Excell Autovista Pvt Ltd

Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs.82.20 Crs. of Excell Autovista Pvt Ltd. ("EAPL" or "The Company").

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
	Previous	Present		Previous (21 May 2021)	Present
Fund Based	86.25	82.20	Long Term	BWR BB/Stable Reaffirmation	BWR BB /Stable Reaffirmation
Grand Total	86.25	82.20	(Rupees Eighty Two Crores and Twenty 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 (BWR) reaffirms the long-term ratings of fund-based facilities of Rs.82.20 Crs. at BWR BB with a Stable outlook for EAPL. 
The rating action reflects EAPL's stable overall performance, promoter’s extensive experience, reputed client base, and the company’s focus on highly leveraged after-sale services. The financial risk profile remains average with a healthy net worth and capital structure and moderate debt protection metrics; however, it is expected to improve over the medium term supported by improved business performance. These rating strengths are however partially offset by the stretched liquidity, working capital intensity in operations, and susceptibility to volatility in raw material prices.
Outlook: Stable
The ‘Stable’ outlook indicates a likelihood of rating change over the medium term. The company continues to derive comfort from the extensive experience of more than two decades of promoters in the industry.  The rating is, however, upgradation by the Liquidity position, Debt protection metrics, and improvement in Financial parameters. 

KEY RATING DRIVERS

Credit Strengths:

• Established Position & Promoters’ Experience :

  EAPL is promoted by Mr. Madhup Agarwal who has over 35 years of experience in the automobile Industry. The company is associated with Maruti Suzuki India Limited (MSIL) as an exclusive dealership of the retail business of automobiles in Mumbai for the last 17 years.  Under the directorship of Mr. Madhup Agarwal, the company has recorded high growth in business on a y-o-y basis, which will support its position in the future.

• Moderate Financial Profile :

  The company has a moderate financial risk profile with a Total Operating Income (TOI) of Rs.740.89 Crs. for FY22(Prov) against Rs.616.09 Crs. for FY21. For FY21, the operating profit margin (OPM) for the company is decreasing to 2.55% (FT20: 3.22%). However, the net profit margin (NPM) is improving to 0.25% (FT20: 0.11%). For FY22, the company provisioned an improvement in both, the OPM and the NPM, to 2.63% and 0.45% respectively. The company registered an ISCR of 1.57x for FY21 and provisioned further improvement in FY22(Prov) to 1.70x. The company is expecting y-o-y in-line DSCR with 1.12x for F21 against 1.19x for FY22(Prov). EIPL is significantly managing its dependency on external borrowings to maintain the inventory of vehicles in stores and so the Gearing ratio is improved over the period of time and recorded at 4.39x for FY21. The company is expecting further improvement in gearing to 3.75x for FY22(Prov).

• Long-standing dealership of MSIL and position in the market :

  The company has established its position in the industry as an authorised dealer of Maruti Suzuki India Limited (MSIL; Rated: CRISIL AAA/Stable/CRISIL A1+) vehicles for the last two decades, It has a long and established relationship with the principals Maruti Suzuki India Limited, which is a well established and a reputed brand in the automobile industry.

Credit Risks:

• Working capital-intensive operations :

  Owing to the minimal credit period from MSIL, the company has to stock different models of vehicles and spares in showrooms to ensure availability and visibility to the retail customers. This results in EAPL being. highly dependent on external bank borrowing and is expected to increase over the medium term due to the expansion in other territories to increase the scale of operations.

• Intense competition results in thin margins :

  Entry barriers in authorized dealership business are low leading to intense competition, thereby resulting in low bargaining power and profitability margins. As the business is mainly of a trading nature, profitability margins continue to be thin. Moreover, the operations are majorly concentrated in Maharashtra, which exposes the firm to any deterioration in that region's economy. Furthermore, the automotive sector is intensely competitive and has a large number of players in the mini, compact, mid-size, executive, premium, and luxury passenger car segments. The company faces intense competition from the unorganized used car market and from dealers of other car manufacturers. For FY22, EIPL has provisioned an operating margin and a net margin of 2.63% and 0.45% respectively.

• Exposure to industry cyclicality, government regulations, and environmental norms :

  The business is susceptible to inherent cyclicality in the automotive industry and is linked to the performance of the economy. Also, exposure to regulatory changes such as Goods and Services Tax rates, variation in emission norms, and intense competition in the market may continue to constrain the scalability, pricing power, and profitability of the company.

• Supplier Concentration Risks :

  Supplier concentration risk arises due to single dealerships of MSIL. The company’s fortunes are totally dependent on its principal, MSIL, giving it limited maneuverability as regards obtaining supplies, and sales. However, MSIL is seeing initial traction for their small commercial vehicles and SUV brands such as the S-Cross and Brezza, which bodes well for EIPL also.

ANALYTICAL APPROACH - Standalone

As the company does not have any subsidiaries, for arriving at its ratings, BWR has assessed the standalone financials of EAPL and has applied its rating methodology as detailed in the Rating Criteria detailed below (hyperlinks provided at the end of this rationale).

RATING SENSITIVITIES

Positive: Significant growth in revenue and profitability, improvement in debt structure, and maintaining adequate liquidity in the medium term will be positive for the rating.
Negative: Lower than expected growth in revenues and profitability coupled with an increase in working capital requirements of the company adversely impacting the liquidity position will be negative for the rating.

LIQUIDITY INDICATORS - Stretched

The company has a repayment obligation of ~Rs.7.37 Crs in FY23 and ~Rs.7.85 Crs in FY24. However, the company’s net accruals are expected to remain stretched (in the range of ~Rs.6 to 7 Crs. per year) to service the principal debt repayment obligations. The management is in a position to infuse unsecured loans in the company as and when required. The average fund-based working capital utilization is on the higher side with the range of 98%-99% across the banks for the 6-month period ending Jun-2022 and as of 24-Aug-2022, the company has a cash balance of Rs.0.15 Crs, bank balance of ~Rs,1.00 Crs.

ABOUT THE ENTITY

Excell Autovista Private Limited (EAPL), Incorporated in 2005, is a Mumbai Based authorized dealer of Maruti Suzuki India Limited (MSIL). The company is currently managed by Mr.Madhup Agarwal(Promoter) and Mr.Sunny Raj Agarwal (Son of Mr. Madhup Agarwal). The company has 9 Showrooms & 5 service stations. Showrooms are in Bandra, Malad, Kharghar, Thane, and Bhiwandi and 4 are in Pune. Service Stations are in Kalina, Kharghar, Taloja, and 2 in Pune. The Head office is in Bandra.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 20-21 (Audited)	FY 19-20 (Audited)
Operating Revenue	Rs.Crs.	616.09	604.24
EBITDA	Rs.Crs.	15.73	19.47
PAT	Rs.Crs.	1.54	0.64
Tangible Net Worth	Rs.Crs.	21.59	20.61
Total Debt/TNW	Times	4.39	5.35
Current Ratio	Times	0.96	0.94

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	82.20	BWR BB/Stable (Reaffirmation)	21May2021	BWR BBStable (Reaffirmation)	03Jan2020	BWR BBStable (Reaffirmation)	30Mar2019	BWR BBStable (Downgrade/ISSUER NOT COOPERATING*)
Non Fund Based	ST	0.00	NA	NA	NA	NA	NA	30Mar2019	BWR A4 (Downgrade/ISSUER NOT COOPERATING*)
Grand Total		82.20	(Rupees Eighty Two Crores and Twenty 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

• General Criteria
• Approach to Financial Ratios
• Short Term Debt

Analytical Contacts
Gaurav Agnihotri Senior Rating Analyst gaurav.a@brickworkratings.com	Chintan Dilip Lakhani Director- Ratings chintan.l@brickworkratings.com
1-860-425-2742 | media@brickworkratings.com

SL.No.	Name of the Bank/Lender	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)
1	Axis Bank Ltd.	Inventory Funding Facility - Sanctioned	7.50	_	7.50
2	Axis Bank Ltd.	Inventory Funding Facility - Sanctioned	7.50	_	7.50
3	HDFC Bank	Inventory Funding Facility - Sanctioned	10.00	_	10.00
4	ICICI Bank	Inventory Funding Facility - Sanctioned	5.00	_	5.00
5	IndusInd Bank	Cash Credit - Sanctioned	8.20	_	8.20
6	IndusInd Bank	Cash Credit - Sanctioned	1.00	_	1.00
7	IndusInd Bank	Cash Credit - Sanctioned	0.10	_	0.10
8	IndusInd Bank	Cash Credit - Sanctioned	0.10	_	0.10
9	IndusInd Bank	Cash Credit - Sanctioned	0.50	_	0.50
10	IndusInd Bank	Cash Credit - Sanctioned	0.10	_	0.10
11	IndusInd Bank	Cash Credit - Sanctioned	0.10	_	0.10
12	IndusInd Bank	Cash Credit - Sanctioned	0.10	_	0.10
13	IndusInd Bank	Cash Credit - Sanctioned	0.50	_	0.50
14	IndusInd Bank	Cash Credit - Sanctioned	0.50	_	0.50
15	IndusInd Bank	Cash Credit - Sanctioned	2.00	_	2.00
16	IndusInd Bank	Inventory Funding Facility - Sanctioned	12.00	_	12.00
17	IndusInd Bank	Inventory Funding Facility - Sanctioned	4.00	_	4.00
18	IndusInd Bank	Inventory Funding Facility - Sanctioned	3.00	_	3.00
19	State Bank Of India (SBI)	Inventory Funding Facility - Sanctioned	10.00	_	10.00
20	State Bank Of India (SBI)	Inventory Funding Facility - Sanctioned	10.00	_	10.00
21	Yes Bank	Inventory Funding Facility - Sanctioned	_	_	0.00
Total			82.20	0.00	82.20
TOTAL (Rupees Eighty Two Crores and Twenty lakhs Only)