A&A Automobiles Pvt. Ltd.

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.25.00 Crs. of A&A Automobiles Pvt. Ltd.

Particulars

Facility**	Amount (Rs.Crs)	Tenure	Rating*
Fund Based
Cash Credit - Sanctioned	25.00	Long Term	BWR B + (Stable)
Sub Total	25.00
Grand Total	25.00	(Rupees Twenty Five Crores Only)

*Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank facilities are provided in Annexure-I RATING ACTION / OUTLOOK : Stable

Brickwork Ratings has assigned the Ratings of BWR B+ with ‘stable’ outlook on bank loans of A&A Automobiles Private Limited. The rating takes into account the promoters business experience. However, the rating is constrained by the nascent stage of business and slowdown in the automobile industry.

The ‘stable’ outlook indicates a low likelihood of a rating change in the medium term. BWR expects that the company’s performance is likely to be maintained over the next few years.

KEY RATING DRIVERS

Credit Strengths:

• Promoter’s experience :

  Promoter Directors have an experience of around two decades in the business of vehicle dealership through the parent company M/s A&A earthmovers Pvt Ltd. Their extensive experience has led to understanding of key market dynamics and healthy relationships with customers.

Credit Risks:

• Nascent stage of business :

  A&A Automobiles is a greenfield project. Showroom in Noida has been operational since Oct 2019 and the Surajpur showroom is expected to be operational by Jan 2020. The company has projected the total operating income of Rs. 554.27 Crs in FY21.

• Slowdown in domestic commercial vehicle industry :

  Commercial vehicle industry is witnessing a downtrend in current fiscal due to tight liquidity in the NBFC space and weak demand. Also, with GDP growth falling to an unexpected 4.5%, a recovery in CV sales is unlikely in the medium term.

ANALYTICAL APPROACH AND APPLICABLE RATING CRITERIA

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

Going forward, the ability of the company to improve its capital structure and maintain adequate liquidity would be key rating sensitivities.

Positive: The outlook may be revised to positive if the company is able to surpass the projected revenues and profit by a considerable margin.

Negative: The outlook may be revised to negative if the company fails to achieve projected revenues & profits and there are delays in servicing the debt obligations.

LIQUIDITY POSITION

The company has availed a working capital limit of Rs. 25.00 Crores and no long term loan is proposed. Long term uses are proposed to be funded through share capital and unsecured loans. Current Ratio is projected at 1.18 times and ISCR is projected at 1.86 times for FY20. Conversion cycle is projected at 47 days for FY20. The liquidity position will remain adequate if equity/quasi-equity is raised as per the proposed plan.

PROFILE

A&A Automobile Pvt. Ltd (“The Company”) is incorporated in 2019 by Ms. Amanpreet Anand and Ms. Aditi Anand. The company has entered into a dealership agreement with Tata Motors for the entire range of products in the commercial vehicle segment and its spare parts. The company has developed two showrooms and workshops, one in Noida for SCV (Cargo & Passenger) and another in Surajpur (Greater Noida) for M&HCV (Trucks & Buses). Showroom in Noida has been operational since Oct 2019 and the Surajpur showroom is expected to be operational in Jan 2020.

Key Financial Projections, provided by the company, are mentioned below

KEY FINANCIAL INDICATORS

Key Parameters	Units	FY 20-21	FY 19-20
Operating Revenue	Rs.Crs.	554.27	233.02
EBITDA	Rs.Crs.	5.86	2.34
PAT	Rs.Crs.	1.67	0.48
Tangible Net Worth	Rs.Crs.	12.46	6.48
Total Debt/Tangible Net Worth	Times	2.87	4.90
Current Ratio	Times	1.60	1.18

KEY COVENANTS OF THE INSTRUMENT/FACILITY RATED

NA

RATING HISTORY (INCLUDING WITHDRAWAL AND SUSPENSION)

S.No	Current Rating (2020)				Rating History
	Facilities	Tenure	Amount (Rs.Crs)	Rating	2019	2018	2017
Fund Based
1	Cash Credit - Sanctioned	Long Term	25.00	BWR B+ (Stable)	NA	NA	NA
Total			25.00	(Rupees Twenty Five Crores Only)

COMPLEXITY LEVELS OF THE INSTRUMENTS

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
• Trading Entities

For More Information Contact:

Analytical Contacts	Investor Contacts
Gaurav Jain Ratings Analyst B : +91 11 2341 2232 Ext : 111 gaurav.j@brickworkratings.com	Liena Thakur Assistant Vice President - Corporate Communications M : +91 84339 94686 liena.t@brickworkratings.com
Satvinder Kumar Gakhar Associate Director - Ratings B : +91 11 2341 2232 satvinder.g@brickworkratings.com
1-860-425-2742

SL.No.	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)
1	Cash Credit - Sanctioned	25.00	_	25.00
Total				25.00
TOTAL (Rupees Twenty Five Crores Only)