (CBUs) of mobile handsets, IT peripherals, LEDs etc. to that of manufacturing-cum-assembling of these products indigenously. The company changed its business model owing to the several additional benefits available to the companies under the Make in India project, change in the duty structure which incentivizes assembly of Semi Knocked Down (SKD) units over imports of Completely Build Units (CBU). Despite the disruption in the mobile segment, the company managed to realize 9% growth in sales in the consumer durables segment in FY18 primarily on the back of increased sales of refrigerators & washing machines. The company has also launched new mobile phones based on the 4G technology and is also in the process of introducing new models in CY2018 prior to the festive period. Analytical approach: Standalone Applicable Criteria Policy in respect of Non-cooperation by issuer Criteria on assigning Outlook to Credit Ratings CARE s Policy on Default Recognition CARE s Methodology for Short-term Instruments CARE s Methodology for manufacturing companies Financial Ratios Non Financial Sector About the Company Incorporated in 1996, ITIL was promoted by Mr. Narendra Bansal (Chairman and Managing Director). The company is engaged in assembling, manufacturing and trading of mobile handsets, computer peripherals, multimedia speakers, personal computers and consumer electronics under the brand name of INTEX. ITIL primarily operates in three business segments namely mobile handset, Consumer Electronics (DVD player, TV, LCD etc.) and IT Hardware (UPS, Monitor, Keyboard, Mouse and other computer peripherals). The company sources its raw material largely through imports from China, Hong-Kong and Taiwan based suppliers backed by Letter of Credit. The finished goods which the company imports are manufactured overseas as per company s specifications and marketed under the brand Intex in India. The company has manufacturing and assembling units in Jammu (Jammu & Kashmir) and Manpura (Himachal Pradesh). Brief Financials (Rs. crore) FY17 (A) FY18 (A) Total operating income PBILDT PAT Overall gearing (times) Interest coverage (times) 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 Investors/market intermediaries/regulators or others are welcome to write to care@careratings.com for any clarifications. Analyst Contact: Name: Gaurav Dixit Tel: Mobile: gaurav.dixit@careratings.com **For detailed Rationale Report and subscription information, please contact us at About CARE Ratings: 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 3 CARE Ratings Limited

4 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. Annexure-1: Details of Instruments/Facilities Name of the Instrument Fund-based - LT-Cash Credit Non-fund-based - ST- BG/LC Fund-based - LT-Term Loan Date of Issuance Coupon Rate Maturity Date Size of the Issue (Rs. crore) Rating assigned along with Rating Outlook CARE BB+; Stable; ISSUER NOT Issuer not cooperating; Revised from CARE BBB; Negative on the basis of best CARE A4+; ISSUER NOT Issuer not cooperating; Revised from CARE A3 on the basis of best available information - - ** CARE BB+; Stable; ISSUER NOT Issuer not cooperating; Revised from CARE BBB; Negative on the basis of best *Issuer did not cooperate; Based on best **includes proposed amount 4 CARE Ratings Limited

5 Annexure-2: Rating History of last three years Sr. No. Name of the Instrument/Bank Facilities 1. Fund-based - LT-Cash Credit 2. Non-fund-based - ST- BG/LC Current Ratings Type Amount Rating Outstanding (Rs. crore) LT CARE BB+; Stable; ISSUER NOT Issuer not cooperating; Revised from CARE BBB; Negative on the basis of best available information Date(s) & Date(s) & Rating(s) Rating(s) assigned assigned in in Rating history Date(s) & Rating(s) assigned in )CARE 1)CARE A-; 1)CARE A BBB; Negative (Under Credit Negative (09-Oct-17) watch with (20-Jul-18) Negative Implications) (24-Jan-17) ST CARE A4+; ISSUER NOT 1)CARE A3 1)CARE 1)CARE A1 (20-Jul-18) A2+ (Under Credit Issuer not cooperating; Revised from CARE A3 on the basis of best (09-Oct-17) watch with Negative Implications) (24-Jan-17) Date(s) & Rating(s) assigned in )CARE A (13-Jan-16) 2)CARE A- (01-Jul-15) 1)CARE A1 (13-Jan-16) 2)CARE A2+ (01-Jul-15) 3. Fund-based - LT-Term Loan LT CARE BB+; Stable; ISSUER NOT Issuer not cooperating; Revised from CARE BBB; Negative on the basis of best available information *Issuer did not cooperate; Based on best 1)CARE 1)CARE A-; BBB; Negative Negative (09-Oct-17) (20-Jul-18) CARE Ratings Limited

6 CONTACT Head Office Mumbai Ms. Meenal Sikchi Mr. Ankur Sachdeva Cell: Cell: meenal.sikchi@careratings.com ankur.sachdeva@careratings.com Ms. Rashmi Narvankar Mr. Saikat Roy Cell: Cell: rashmi.narvankar@careratings.com 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 Tel: Fax: care@careratings.com AHMEDABAD Mr. Deepak Prajapati 32, Titanium, Prahaladnagar Corporate Road, Satellite, Ahmedabad Cell: Tel: deepak.prajapati@careratings.com BENGALURU Mr. V Pradeep Kumar Unit No , 11th Floor, Prestige Meridian II, No. 30, M.G. Road, Bangalore Cell: Tel: , pradeep.kumar@careratings.com CHANDIGARH Mr. Anand Jha SCF No , First Floor, Phase 11, Sector 65, Mohali Chandigarh Cell: / Tel: /01 anand.jha@careratings.com CHENNAI Mr. V Pradeep Kumar Unit No. O-509/C, Spencer Plaza, 5th Floor, No. 769, Anna Salai, Chennai Cell: Tel: / pradeep.kumar@careratings.com COIMBATORE Mr. V Pradeep Kumar T-3, 3rd Floor, Manchester Square Puliakulam Road, Coimbatore Tel: / pradeep.kumar@careratings.com JAIPUR Mr. Nikhil Soni 304, Pashupati Akshat Heights, Plot No. D-91, Madho Singh Road, Near Collectorate Circle, Bani Park, Jaipur Cell: Tel: / 14 nikhil.soni@careratings.com KOLKATA Ms. Priti Agarwal 3rd Floor, Prasad Chambers, (Shagun Mall Bldg.) 10A, Shakespeare Sarani, Kolkata Cell: Tel: priti.agarwal@careratings.com NEW DELHI Ms. Swati Agrawal 13th Floor, E-1 Block, Videocon Tower, Jhandewalan Extension, New Delhi Cell: Tel: swati.agrawal@careratings.com PUNE Mr.Pratim Banerjee 9th Floor, Pride Kumar Senate, Plot No. 970, Bhamburda, Senapati Bapat Road, Shivaji Nagar, Pune Cell: Tel: pratim.banerjee@careratings.com CIN - L67190MH1993PLC HYDERABAD Mr. Ramesh Bob 401, Ashoka Scintilla, , Himayat Nagar, Hyderabad Cell : Tel: ramesh.bob@careratings.com 6 CARE Ratings Limited