RATING RATIONALE
24Mar2021

Ashok Auto Ventures LLP

Brickwork Ratings upgrades the ratings for the Bank Loan Facilities of Rs. 40.00 Crs. of Ashok Auto Ventures LLP.

Particulars
Facilities** Amount (Rs.Crs.) Tenure Rating#
Previous Present Previous
(31 Mar 2020)
Present
Fund Based 49.00 40.00 Long Term BWR BB- (Stable)
BWR BB /Stable
Upgrade
Grand Total 49.00 40.00 (Rupees Forty Crores Only)
#Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank Loan facilities,consolidation or instruments are provided in Annexure


RATING ACTION / OUTLOOK

BWR has upgraded the Long Term rating to BWR BB (Stable) for the bank loan facilities of Ashok Auto Ventures LLP.

BWR has principally relied upon audited financial results up to FY20, projected financials for FY21 & FY22,publicly available information and information/clarifications provided by the management of the firm and their representatives.

While assigning the rating, BWR has factored the decade long experience of the partners, moderate financial profile and an established market by group company Ashok Auto Sales Limited (AASL) through which the firm has benefited in its first year of successful operations (FY20). The ratings, however, remain constrained by working capital intensive nature of business (owing to reliance on inventory funding from banks), besides intense competition from other automobile dealers and the cyclical nature of the commercial auto industry. 

Outlook : Stable 

The outlook is Stable as the firm has been able to improve the scale of operations. As advised by the management, the firm has achieved turnover of INR 130 Cr in 11MFY21 (April 2020 - February 2021).

KEY RATING DRIVERS


Credit Strengths:


Credit Risks:

ANALYTICAL APPROACH - Standalone

BWR has factored in the standalone business parameters and financial risk profile of the company to arrive at the rating. Reference may be made to the Rating Criteria hyperlinked detailed below (hyperlinks provided at the end of this rationale).

LIQUIDITY INDICATORS - Adequate

The bank limit utilization for CC & Inventory funding was 40% to 60% on an average for the last seven months ending Feb 2021 indicating available cushion of unutilized bank lines. With no term loan obligations, the gearing ratio marked by TD/TNW was comfortable at 0.68 times in FY20. Debt protection metrics were adequate, as reflected in interest coverage of 1.44 times in FY20. Therefore, liquidity is marked adequate on account of low bank limit utilization and comfortable gearing & debt protection indicators. 

ABOUT THE ENTITY

Ashok Auto Ventures LLP(AAVLP), is a group concern of Ashok Auto Sales Ltd. (AASL), was established in Nov, 2016 and commenced its operations in the last week of Feb 2019. The firm is engaged in the automobile dealership of Tata Motors (TML) in Ghaziabad, Noida and Greater Noida. The dealership business of TML in the Delhi National Capital Region was hived off from AASL and transferred to AAVLP in FY20. AASL holds 48% stake in AAVLP. Partners of the firm are Mr. Bharat Bansal, Ranjana Bansal and Ashok Auto Sales Ltd. represented by Mr. Rajan Kishore.

KEY FINANCIAL INDICATORS (Standalone)
Key Parameters Units FY 19-20
(Audited)
FY 18-19
(Audited)
Operating Revenue Rs.Crs. 199.16 Not Available
EBITDA Rs.Crs. 2.64 -0.02
PAT Rs.Crs. 0.16 -0.05
Tangible Net Worth Rs.Crs. 10.11 9.76
Total Debt/Tangible Net Worth Times 0.68 0.43
Current Ratio Times 1.10 2.01

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

NA

ANY OTHER INFORMATION

NA

RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)
Facilities Current Rating (2021) 2020 2019 2018
Type Tenure Amount
(Rs.Crs.)
Rating Date Rating Date Rating Date Rating
Fund Based LT 40.00
BWR BB/Stable
31Mar2020
BWR BB- (Stable)
22Mar2019
BWR BB- (Stable)
NA
NA
Grand Total 40.00 (Rupees Forty Crores Only)
COMPLEXITY LEVELS OF THE INSTRUMENTS - NA

BWR complexity levels are meant for educating investors. The BWR complexity levels are available at www.brickworkratings.com / download / ComplexityLevels.pdf. Investors queries can be sent to info@brickworkratings.com.

Hyperlink/Reference to applicable Criteria
Analytical Contacts

Nalin Raj Mehta

Rating Analyst nalinraj.m@brickworkratings.com

Rajender Kumar Sharma

Principal Director -Ratings Board : +91 11 2341 2232 rksharma@brickworkratings.com
1-860-425-2742 | media@brickworkratings.com
Ashok Auto Ventures LLP
ANNEXURE-I
Details of Bank Facilities rated by BWR
SL.No. Type Of Facilities Long Term(Rs.Crs.) Short Term(Rs.Crs.) Total(Rs.Crs.)
1 Inventory Funding FacilitySanctioned 11.00 _ 11.00
2 Cash CreditSanctioned 11.00 _ 11.00
3 Inventory Funding FacilityProposed 8.00 _ 8.00
4 Electronic Dealer Finance System (e-DFS)Sanctioned 10.00 _ 10.00
Total 40.00 0.00 40.00
TOTAL (Rupees Forty Crores Only)
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About Brickwork Ratings

Brickwork Ratings (BWR), a Securities and Exchange Board of India [SEBI] registered Credit Rating Agency and accredited by Reserve Bank of India [RBI], offers credit ratings of Bank Loan, Non- convertible / convertible / partially convertible debentures and other capital market instruments and bonds, Commercial Paper, perpetual bonds, asset-backed and mortgage-backed securities, partial guarantees and other structured / credit enhanced debt instruments, Security Receipts, Securitization Products, Municipal Bonds, etc. BWR has rated over 11,400 medium and large corporates and financial institutions’ instruments. BWR has also rated NGOs, Educational Institutions, Hospitals, Real Estate Developers, Urban Local Bodies and Municipal Corporations. BWR has Canara Bank, a leading public sector bank, as one of the promoters and strategic partner. BWR has its corporate office in Bengaluru and a country-wide presence with its offices in Ahmedabad, Chandigarh, Chennai, Hyderabad, Kolkata, Mumbai and New Delhi along with representatives in 150+ locations.

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