Press Release

R. K. Marble Private Limited

December 30, 2020
Ratings
Amount
Facilities Ratings1 Rating Action
(Rs. crore)
CARE A-
(Under Credit watch with Developing Placed on Credit watch
Long-term Bank Facilities 130.00 Implications) with Developing
(Single A Minus) (Under Credit watch with Implications
Developing Implications)
CARE A- / CARE A2+
(Under Credit watch with Developing Placed on Credit watch
Long-term / Short-term
5.00 Implications) with Developing
Bank Facilities*
(Single A Minus / A Two Plus) (Under Credit Implications
watch with Developing Implications)
135.00
Total facilities (Rupees One Hundred and
Thirty Five crore only)
Details of facilities in Annexure - I
*CARE has withdrawn the rating assigned to the non-fund based facilities amounting to Rs.31 crore classified under long-
term/short-term bank facilities on the basis of receipt of No Due Certificate from the bank.

Detailed Rationale & Key Rating Drivers

The ratings assigned to the bank facilities of R.K. Marble Private Limited (RKMPL) have been placed on watch with developing
implications in view of the demerger announcement for hiving off the marble and granite processing unit along with the
retail sales and warehousing division into another company called R.K. Marble & Granite Private Limited. As such, CARE
Ratings would closely monitor the developments including the transfer of assets and liabilities and conclusion of the
transaction as envisaged. Further, CARE Ratings will take a view on the ratings once the exact implications of the above on
the credit risk profile of the company are clear.
The ratings, however, continue to derive strength from experienced and resourceful promoters, established track record of
RKMPL in marble mining and processing industry along with the substantial mining rights of marble in India and Vietnam. The
ratings also continues to take into consideration growth in scale of Vietnam operations leading to stable total operating
income (TOI) and adequate leverage, debt coverage and liquidity indicators.
The ratings however, continues to remain constrained by steady decline in domestic production of marble slabs/sand stones
for the past four years ended March 31, 2020 increasing the reliance on the repatriation of funds from the Vietnam
Subsidiaries, viz. R.K. Marble Vietnam Company Limited (RKMVCL) and R.K. Marble International Company Limited (RKMICL)
in the form of dividend income, extension of unconditional and irrevocable corporate guarantee by RKMPL towards the
unrelated business of one of the group companies, viz. Wonder Home Finance Limited (WHFL; rated ‘Provisional CARE A-
(CE); Credit watch with developing implications/ CARE BBB+; Stable’), working capital intensive operations, and direct
linkages to the cyclical real estate sector. Ratings also appropriately factors in the exposure to group companies.

Key Rating Sensitivities:

Positive Factors:
 Increase in scale of its domestic operations along with steady performance of its Vietnam subsidiaries leading to increase
in its consolidated scale of operations by more than 25% while improving profitability on sustained basis
 Significant rationalization of inventory levels while efficiently managing working capital requirement on sustained basis

Negative Factors:
 Non repatriation or non-retention of funds from Vietnam subsidiaries viz. R.K. Marble Vietnam Company Limited
(RKMVCL) and R.K. Marble International Company Limited (RKMICL) leading to significant decline in the TOI and
profitability of the company on standalone basis.
 Significant increase in the exposure of group companies including WHFL
 Delay in receipt of need based support from the promoters

1
Complete definitions of the ratings assigned are available at www.careratings.com and in other CARE publications.
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 Press Release

Detailed description of the key rating drivers

Demerger of loss making operations of marble and granite slab manufacturing along with warehousing and retail sales
division
With the motive of deriving operational efficiencies with a clear focus; the company has entered into a scheme of demerger
for demerging the loss making operations into R.K. Marble and Granite Pvt. Ltd wherein the shareholding would be the same
as RKMPL. The Appointed date for the same has been selected as April 01, 2021. The shareholders of RKMPL shall get one
share of Rs.10 each of the new resulting company R.K. Marble and Granite Private Limited for every 10 shares of Rs.10 each
held in RKMPL.

Key Rating Strengths:

Experienced and resourceful promoters with presence in entire value chain of marble
RKMPL has a long track record of three decades in the marble industry and it is the flagship company of the R K Group of
Kishangarh (Rajasthan) which is promoted by the Patni family. Mr. Ashok Patni is the key promoter and Chairman Emeritus
of RKMPL having an experience of over three decades in the marble industry. RKMPL is present in the entire value chain of
marble from its mining to processing and finishing, including import and export at various stages.

Substantial mining rights of marble

RK Group is one of the leading marble mining companies having mines at Morwad and Garda in Rajasthan and in Vietnam.
The Morwad mine is known for whites (also known as Milky Coral) with splashes of green and grey while Banswara (under
the ownership of associate concerns) is known for its beige range, fine texture and smooth finish. RKMPL holds mine in
Vietnam that produces the finest quality of flawless white and cat’s eye marble which commands high-premium in
international and domestic market and it is exported to more than 50 countries. The group has overall mineable marble
reserves of about 161 million tonne.

Stable operating income at consolidated level during FY20 albeit with decline in profitability
The total operating income (TOI) of RKMPL remained stable at Rs.295 crore during FY20 as against TOI of Rs.311 crore during
FY19. However, PBILDT margins of the company declined to 18.16% during FY20 as against margins of 24.38% during FY19 on
account of subdued performance of domestic operations. Domestic operations were impacted due to Covid 19 pandemic and
RKMPL reported TOI of Rs.50 crore (excl. dividend) on standalone basis during H1FY21

Low bank debt and adequate debt coverage indicators at consolidated level
Total consolidated debt of RKMPL has increased from Rs.198.14 crore as on March 31, 2019 to Rs.323.07 crore as on March
31, 2020 mainly on account of the infusion of interest free unsecured loans from the promoters to the tune of Rs.95.92 crore
which resulted in the USL from the group entities rising to Rs.205.83 crore from Rs.111.91 crore.. The cash and cash
equivalents balance stood at Rs.103.79 crore as on March 31, 2020 resulting in a low net bank debt of Rs.13.45 crore.
Consequently, the overall gearing, although increased, remained at a comfortable level of 1.14 times as on March 31, 2020.
Further, the debt coverage indicators of the company also continued to remain adequate marked by interest coverage of
4.53 times during FY20. Considering the free cash and cash equivalents, the net debt of the company remained at Rs.219.27
crore as on March 31, 2020 with the adjusted gearing (incl. the corporate guarantee and considering the net debt) was also
comfortable at 1.12 times as on March 31, 2020.

Liquidity: Adequate
Liquidity is marked by healthy accruals against no repayment obligations and free cash and cash equivalents to the tune of
Rs.103.79 crore as on March 31, 2020. Further, no major capex is envisaged by the company in near to medium term
providing sufficient cushion. Average working-capital limit utilization during trailing 12-months ended June 2020 remained
low between 25-30% as majority of the working capital requirement is funded out of internal accruals and interest free
unsecured loans from promoters. However, any contractual obligations arising out of extension of corporate guarantee to
WHFL may moderate the liquidity position of the company in case of absence or timing mismatch in repatriation of funds.

Key Rating Weaknesses:

Extension of corporate guarantee to WHFL
RKMPL had extended unconditional and irrevocable corporate guarantee to the unrelated home loan financing business of
one of its group companies WHFL to the tune of Rs.90 crore till the tenor of the term loan while is in process to further
extend corporate guarantee to the tune of another Rs.10 crore in the near term. Reliance on repatriated funds increases to
meet any contractual obligation arising due to exposure to with recourse nature of debt of WHFL; given latter’s exposure to
long tenure home loan financing as against the tenure of five years of debt. Further, as per the terms of repayment of term
loan, the repayment shall be on a quarterly basis as against yearly repatriation which increases inherent risk related to timing
mismatch. Hence, going forward timely repatriation of fund from RKMVCL to RKMPL and retention of the same at RKMPL

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 Press Release

shall remain crucial from the credit perspective. Nevertheless, some comfort can be derived from the fact that WHFL shall
earmark cash and cash equivalent for its debt servicing requirements.

Steady decline in the domestic production and core operating income (excl. dividend) on a standalone basis
There has been a steady decline in domestic production of Marble Slabs/ Sand Stones/ Slate Stones on account of subdued
demand in domestic market and non-availability of desired marble quality in domestic mines which has led to further drop in
the capacity utilization to 27% during FY20 as compared to capacity utilization of 32% during FY19 and 72% in FY14.
Further, the adjusted total operating income (excl. dividend) on a standalone basis declined to Rs.151.41 crore during FY20
from Rs.177.93 crore during FY19 majorly on account of free issuance of import license for importing marble blocks due to
which imports have increased substantially and has resulted into higher competition. Furthermore, stiff competition is faced
by the company from cheaper substitutes like vitrified tiles and ceramic industry. Nevertheless, the PBILDT margin of the
company jumped to 35% for FY20 from 6.20% in FY19 on the back of other income in the form of dividend receipt from
subsidiaries to the tune of Rs.87.79 crore. The same was, in turn, distributed to the promoters of RKMPL.

Exposure to group companies

Cash generated from RKMPL had been utilized to enter into diversified businesses through its various group concerns viz.
marble mining, rental income from commercial properties, trading of agro- commodities, etc in the past. Total investment of
RKMPL in group concerns stood at Rs.105 crore as on March 31, 2020 which is around 37% of the consolidated net-worth of
the company as on March 31, 2020. Going forward, extent of exposure to group companies and resultant contractual
obligations arising from it shall also remain crucial from the credit perspective.

Direct linkages to realty sector which is cyclical in nature

RKMPL’s growth would critically depend on the prospects of the real estate sector which is inherently cyclical in nature. It
exposes RKMPL to the adversities and vagaries of economic fluctuations. Further, demand for marbles is likely to get affected
with increasing demand of ceramic tiles in the real estate sector in substitution of marble.

Highly working capital intensive operations albeit majority of it on account of the division getting demerged
On account of higher variety of product offerings and capturing of high quality product from all over the world for the
showrooms, increase in marble blocks from its mines and decline in sales, the inventory levels of RKMPL remain substantially
high which led to elongation of its operating cycle to 378 days during FY20. Majority of the inventory was held in the
warehouse and showroom which are going to be demerged from RKMPL.

Analytical approach: Consolidated: CARE has analyzed RKMPL’s credit profile by considering consolidated financial
statements as there are operational and financial linkages between the holding and Subsidiaries Company, RKMVCL and
RKMICL being the wholly owned subsidiaries (WOS) of RKMPL. Further, debt raised by RKMVCL is guaranteed by RKMPL.
Entire profit of overseas subsidiaries had been repatriated in RKMPL in the past leading to fungibility of cash flow between
RKMPL and its overseas subsidiaries. The list of subsidiaries considered in its consolidation is shown in Annexure III.
Furthermore, RKMPL is in a process to extend corporate guarantee to its group company WHFL. Hence, entire debt servicing
of WHFL is loaded in RKMPL.

Applicable criteria:
Criteria for Short Term Instruments
Financial Ratios - Non financial sector
Criteria on assigning ‘outlook’ and ‘credit watch’ to Credit Ratings
CARE’s Policy on Default Recognition
Policy on Withdrawal of ratings
Liquidity Analysis of Non-Financial Sector Entities
Rating Methodology: Factoring Linkages in Ratings
Rating Methodology - Manufacturing Companies

About the company

R. K. Marble Private Ltd. (RKMPL), a part of the R. K. Group, was established in 1989 by Kishangarh (Rajasthan)-based Patni
family. RK Marble group has large mineable marble reserves in India. Shri Ashok Patni, key promoter of RKMPL, has
experience of over three decades in the marble industry.
The company has marble mining facilities at Morwad and marble processing facilities at Kishangarh in Rajasthan. As on
March 31, 2020 RKMPL has an installed capacity of 350,000 cubic meter of marble mining and 2,050,000 cubic feet of marble
slabs processing per annum. Further, the group concerns also have marble mining facilities in Garda and Banswara in
Rajasthan and in Vietnam through its subsidiaries.

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 Press Release

Brief Consolidated Financials - (Rs. Crore) FY19 (A) FY20 (A)

Total Operating Income (TOI) 311 295
PBILDT 76 54
PAT 34 19
Interest coverage (times) 10.58 4.53
Overall gearing (times) 0.57 1.14
A: Audited

Status of non-cooperation with previous CRA: Not Applicable

Any other information: Not Applicable

Rating History (Last three years): Please refer Annexure – II

Annexure-1: Details of Instruments/Facilities

Name of the Date of Coupon Maturity Size of the Issue Rating assigned along with
Instrument Issuance Rate Date (Rs. crore) Rating Outlook
CARE A- (Under Credit
Fund-based - LT-Cash
- - - 100.00 watch with Developing
Credit
Implications)
CARE A- / CARE A2+ (Under
Non-fund-based - LT/
- - - 5.00 Credit watch with
ST-BG/LC
Developing Implications)
CARE A- (Under Credit
Fund-based - LT-Bank
- - - 30.00 watch with Developing
Overdraft
Implications)

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 Press Release

Annexure-2: Rating History of last three years

Current Ratings Rating history

Name of the Date(s) & Date(s) & Date(s) & Date(s) &
Sr. Amount
Instrument/Bank Type Rating Rating(s) Rating(s) Rating(s) Rating(s)
No. Outstanding
Facilities assigned in assigned in assigned in assigned in
(Rs. crore)
2020-2021 2019-2020 2018-2019 2017-2018
1)CARE A-;
1)CARE A+;
CARE A- (Under 1)CARE A-; Stable
Stable
Fund-based - LT-Cash Credit watch Stable (04-Oct-19)
1. LT 100.00 - (30-Mar-
Credit with Developing (03-Apr-20) 2)CARE A;
18)
Implications) Stable
(05-Apr-19)
1)CARE A-;
Stable /
1)CARE A+;
1)CARE A-; CARE A2+
Stable /
Non-fund-based- Stable / (04-Oct-19)
2. LT/ST - - - CARE A1+
LT/ST CARE A2+ 2)CARE A;
(30-Mar-
(03-Apr-20) Stable /
18)
CARE A1+
(05-Apr-19)
1)CARE A-;
CARE A- / CARE Stable / 1)CARE A+;
1)CARE A-;
A2+ (Under CARE A2+ Stable /
Stable /
Non-fund-based - LT/ Credit watch (04-Oct-19) CARE A1+
3. LT/ST 5.00 CARE A2+ -
ST-BG/LC with Developing 2)CARE A; (30-Mar-
(03-Apr-20)
Implications) Stable / 18)
CARE A1+
(05-Apr-19)
1)CARE A-;
CARE A- (Under 1)CARE A+;
1)CARE A-; Stable
Credit watch Stable
Fund-based - LT-Bank Stable (04-Oct-19)
4. LT 30.00 with Developing - (30-Mar-
Overdraft (03-Apr-20) 2)CARE A;
Implications) 18)
Stable
(05-Apr-19)

Annexure-3: Detailed explanation of the terms of rated facilities- Not Applicable

Annexure-4: Complexity Level of various facilities rated for this company

Sr. Name of the Instrument Complexity Level

No.
1. Fund-based - LT-Cash Credit Simple
2. Non-fund-based - LT/ ST-BG/LC Simple
3. Fund-based - LT-Bank Overdraft Simple

Annexure-5: List of subsidiaries and joint venture of R.K. Marble Private Limited getting consolidated

Sr. No. Name of Company % holding by RKMPL

1. R.K. Marble Vietnam Company Limited 100%
2. R.K. Marble International Company Limited* 30%
*70% of stake in R.K. Marble International Company Limited is held by R.K. Marble Vietnam Company Limited

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.
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 Press Release

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Contact no.: +91-22-6837 4424
Email ID: mradul.mishra@careratings.com

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Contact no.: 079- 4026 5605
Email ID: maulesh.desai@careratings.com

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Email ID: deepak.prajapati@careratings.com

About CARE Ratings:

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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
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Disclaimer
CARE’s ratings are opinions on the likelihood of timely payment of the obligations under the rated instrument and are not
recommendations to sanction, renew, disburse or recall the concerned bank facilities or to buy, sell or hold any security.
CARE’s ratings do not convey suitability or price for the investor. CARE’s ratings do not constitute an audit on the rated
entity. CARE has based its ratings/outlooks on information obtained from sources believed by it to be accurate and reliable.
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any errors or omissions or for the results obtained from the use of such information. Most entities whose bank
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case of partnership/proprietary concerns, the rating /outlook assigned by CARE is, inter-alia, based on the capital deployed
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ratings may see volatility and sharp downgrades.

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6 CARE Ratings Limited