RATING RATIONALE
06 Nov 2019
Aditya Auto Components
Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.6.00 Crs. of Aditya Auto Components
Particulars| Facility** | Amount (Rs.Crs) | Tenure | Rating* |
|---|---|---|---|
| Fund Based | |||
|
Open Cash Credit / Cash Credit (Hypothecation/Pledge)
Sanctioned
Term Loan Sanctioned |
02.00
04.00 |
Long Term | BWR BB (Stable) |
| Sub Total | 06.00 | ||
| Grand Total | 06.00 | (Rupees Six Crores Only) | |
**Details of Bank facilities are provided in Annexure-I RATING ACTION / OUTLOOK : Stable
BWR believes that Aditya Auto Components business risk profile 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. The rating outlook may be revisd to 'Negative' if the revenues go down and profit margins show lower than expected figures.
KEY RATING DRIVERS
Credit Strengths:
- Locational Advantage :
The Firm is located in Bengaluru cluster and thus has a competitive advantage in terms of skilled labor, logistics, production knowledge and vendors making the company more efficient and cost effective.
- Company’s Existence :
The firm is in existence for 24 years and has seen complete business cycles.
- Debt Protection Metrics :
DSCR and ISCR of the company stand at 3.15 and 5.15 respectively in FY19 indicating company’s adequacy to meet its debt obligations.
Credit Risks:
- Constitution :
withdrawal of capital by the proprietor/Partners for any personal contingency would adversely affect the capital structure of the firm.
Limitations of Proprietorship constitution in terms of capital and management. - Competition in the Industry :
Entry barriers in the industry are low on account of limited capital and technology requirement and also low differentiation in the end product leading to intense competition and limiting the pricing power resulting in low profitability.
- Exposure :
60% of the sales come from Automobile industry which is facing a slowdown globally can be a concern.
For arriving at its ratings, BWR has applied its rating methodology as detailed in the Rating Criteria detailed below (hyperlinks provided at the end of this rationale).
RATING SENSITIVITIES
The rating derives strength from extensive experience of partners in the auto component manufacturing industry, company’s moderate financial risk profile indicated by comfortable gearing, healthy debt protection metrics and profitability margins. The rating is further supported by the diverse product range.The rating is however, constrained by the susceptibility of company’s margins to volatile prices of steel.
LIQUIDITY POSITION
Current ratio of the company is 1.5 for FY19 which indicates that company can meet short term obligations.
PROFILEAditya Auto Components commenced business entity in 1995 and continue its operation at No 413, 9th cross Petechennappa Indl Estate,Kamakshipalya. Aditya Auto Components is engaged in the manufacturing of precision-tuned components used in Automotive parts, Hydraulic parts, Dental parts. Partners Rama Chandra & Sharada Sherigarthy to their credit have 40 years of experience in this business.
KEY FINANCIAL INDICATORS| Key Parameters | Units |
FY 18-19 |
FY 17-18 |
|---|---|---|---|
| Operating Revenue | Rs.Crs. | 26.12 | 18.91 |
| EBITDA | Rs.Crs. | 3.81 | 3.35 |
| PAT | Rs.Crs. | 0.68 | 0.45 |
| Tangible Net Worth | Rs.Crs. | 14.99 | 14.03 |
| Total Debt/Tangible Net Worth | Times | 0.45 | 0.61 |
| Current Ratio | Times | 1.54 | 1.36 |
The terms of the sanction include standard covenants normally stipulated for such facilities.
RATING HISTORY (INCLUDING WITHDRAWAL AND SUSPENSION)
| S.No | Current Rating (2019) | Rating History | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Facilities | Tenure | Amount (Rs.Crs) | Rating | 2018 | 2017 | 2016 | ||||
| Fund Based | ||||||||||
| 1 | Open Cash Credit / Cash Credit (Hypothecation/Pledge) - SanctionedTerm Loan - Sanctioned | Long Term | 2.004.00 | BWR BB(Pronounced as BWR Double B )(Outlook: Stable) | NA | NA | NA | |||
| Total | 06.00 | (Rupees Six Crores Only) | ||||||||
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.
For More Information Contact:| Analytical Contacts | Investor Contacts |
|---|---|
|
Sanagapalli Mohana Krishna Chaitanya Lead Analyst mkchaitanya.s@brickworkratings.com |
Liena Thakur Assistant Vice President - Corporate Communications M : +91 84339 94686 liena.t@brickworkratings.com |
|
K Nagaraj Associate Director - Ratings B : +91 80 4040 9940 nagaraj.ks@brickworkratings.com |
|
| 1-860-425-2742 | |
| SL.No. | Type Of Facilities | Long Term(Rs.Crs.) | Short Term(Rs.Crs.) | Total(Rs.Crs.) |
|---|---|---|---|---|
| 1 | Open Cash Credit / Cash Credit (Hypothecation/Pledge)Sanctioned | 2.00 | _ | 2.00 |
| 2 | Term LoanSanctioned | 4.00 | _ | 4.00 |
| Total | 6.00 | |||
| TOTAL (Rupees Six Crores Only) | ||||
| Instrument | Issue Date | Amount (Rs.Crs) | Coupon Rate | Maturity Date | ISIN Particulars |
|---|---|---|---|---|---|
| NA | NA | NA | NA | NA | NA |
| Name of Entity | % Ownership | Extent of consolidation | Rationale for consolidation |
|---|---|---|---|
| NA | NA | NA | NA |
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Brickwork Ratings (BWR), a SEBI registered Credit Rating Agency, accredited by RBI and empaneled by NSIC, offers Bank Loan, NCD, Commercial Paper, MSME ratings and grading services. NABARD has empaneled Brickwork for MFI and NGO grading. BWR is accredited by IREDA & the Ministry of New and Renewable Energy (MNRE), Government of India. Brickwork Ratings has Canara Bank, a leading public sector bank, as its promoter 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.
Brickwork Ratings (BWR) has assigned the rating based on the information obtained from the issuer and other reliable sources, which are deemed to be accurate. BWR has taken considerable steps to avoid any data distortion; however, it does not examine the precision or completeness of the information obtained. And hence, the information in this report is presented "as is" without any express or implied warranty of any kind. BWR does not make any representation in respect to the truth or accuracy of any such information. The rating assigned by BWR should be treated as an opinion rather than a recommendation to buy, sell or hold the rated instrument and BWR shall not be liable for any losses incurred by users from any use of this report or its contents. BWR has the right to change, suspend or withdraw the ratings at any time for any reasons.