Auto Tech Engineers

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.6.48 Crs. of Auto Tech Engineers

Particulars

Facility**	Amount (Rs.Crs)	Tenure	Rating*
Fund Based
Cash Credit - Sanctioned Term Loan - Sanctioned Term Loan - Sanctioned Term Loan - Sanctioned	03.00 03.00 00.14 00.34	Long Term	BWR B + (Stable)
Sub Total	06.48
Grand Total	06.48	(Rupees Six Crores and Forty Eight lakhs 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

BWR believes that Auto Tech Engineers' 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:

• Experience of Proprietor :

  Mr. Jagpal Singh, the proprietor of the firm is a qualified engineer and has 35 years of business experience in the similar line of business.

• Expansion Plan :

  The firm is planning to expand their geographical presence and markets by venturing into exports. They have already received requisite approval related to quality standards from premium brands(International Tractors and Eicher Motors).

Credit Risks:

• Moderate Financial Position :

  Despite being in a similar business for more than three decades, the firm has a moderate financial position as shown by low turnover of Rs. 19.75 Crs, low net worth of Rs. 1.51 Crs and gearing ratio of 3.41x in FY 19.

• Industry Performance :

  The auto sector is facing a slow down due to the decline in domestic vehicle sales, poor financing options available for agricultural equipment, etc which had a negative impact on the ancillary industries related to Automobile Sector.

• Constitution of the firm :

  Inherent limitations of proprietorship constitution in terms of capital, management and the risk of withdrawal of capital by the proprietor for personal contingency, if any.

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 firm to improve its scale of operations by improving its profitability margins and efficiently manage its liquidity would remain the key rating sensitivities.

Positive: The rating outlook may be revised to 'Positive' in case the revenues and profit show sustained improvement backed by healthy liquidity. 

Negative: The rating outlook may be revised to 'Negative' in case the revenues of the company substantially deteriorates from the current level. Rating may also be adversely affected in case of deterioration in gearing and coverage ratios.

LIQUIDITY POSITION

Stretched

Liquid investments of the company include cash at bank and cash on hand which stood at Rs. 0.01 Crs in FY 19.  Average cash credit utilization during the past seven months period (June 2019 to Dec 2019) is at 97%. Net cash accruals to total debt is at  0.11 times.  

PROFILE

Auto Tech Engineers(ATE) started in 1985 as a proprietorship firm by Mr. Jagpal Singh in Faridabad, Haryana. ATE is engaged in manufacturing components of automobile, agriculture and earth moving equipment such as piston, fabrication parts, magnetic clutch parts, stator housing, rotor and idler pulley, two-wheeler clutch components, etc. Mr. Jagpal Singh has an experience of more than three decades in the line of business and holds a degree in B.Tech. His sons Mr. Jaspreet Singh and Mr. Jasmeet Singh are helping him in his business. ATE has 2 manufacturing hubs, unit 1 at NIT, Faridabad with a built-up area of 800 sq. ft. and operational since 1988, unit 2 at Industrial Area, NIT, Faridabad with a built-up area of 4400 sq. ft, operational since 2013. ATE has a clientele base that consists of premium clients such as Sonalika International, ESCORTS, ACE and Victoria Tools.

KEY FINANCIAL INDICATORS

Key Parameters	Units	FY 18-19 (Audited)	FY 17-18 (Audited)
Operating Revenue	Rs.Crs.	19.75	16.01
EBITDA	Rs.Crs.	1.47	1.25
PAT	Rs.Crs.	0.27	0.24
Tangible Net Worth	Rs.Crs.	1.51	1.34
Total Debt/Tangible Net Worth	Times	3.41	2.99
Current Ratio	Times	1.21	1.17

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 Term Loan - Sanctioned Term Loan - Sanctioned Term Loan - Sanctioned	Long Term	03.00 03.00 00.14 00.34	BWR B+ (Stable)	NA	NA	NA
Total			06.48	(Rupees Six Crores and Forty Eight lakhs 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
• Manufacturing Companies

For More Information Contact:

Analytical Contacts	Investor Contacts
Protusha Bera Ratings Analyst B : +91 80 4040 9940 protusha.b@brickworkratings.com	Liena Thakur Assistant Vice President - Corporate Communications M : +91 84339 94686 liena.t@brickworkratings.com
K.Venkateswara Raju Associate Director - SME & Vendor Gradings B : +91 80 4040 9940 kvraju@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	3.00	_	3.00
2	Term Loan - Sanctioned	3.00	_	3.00
3	Term Loan - Sanctioned	0.14	_	0.14
4	Term Loan - Sanctioned	0.34	_	0.34
Total				6.48
TOTAL (Rupees Six Crores and Forty Eight lakhs Only)