Allena Auto Industries Pvt. Ltd.

Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 30.98 Crs. of Allena Auto Industries Pvt. Ltd.

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (07 Apr 2021)	Present
Fund Based	33.00	30.18	Long Term	BWR BBB-/Stable Upgrade	BWR BBB - /Stable Reaffirmation
Fund Based	(10.00)	(10.00)	Long Term	BWR BBB-/Stable Upgrade	BWR BBB - /Stable Reaffirmation
Non Fund Based	0.80	0.80	Short Term	BWR A3 Upgrade	BWR A3 Reaffirmation
Grand Total	33.80	30.98	(Rupees Thirty Crores and Ninety Eight 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

BWR reaffirmed the ratings at BWR BBB-/Stable/BWR A3 for the bank loan facilities of Allena Auto Industries Pvt. Ltd.

The rating draws strength from the rich experience of the management of the company and moderate financial risk profile and strong customer base. The rating of the company is constrained by low current ratio and low debt servicing metrics, vulnerability of the profitability margins to the changing steel prices and competition in the industry.

BWR believes that the business risk profile of “Allena Auto Industries 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 there is significant improvement in revenues, and profit margins of the company. The rating outlook may be revised to “Negative” if there is any deterioration in the financial risk profile including liquidity of the company.

KEY RATING DRIVERS

Credit Strengths:

Experienced Management :
The management of the company consists of members of Chandigarh based Thapar family. This is the third generation of the family steering the company forward. All directors are highly educated and resourceful. The company has employed professionally qualified people to take care of various verticals of the business. The directors have over four decades of experience in the same line of business.
Moderate Financial Profile :
Though, total operating income has increased to Rs.157.85 crs in FY21 from Rs.143.95 crs in FY20 which indicates an increase of 9.65%. The PAT increased to Rs. 1.15 cr in FY21 from Rs. 0.80 cr in FY20. The TNW has increased to Rs.31.84crs in FY21 from Rs.31.57crs in FY20 (Analyzed TNW has decreased to Rs.49.36crs in FY21 from Rs. 50.21 crs in FY20). Total debt/ TNW improved at 1.86x in FY21 from 1.98x. The analyzed Total debt/ TNW improved to 0.85x as on March 31, 2021 (PY1; 0.87x). The Operating & Net Profit Margin increased to 7.07% and 0.73% in FY21 respectively from 6.57% and 0.55% respectively in FY20. The ISCR & DSCR are moderate at 2.40x and 1.06x in FY21 respectively. The conversion cycle stood at 60 days in FY21 (PY: 71 days). The current ratio stood at 1.10x in FY21.
Strong customer base :
The company is the Original Component Manufacturer and Supplier catering to the requirements of almost all the major Original Equipment Manufacturers engaged in the manufacturing of Cars, Trucks, Tractors, Diesel Engines, Jeeps, Earthmoving Equipments and LC V etc. Allena’s some of the customers are Tata Motors Ltd, Maruti Suzuki India Ltd, Simpson & Co. Ltd, ISUZU, TBVC, Subros Ltd, Lucas TVS Ltd, Indo Farm Equipments, Bridgestone, FUKOKU etc. The top 5 customers comprising of Tata Motors Ltd, Maruti Suzuki India Ltd, Simpson & Co. Ltd, Escorts Ltd and VE commercial Ltd. contribute to approx. 72.50% of the total sales in FY21.

Credit Risks:

Competition in the industry :
The scale of the business is small and the company has limited pricing power for its products. Also, it is not able to leverage the economies of scale while some of the bigger players have this advantage. Due to low entry barriers, automotive segment is highly fragmented and competitive due to the presence of various small players. Most of the manufacturers offer similar products with little difference which competes with each other resulting in lower margins for most of the players
Vulnerability of profitability margins :
Company's profitability is highly susceptible by the movement in the prices of steel, as casting iron & steel forms the major part of operating expenditure. Furthermore, any unprecedented increase in the raw material prices might adversely impact company's profitability margins.
Poor current ratio and Low debt servicing metrics :
The company has poor current ratio and low DSCR.

ANALYTICAL APPROACH - Standalone

Standalone - For arriving at its ratings, BWR has considered the standalone performance of Allena Auto Industries Pvt. Ltd.. BWR has applied its rating methodology as detailed in the Rating Criteria (hyperlinks provided at the end of this rationale).

RATING SENSITIVITIES

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

Positive: Rating may be upgraded in case of substantial improvement in revenues and profit margins of the firm, or on account of any other favorable factor.

Negative: Rating may be downgraded in case there is deterioration in financial risk profile of the firm including the liquidity of the company or on account of any unforeseen unfavorable events.

LIQUIDITY INDICATORS - Adequate

The company has an associate company: Gurudave Industries which is incorporated in 1975. It, is a proprietorship firm of Mr. Surinder Kaur Thapar, director of Allena Auto Industries. Gurudave Industry is into manufacturing of autoparts. There is however, no linkage between Gurudave Industry and Allena Auto Industries.
The cash and bank balance as on March 31, 2021 stood at Rs. 4.05 cr .
The long term borrowings stood at Rs. 17.34 cr as on March 31, 2021 (PY: Rs. 17.09 cr). The current portion of long term debt stood at Rs. 5.09 cr as on March 31, 2021 (PY: Rs. 5.20 cr). The cash accruals during FY21 stood at Rs. 5.95 cr as on March 31, 2021. The long term borrowings stood at Rs. 30.34 cr as on March 31, 2022. The current portion of long term debt stood at Rs.6.79 cr as on March 31, 2022. The cash accruals during FY22 are expected to be Rs. 11.75 cr as on March 31, 2022.
The cash credit limits were utilised at approx.77.84% during the 6 month trailing period ending Feb 2022.
The current ratio of the company stood at 1.10x as on March 31, 2021.
ISCR has stood at 2.40x in FY21 and DSCR has stood at 1.06x in FY21.
The conversion cycle stood at 60 days as on March 31, 2021.

ABOUT THE ENTITY

Allena Auto Industries Pvt.Ltd managed by the Thapar family commenced its operations in 1976 in Wazirpur Industrial Area, Delhi with 1 store. Since then it has expanded its operations and set up two more plants in Mohali, Punjab. The operations of the company are managed by the members of the Thapar family. The family has been in this business for more than 4 decades now. The company is the Original Component Manufacturer catering to the requirements of major automobile manufacturers such as Tata Motors Ltd, Maruti Suzuki India Ltd, Simpson & Co. Ltd, ISUZU, TBVC, Subros Ltd, Lucas TVS Ltd etc.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 20-21 (Audited)	FY 19-20 (Audited)
Operating Revenue	Rs.Crs.	157.85	143.95
EBITDA	Rs.Crs.	11.16	9.46
PAT	Rs.Crs.	1.15	0.80
Tangible Net Worth	Rs.Crs.	31.84	31.57
Total Debt/Tangible Net Worth	Times	1.86	1.98
Current Ratio	Times	1.10	1.07

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)

Facilities	Current Rating (2022)			2021		2020		2019
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	30.18	BWR BBB-/Stable (Reaffirmation)	12Feb2021	BWR BBStable (Downgrade/ISSUER NOT COOPERATING*)	NA	NA	19Nov2019	BWR BBB-Stable (Reaffirmation)
		0.00	NA	07Apr2021	BWR BBB-Stable (Upgrade)	NA	NA	NA	NA
FB SubLimit	LT	(10.00)	BWR BBB-/Stable (Reaffirmation)	12Feb2021	BWR BBStable (Downgrade/ISSUER NOT COOPERATING*)	NA	NA	19Nov2019	BWR BBB- Stable (Reaffirmation)
		NA	NA	07Apr2021	BWR BBB-Stable (Upgrade)	NA	NA	NA	NA
Non Fund Based	ST	0.80	BWR A3 (Reaffirmation)	12Feb2021	BWR A4 (Downgrade/ISSUER NOT COOPERATING*)	NA	NA	19Nov2019	BWR A3 (Reaffirmation)
		0.00	NA	07Apr2021	BWR A3 (Upgrade)	NA	NA	NA	NA
Grand Total		30.98	(Rupees Thirty Crores and Ninety Eight 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
Vaishali Khandelwal Ratings Analyst vaishali.k@brickworkratings.com	V.K.Kukreja Associate Director - Ratings Board : +91 11 2341 2232 kukreja.vk@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

Allena Auto Industries 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	HDFC Bank	Working Capital Term Loan	3.18	_	3.18
2	HDFC Bank	Cash Credit	27.00	_	27.00
	Sub-Limit (WCDL)	(10.00)
3	HDFC Bank	Bank Guarantee	_	0.30	0.30
4	HDFC Bank	Letter of Credit	_	0.50	0.50
Total			30.18	0.80	30.98
TOTAL (Rupees Thirty Crores and Ninety Eight lakhs Only)

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