RATING RATIONALE
23Apr2024

Atul Motors Pvt. Ltd.

Brickwork Ratings upgrades the long term rating and reaffirms the short term ratings for the Bank Loan Facilities of Rs. 67.67 Crs. of Atul Motors Pvt. Ltd. while simultaneously removing the same from the Issuer Not Cooperating category.

Particulars
Facilities** Amount (Rs.Crs.) Tenure Rating#
Previous Present Previous
(11 Apr 2023)
Present
Fund Based 33.83 47.67 Long Term BWR C
Continues to be in ISSUER NOT COOPERATING* category/Downgraded
BWR B + /Stable
Upgrade and Removed from the INC category
40.00 20.00 Short Term BWR A4
Continues to be in ISSUER NOT COOPERATING* category/Reaffirmed
BWR A4
Reaffirmation and Removed from the INC category
Grand Total 73.83 67.67 (Rupees Sixty Seven Crores and Sixty Seven lakhs 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

Brickwork Ratings has relied on the audited financials of  Atul Motors Pvt. Ltd. for FY22 and FY23 and projected financials for FY24 and FY 25, information furnished by the client and its bankers, as well as information available in the public domain, to arrive at the present ratings.

Brickwork Ratings has upgraded the long term rating to BWR B+ (Stable) and reaffirm the short term rating at BWR A4 and has removed from Issuer Not Cooperating Category to the bank loan facilities of the Company aggregating to Rs.67.67 Crs. The upgradation in the rating draws strength from the vast business experience of the promoters, an established track of operations, Moderate financial risk profile. However, the rating is constrained on account of Working capital-intensive operations & modest financial profile and Intense Competition and technological challenges.

BWR believes that the business risk profile of Atul Motors Pvt. Ltd. will be maintained over the medium term. The 'Stable' outlook indicates a low likelihood of rating change over the medium term. The rating outlook may be revised to 'Positive' in case the revenues and profit show sustained improvement, with improvement in debt protection metrics. The rating outlook may be revised to 'Negative' if the revenues go down, profit margins show lower than expected figures or if there is a delay in debt servicing.

KEY RATING DRIVERS

Credit Strengths:


Credit Risks:

ANALYTICAL APPROACH - Standalone

To arrive at ratings, BWR has relied upon the standalone audited financials up to FY23, and projected financials.

RATING SENSITIVITIES

.

Going forward, the ability of the company to maintain its financial risk profile and maintaining adequate liquidity will remain the key rating sensitivities.

Positive: To be able to increase revenues, profitability margins, improve gearing, debt coverage metrics or on account of any other favourable factor.

Negative: Deterioration in financial risk profile and fails to maintain adequate liquidity.

LIQUIDITY INDICATORS - Stretched

On account of the decline in Net Profit to Rs. 0.62 Crs in FY 23 compared to Rs. 6.52 Crs in FY 22, high utilization of inventory funding facilities. Inadequate net cash accruals of Rs. 2.69 Crs in FY 23 as against CPLTD of Rs. 3.45 Crs in FY 23 and cash accrual of Rs. 5.10 Crs in FY 24 against CPLTD of Rs. 5.74 Crs. AMPL's conversion 100 days and inventory holding days 46 days in FY23. Debt Protection Metrics of the company is not adequate to service the debt obligations with ISCR and DSCR standing at 1.88x and 0.65x respectively in FY23.

ABOUT THE ENTITY
Macro Economic Indicator Sector Industry Basic Industry
Consumer Discretionary Automobile and Auto Components Automobiles Auto Dealer

Incorporated on 5th April 1999, Atul Motors Pvt. Ltd. (AMPL) belongs to the Saurashtra-Gujarat based known automobile group "Atul". AMPL owns a dealership of Maruti Suzuki India limited and running a business through different Channels like Arena, Nexa & Commercial with 11 showrooms, 23 service & repair centres and 4 True Value Outlets at Saurashtra region like Jamnagar, Rajkot, Porbandar, Amereli, Gondal, Wankaner, Jasdan, Rajula etc. The company is promoted and managed by Mr Harish Chandra and Mr Dharmendra Chandra, who has extensive experience of more than two decades in the automobile industry.

KEY FINANCIAL INDICATORS (Standalone)
Key Parameters Units FY 20 - 21
(Audited)
FY 21 - 22
(Audited)
FY 22 - 23
(Audited)
Operating Revenue Rs.Crs. 248.79 217.77 224.52
EBITDA Rs.Crs. 14.20 9.04 9.31
PAT Rs.Crs. 2.65 6.52 0.62
Tangible Net Worth Rs.Crs. 32.19 38.71 39.33
Total Debt / Tangible Net Worth Times 2.98 1.38 1.19
Current Ratio Times 1.29 1.53 1.52
KEY COVENANTS OF THE FACILITY RATED

The terms of sanction include standard covenants normally stipulated for bank loan facilities


STATUS OF NON-COOPERATION WITH PREVIOUS CRA

ICRA has reaffirmed the rating of the entity at ICRA B+ (Stable) / ICRA A4; ISSUER NOT COOPERATING for bank loan facilities of Rs.144.10 crores on 29/03/2023.
.

ANY OTHER INFORMATION

Nil

RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)
Facilities Current Rating (2024) 2023 2022 2021
Type Tenure Amount
(Rs.Crs.)
Rating Date Rating Date Rating Date Rating
Fund Based LT 47.67
BWR B+/Stable
(Upgrade and Removed from the INC category)
11Apr2023
BWR C
(Continues to be in ISSUER NOT COOPERATING* category/Downgraded)
11Apr2022
BWR B Stable
(Downgrade/ISSUER NOT COOPERATING*)
16Mar2021
BWR B+ Stable
(Assignment)
Fund Based ST 20.00
BWR A4
(Reaffirmation and Removed from the INC category)
11Apr2023
BWR A4
(Continues to be in ISSUER NOT COOPERATING* category/Reaffirmed)
11Apr2022
BWR A4
(Reaffirmation/ISSUER NOT COOPERATING*)
16Mar2021
BWR A4
(Assignment)
Grand Total 67.67 (Rupees Sixty Seven Crores and Sixty Seven lakhs Only)
COMPLEXITY LEVELS OF THE INSTRUMENTS - Simple

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

Chinmaya R

Rating Analyst chinmaya.r@brickworkratings.com

RamaKrishna

Director - Ratings ramakrishna@brickworkratings.com
1-860-425-2742 | media@brickworkratings.com
Atul Motors Pvt. Ltd.
ANNEXURE-I
Details of Bank Facilities rated by BWR
SL.No. Name of the Bank/Lender Type Of Facilities Long Term(Rs.Crs.) Short Term(Rs.Crs.) Total(Rs.Crs.)
1 Cholamandalam Investment and Finance Company Limited Loans against PropertyOut-standing 5.31 _ 5.31
2 HDFC Bank Inventory Funding FacilitySanctioned _ _ 0.00
3 HDFC Bank Term LoanOut-standing _ _ 0.00
4 ICICI Bank Inventory Funding FacilitySanctioned _ 10.00 10.00
5 Indian Bank Inventory Funding FacilitySanctioned _ 10.00 10.00
6 Kotak Mahindra Bank Cash CreditSanctioned _ _ 0.00
7 KOTAK MAHINDRA PRIME LIMITED Inventory Funding FacilitySanctioned _ _ 0.00
8 State Bank Of India (SBI) Cash CreditSanctioned 3.50 _ 3.50
9 State Bank Of India (SBI) Electronic Dealer Finance System (e-DFS)Sanctioned 35.00 _ 35.00
10 State Bank Of India (SBI) GECL 2.0Out-standing 3.86 _ 3.86
Total 47.67 20.00 67.67
TOTAL (Rupees Sixty Seven Crores and Sixty Seven lakhs Only)
Print and Digital Media

The Rating Rationale is sent to you for the sole purpose of dissemination through your print, digital or electronic media. While it may be used by you acknowledging credit to BWR, please do not change the wordings in the rationale to avoid conveying a meaning different from what was intended by BWR. BWR alone has the sole right of sharing (both direct and indirect) its rationales for consideration or otherwise through any print or electronic or digital media.

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 11,560 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.

Disclaimer

Brickwork Ratings India Pvt. Ltd. (BWR), a Securities and Exchange Board of India [SEBI] registered Credit Rating Agency and accredited by the Reserve Bank of India [RBI], offers credit ratings of Bank Loan facilities, 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. [ hereafter referred to as "Instruments"]. BWR also rates NGOs, Educational Institutions, Hospitals, Real Estate Developers, Urban Local Bodies and Municipal Corporations.

BWR wishes to inform all persons who may come across Rating Rationales and Rating Reports provided by BWR that the ratings assigned by BWR are based on information obtained from the issuer of the instrument and other reliable sources, which in BWR's best judgment are considered reliable. The Rating Rationale / Rating Report & other rating communications are intended for the jurisdiction of India only. The reports should not be the sole or primary basis for any investment decision within the meaning of any law or regulation (including the laws and regulations applicable in Europe and also the USA).

BWR also wishes to inform that access or use of the said documents does not create a client relationship between the user and BWR.

The ratings assigned by BWR are only an expression of BWR's opinion on the entity / instrument and should not in any manner be construed as being a recommendation to either, purchase, hold or sell the instrument.

BWR also wishes to abundantly clarify that these ratings are not to be considered as an investment advice in any jurisdiction nor are they to be used as a basis for or as an alternative to independent financial advice and judgment obtained from the user's financial advisors. BWR shall not be liable to any losses incurred by the users of these Rating Rationales, Rating Reports or its contents. BWR reserves the right to vary, modify, suspend or withdraw the ratings at any time without assigning reasons for the same.

BWR's ratings reflect BWR's opinion on the day the ratings are published and are not reflective of factual circumstances that may have arisen on a later date. BWR is not obliged to update its opinion based on any public notification, in any form or format although BWR may disseminate its opinion and analysis when deemed fit.

Neither BWR nor its affiliates, third party providers, as well as the directors, officers, shareholders, employees or agents (collectively, "BWR Party") guarantee the accuracy, completeness or adequacy of the Ratings, and no BWR Party shall have any liability for any errors, omissions, or interruptions therein, regardless of the cause, or for the results obtained from the use of any part of the Rating Rationales or Rating Reports. Each BWR Party disclaims all express or implied warranties, including, but not limited to, any warranties of merchantability, suitability or fitness for a particular purpose or use. In no event shall any BWR Party be liable to any one for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of any part of the Rating Rationales and/or Rating Reports even if advised of the possibility of such damages. However, BWR or its associates may have other commercial transactions with the company/entity. BWR and its affiliates do not act as a fiduciary.

BWR keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of the respective activity. As a result, certain business units of BWR may have information that is not available to other BWR business units. BWR has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with each analytical process.

BWR clarifies that it may have been paid a fee by the issuers or underwriters of the instruments, facilities, securities etc., or from obligors. BWR's public ratings and analysis are made available on its web site, www.brickworkratings.com. More detailed information may be provided for a fee. BWR's rating criteria are also generally made available without charge on BWR's website.

This disclaimer forms an integral part of the Ratings Rationales / Rating Reports or other press releases, advisories, communications issued by BWR and circulation of the ratings without this disclaimer is prohibited.

BWR is bound by the Code of Conduct for Credit Rating Agencies issued by the Securities and Exchange Board of India and is governed by the applicable regulations issued by the Securities and Exchange Board of India as amended from time to time.