Boxco Logistics India Pvt Ltd April 18, Amount (Rs. crore) Long term Bank Facilities CARE BBB-; Stable (Triple B Minus; Outlook: Stable)

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1 Boxco Logistics India Pvt Ltd April 18, 2017 Ratings Facilities Amount Rating 1 Long term Bank Facilities CARE BBB-; Stable (Triple B Minus; Outlook: Stable) Short term Bank Facilities CARE A3 (A Three) Remarks Reaffirmed Reaffirmed Total (Rs. Hundred and sixteen Crore and thirty five lakhs only) Details of instruments/facilities in Annexure-1 Detailed Rationale & Key Rating Drivers The ratings assigned to the bank facilities of Boxco Logistics India Pvt Limited (BLIPL) continue to derive strength from the long track record and vast experience of the promoters in the logistics & shipping industry, continuous financial support provided over the years, diversified service offering and client base of the company. The ratings are however constrained by low profitability margins coupled with exposure to economic cycles, risk related to the ongoing project, stretched collection period leading to working capital intensive nature of operations. BLIPL s ability to improve its profitability margins/cash accruals and optimally utilize the ongoing warehousing facility remains the key rating sensitivity. Detailed description of the key rating drivers Key Rating Strengths Extensive experience of the promoters, management and strong group support BLIPL is a closely held private limited company and is a part of JM Baxi group. Based out of Mumbai, J.M. Baxi group is an end to end logistics major having an experience of 100 years in the logistics industry. The promoter directors of the company Mr Krishna Kotak, Mr. Dhruv Kotak and Mr. Vir Kotak have extensive experience in the logistics industry. The strong brand image of J.M. Baxi group helps BLIPL in sourcing its businesses. The promoters have supported the company over the years by infusing unsecured loan/preference share. As on March 31, 2016 the unsecured loans outstanding was about Rs crore (which are subordinated to bank debt) and preference share amounting to Rs crore is treated as quasi equity for analytical purpose. Diversified service offering and strong clientele base BLIPL has a diversified revenue profile with project logistics and bulk logistics business contributing around 71% & 25% of the revenue during FY16 respectively. The carving out of IFF division would increase the revenue concentration risk to some extent considering the fact that the logistics industry especially the project logistics 1 Complete definitions of the ratings assigned are available at and in other CARE publications. 1 Credit Analysis & Research Limited

2 is depended upon the economic cycles and thus is cyclical in nature. However going ahead with venturing into Shipping and cold storage warehouse would reduce the revenue concentration risk. Key Rating Weaknesses Risk related to ongoing capex During FY 15, BLIPL started constructing cold warehousing facility at Sonepat, Hariyana. The total cost was Rs 33 crore and is expected to be funded by debt of Rs crore and remaining by equity/internal accruals/preference shares. The facility is expected to begin commercial operations in FY18. The ability of the company to optimally utilize the above facility considering the competitive nature of the industry remains as the key rating sensitivity. Low profitability margins coupled with exposure to economic cycles BLIPL, like any other transportation & logistics player has low profitability margins. The industry is highly unorganised and BLIPL faces stiff competition from the unorganised segment.the project logistics segment is exposed to economic cycles and any slowdown in EXIM trade or CAPEX cycle due to an economic slowdown may affect the income from project logistics division BLIPL. Cash accruals expected to improve with the vessel being deployed During FY15 the company had purchased a self-propelled Ro-Ro barge for the project logistics division at a cost of about Rs crore funded through debt of Rs and remaining through unsecured loan. The vessel was delivered in April The barge was largely under-utilized in FY17 and the company has posted losses during 9MFY17. However during March 2017 the company has bagged one long term contract with fixed charter rate. This is a bare boat charter and the operating cost has to be borne by the customer. Thus cash accruals and profitability of the company is thus expected to improve from FY18 onwards. Stretched collection period leading to moderate liquidity position BLIPL, involved in the bulk and project logistics division faces stiff competition from unorganized players. The company has to provide liberal credit terms to its customers. The average collection period deteriorated to 172 days in FY16 from 99 days in FY15. The company has significant intergroup transaction and provides services to group companies. BLIPL also uses the equipment s/services of group companies. Thus the operating cycle is maintained at around 2 months. The average utilization of fund based limits for the past 12 months ending Jan 2017 is 72% and provides some liquidity backup. Analytical Approach- Standalone Applicable Criteria Criteria on assigning Outlook to Credit Ratings CARE s policy on Default Recognition Financial Ratios-Non Financial Sector Criteria for Short Term Instruments Rating methodology Services Companies 2 Credit Analysis & Research Limited

3 About the Company Incorporated in June 2011, Boxco Logistics India Pvt Ltd (BLIPL) is the freight forwarding and project logistics arm of the JM Baxi Group, an end to end logistics major in the Indian logistics industry. BLIPL has two main divisions viz. bulk handling division and project logistics division. The bulk handling division deals with bulk handling at almost all major ports. The project logistics division undertakes transportation of Over Dimensional Cargo and specializes in multi-modal transportation and door to door service from source location to project site. Before the incorporation of BLIPL all these services was provided by various group companies of JM Baxi group. BLIPL was incorporated to streamline the operations and bring all services related to bulk logistics, international freight forwarding and project logistics under one entity. The company till FY15 has another division International Freight Forwarding division which addresses the requirements of exporters, importers, manufacturers, retailers, etc. to facilitate the movement of their goods on an end-to-end basis over both ocean and air freights. This division was divested effective from FY16. During FY16, BLIPL reported a PAT of Rs.5.67 crore on a total operating income of Rs crore as compared to PAT of Rs.2.46 crore on a total operating income of Rs crore recorded during FY15. Further during 9MFY17 BLIPL had recorded loss at the PBT level of Rs crore on total income of Rs crore. Status of non-cooperation with previous CRA: Not Applicable Any other information: Not Applicable Rating History (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: Mr Arunava Paul Tel: Mobile: arunava.paul@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 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 Credit Analysis & Research Limited

4 Annexure-1: Details of Instruments/Facilities Name of the Instrument Fund-based - LT-Term Loan Fund-based - LT-Cash Credit Non-fund-based - ST- BG/LC Date of Issuance Coupon Rate Annexure-2: Rating History of last three years Maturity Date Size of the Issue Rating assigned along with Rating Outlook - - Various qtr instalments ending in FY CARE BBB-; Stable CARE BBB-; Stable CARE A3 Sr. No. Name of the Instrument/Bank Facilities 1. Fund-based - LT-Term Loan 2. Fund-based - LT-Cash Credit 3. Non-fund-based - ST- BG/LC Type Current Ratings Amount Outstanding Rating LT CARE BBB-; Stable LT CARE BBB-; Stable Rating history )CARE BBB )CARE BBB- ST CARE A )CARE A )CARE BBB- 1)CARE BBB- 1)CARE A3 4 Credit Analysis & Research Limited

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