Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.9.78 Crs. of Dharmana Motors
ParticularsFacility** | Amount (Rs.Crs) | Tenure | Rating* |
---|---|---|---|
Fund Based | |||
Term Loan
Out-standing
Term Loan Out-standing |
05.83
03.95 |
Long Term | BWR B + (Stable) |
Sub Total | 09.78 | ||
Grand Total | 09.78 | (Rupees Nine Crores and Seventy Eight lakhs Only) |
BWR believes that Dharmana Motors 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 revised to 'Negative' if the revenues go down and profit margins show lower than expected figures.
KEY RATING DRIVERS
Credit Strengths:
COVID-19 has changed the preferred mode of commute among passengers, with people choosing to use a personal vehicle over a public or shared transport.
Along with Sales, Dharmana Motors offers maintenance & Spares Parts for two wheels vehicles.
The partnership firm is headed by Shri. Sasidhar Dharmana, Managing Partner worked as Automobile Engineer in NZ, Singapore and now Leading Dharman Motors since 2002 and Shri. Dharma Rao Dharmana, Managing Partner specialising in Automobile Business and Modern Agriculture who are having decades of experience in the automobile industry.
In an effort to increase its presence in the electric mobility space, TVS Motor Company decided to set up a new subsidiary for the electric vehicle segment. At present, TVS has only one product in the category, iQube. TVS iQube, launched in January 2020, is currently available in 33 cities across the country.
Credit Risks:
The company`s revenue from operations has grown marginally by 0.67 % in the FY 20
Digital dealership drives higher sales through in-depth and personalised customer segmentation and engagement, as a massive customer base shifts to online with increasing internet penetration and lower data tariffs.
Withdrawal of capital by the Partners for any personal contingency would adversely affect the capital structure of the firm.
DM's financial risk profile is characterised by medium total outside liabilities to total net worth (TOL/TNW), average debt protection metrics though supported by moderate capital structure. DM's TOL/TNW is high at around 2.10 times as of March 31, 2020; owing to its trading nature and high reliance on working capital requirements. Interest Coverage ratio 1.03 in FY20 and 1.98 in FY21 provisional and net cash accrual -0.02 Crores in FY20. It's gearing (debt-to-equity) is comfortable at 1.79 times as of March 31, 2020; its net worth is modest at about Rs.6.15 crore as of March 31, 2020. Being a partnership concern, withdrawal of capital is a key rating sensitivity factor. Dharmana Motors achieved gross sales of 38 crores for H1 FY22.
High Competition is present in the two-wheeler segment with domestic and international players, However, TVS enjoys around 13.84% market share. The company operates in a highly competitive landscape considering the number of other automobile manufacturers and their dealers, auto sales also have monthly cyclicality with higher sales during the festive period each year. BWR takes note of the new launches during the ensuing festive season which is expected to support the overall sales of the company in FY22.
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
Positive: BWR may revise the ratings upward if the company’s scale of operations and profitability improve on a sustained basis.
Negative: BWR may revise the ratings downwards if there is a deterioration in the company's revenue, profitability, and liquidity.
LIQUIDITY POSITION
1)Gearing Ratio is moderate at 1.67 times in FY18,2.46 times in FY19 and 1.79 times in FY20.
2)The current ratio is 1.22 in FY18,1.41 in FY19 and 1.60 in FY20.
3) Net cash Accruals are low because of appropriation of funds by partners, it is 0.58 crores in FY18, 0.29 crores in FY19 and -0.02 crores in FY20.
PROFILE
Dharmana Motors (Popularly known as Dharmana TVS) is founded in the fiscal year 2002-03 and began operations as a TVS Motor Company Authorised the main dealer of two wheels vehicles in Srikakulam District. In the Fiscal year 2005-2006, Dharmana Motors expanded its activities in Visakhapatnam District and is currently operating with the wide-spread network in the districts of Visakhapatnam, Srikakulam and Vizianagaram through their own main Dealerships, Partnership firm is headed by Shri. Sasidhar Dharmana, Managing Partner worked as Automobile Engineer in NZ, Singapore and now Leading Dharman Motors since 2002 and Shri. Dharma Rao Dharmana, Managing Partner specialised in Automobile Business and Modern Agriculture.
KEY FINANCIAL INDICATORSKey Parameters | Units |
FY 19-20 (Audited) |
FY 18-19 (Audited) |
---|---|---|---|
Operating Revenue | Rs.Crs. | 46.75 | 46.44 |
EBITDA | Rs.Crs. | 1.72 | 2.43 |
PAT | Rs.Crs. | -0.07 | 0.25 |
Tangible Net Worth | Rs.Crs. | 6.15 | 4.86 |
Total Debt/Tangible Net Worth | Times | 1.79 | 2.51 |
Current Ratio | Times | 1.60 | 1.41 |
CRA Name | Date | Amount | Rating |
---|---|---|---|
ACUITE | 29 Apr 2021 | 10.00 | ACUITE B+ |
S.No | Current Rating (2021) | Rating History | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Facilities | Tenure | Amount (Rs.Crs) | Rating | 2020 | 2019 | 2018 | ||||
Fund Based | ||||||||||
1 | Term Loan - Out-standingTerm Loan - Out-standing | Long Term | 05.8303.95 | BWR B+(Stable) | NA | NA | NA | |||
Total | 09.78 | (Rupees Nine Crores and Seventy Eight lakhs 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.
Hyperlink/Reference to applicable Criteria : For More Information Contact:Analytical Contacts | |
---|---|
Koppula Shyam Sundar Lead Analyst shyamsundar.k@brickworkratings.com |
Nagaraj K Associate Director - Ratings B : +91 80 4040 9940 nagaraj.ks@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 | Karur Vysya Bank | Term LoanOut-standing | 5.83 | _ | 5.83 |
2 | Karur Vysya Bank | Term LoanOut-standing | 3.95 | _ | 3.95 |
Total | 9.78 | 0.00 | 9.78 | ||
TOTAL (Rupees Nine Crores and Seventy Eight lakhs 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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