Ratings of [ICRA]B- and [ICRA]A4 assigned to bank facilities of Ecolite Technologies

Ecolite Technologies

Amount Rating Action
In Rs. Crore Nov’12

Fund based limits- Cash Credit 6.00 [ICRA]B- assigned
Fund based limits- Term Loans 6.66 [ICRA]B- assigned
Non-fund based limits- letter of credit 1.50 [ICRA]A4 assigned

ICRA has assigned the long term rating of [ICRA]B- (pronounced ICRA B minus)† to Rs 6.00 crore1 fund based facilities and Rs 6.66 crore term loans of Ecolite Technologies. ICRA has also assigned a short term rating of [ICRA]A4 (pronounced ICRA A four) to Rs 1.50 crore non-fund based limits of Ecolite Technologies. The assigned rating takes into account Ecolite’s modest scale of operations and lack of operational track record owing to its recent incorporation (with sales commencing from January 2012). Further the operations of the firm are yet to stabilize (as corroborated by the negative cash accruals being generated by the firm), which in combination with the initial high debt funded capex incurred by Ecolite, has led to a weak financial profile characterized by a high gearing of more than 14x and TD/OPBDITA (adjusted for 3 months) of more than 21 times as on March 31, 2012. However, the debt coverage indicators are likely to improve as sales pick up in FY13-14, with the current indicators being subdued because of the recent commencement of operations. The ratings are also constrained by the low awareness as well as the high price of the LED products, which act as a deterrent as well as the partnership constitution of firm which further limits the ability to raise equity capital. The ratings however draws comfort from the fact that Ecolite is one of the few players to offer both LED luminaries manufacturing as well as accredited testing facilities and its focus on quality of products as evident by its sourcing of raw material (LED) from leading manufacturers. ICRA also takes note of the fact that the entire capex for setting up of the manufacturing and testing unit is complete and no major capex is planned over the medium term. Ecolite’s ability to increase its scale of operations and stabilize the initial capex which would help improve its financial profile would be the key rating sensitivities going forward. Company Profile Incorporated in April 2010 as a partnership firm, Ecolite Technologies is engaged in the supply of LED based lighting products with product range including LED bulbs, MR-16, Tube lights, Down lights, Bay lights and street lights. The manufacturing facilities of the company are located at Industrial Model Township at Manesar, Haryana. Though the plant became operational in March 2011, the sales commenced only from January 2012 with the initial 9 months being spent towards product development and testing. During the eleven months since January 2012, Ecolite has majorly functioned as an OEM for supply of LED based lighting products to established players like Havells India, Surya Roshni, Halonix , Moserbaer and Marc Signage. The company has recently ventured into supply of LED based products under its own brand ‘Ecolite’ as well as supply of street lights in the capacity of a subcontractor to State Road Authorities. __________________________________________

1100 lakh = 1 crore = 10 million †For complete rating scale and definitions please refer to ICRA’s website www.icra.in or other ICRA Rating Publications

Recent Results The firm reported net loss of Rs 1.24 crores on an operating income of Rs 3.13 crore in FY12. In the first 8 months of FY13, Ecolite has achieved gross sales of around Rs 5 crores.

November 2012

For further details please contact:

Analyst Contacts: Mr. Rohit Inamdar (Tel No. +91-124-4545847) rohit.inamdar@icraindia.com

Relationship Contacts: Mr. Vivek Mathur, (Tel. No. +91-124-4545310) vivek@icraindia.com

Rating Agency Website: http://www.icra.in

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