RATING RATIONALE
23 Jun 2020
Aditya Automobile Spares Pvt. Ltd.
Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.14.00 Crs. of Aditya Automobile Spares Pvt. Ltd.
Particulars| Facility** | Amount (Rs.Crs) | Tenure | Rating* |
|---|---|---|---|
| Fund Based | |||
| Over Draft Sanctioned | 14.00 | Long Term | BWR BB - (Stable) |
| Sub Total | 14.00 | ||
| Grand Total | 14.00 | (Rupees Fourteen Crores Only) | |
**Details of Bank facilities are provided in Annexure-I
Note: The company also has business loans with Axis Bank and IndusInd Bank.The oustanding amount is Rs 0.24 Crs as on 31 March 2019 and the same is not considered for the purpose of rating. RATING ACTION / OUTLOOK : Stable
BWR believes that Aditya Automobile Spares Pvt. Ltd. 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
BWR has essentially relied upon the audited financial statements of Aditya Automobile Spares Pvt. Ltd. of FY17, FY18, FY19, provisional financial statements of FY 20 and projected financial statements of FY21, FY22, publicly available information and information / clarifications provided by the entity’s management. The rating draws strength from the vast business experience of the director/s, established track of operations and average financial risk profile. However, the rating is constrained by the scale of operations, high gearing, high competition from other established players in the market.
Credit Strengths:
-
Experienced Promoter and company existence :
The promoter has extensive experience and understanding of market dynamics in this field of business. Prior to the incorporation of the company in 2001, the promoter was managing the family owned firms along with his father, late Mr. R Ponnusamy who started the business in 1971 under M/s Alagendran Auto parts Company and hence they have seen various business cycles.
-
Location Advantage :
The company is located in Coimbatore 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.
Credit Risks:
-
Competition in the industry :
The company faces stiff competition from dealers of other leading spare part manufacturers apart from the unorganised segment, and also low differentiation in the end product. Intense competition thus, restricts the firms scalability of operations, and bargaining power with suppliers.
-
Low profit margins :
The profit margins are mainly constrained by trading nature of business and intense competition. Intense competition prompts dealers to offer discounts and incentives to customers, thereby straining the profitability.
-
Impact of COVID-19 Pandemic :
Due to lockdown, on account of COVID 19 pandemic, the company being a dealer of spare parts from OEM, may face shortage of supply from the manufacturers and the same will have impact on the performance of the company in FY21.
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: The rating would be upgraded if there is improvement in gearing ratio, networth, profitability margins and liquidity position of the company.
Negative: The ratings would be downgraded if the revenue, profitability margins and gearing ratio deteriorates.
Going forward, the ability of the entity to achieve projected revenue & profitability margins and manage liquidity would be key rating sensitivities.
LIQUIDITY POSITION
Stretched
The liquidity position of the company is marked by maximum utilization of bank limits which is close to 100% for the last few months, Average debt protection metrics i.e. DSCR and ISCR of 1.01x and 1.23x in FY 19 vis à vis 1.15x and 0.83x in FY18 respectively and conversion cycle of 153 days in FY19.
PROFILEAditya Auto Mobile Spares Private Limited (AASPL or "the company") was incorporated on 12 December 2001 at Coimbatore, Tamil Nadu. The company is engaged in trading of automobile spares of OEMs (Original Equipment Manufacturers) of two wheelers and three wheelers. The company is an authorized stockist for spares of OEMs like Yamaha, Royal Enfield and Bajaj. Spare parts of other OEMs are procured from wholesale vendors. The company also sells batteries and lubricants. The main outlet is in Coimbatore and is spread over an area of 25,000 square feet in a six-storey building. Mr Ponnusamy Selvakumar, Mrs Selvakumar Karthika are the directors of the company.The company has six outlets in Tamil Nadu out of which five are located in Coimbatore and one is located in Tirupur.
The company is a part of 'The Aditya Group' which has its offices and factories spread over Coimbatore, Chennai and Trichy having a total staff strength of over 600 employees.The group's founder and promoter is Mr R Ponnusamy.
KEY FINANCIAL INDICATORS| Key Parameters | Units |
FY 18-19 (Audited) |
FY 17-18 (Audited) |
|---|---|---|---|
| Operating Revenue | Rs.Crs. | 55.51 | 50.39 |
| EBITDA | Rs.Crs. | 2.95 | 2.12 |
| PAT | Rs.Crs. | 0.44 | 0.65 |
| Tangible Net Worth | Rs.Crs. | 5.15 | 4.71 |
| Total Debt/Tangible Net Worth | Times | 3.36 | 4.13 |
| Current Ratio | Times | 1.15 | 1.24 |
NON-COOPERATION WITH PREVIOUS RATING AGENCY ,IF ANY
| CRA Name | Date | Amount | Rating |
|---|---|---|---|
| ICRA | 24 Sep 2019 | 10.00 | ICRA B+ |
| CRISIL | 15 May 2020 | 12.00 | CRISIL B+ |
| ACUITE | 15 May 2020 | 14.50 | Acuite BB- |
| S.No | Current Rating (2020) | Rating History | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Facilities | Tenure | Amount (Rs.Crs) | Rating | 2019 | 2018 | 2017 | ||||
| Fund Based | ||||||||||
| 1 | Over Draft - Sanctioned | Long Term | 14.00 | BWR BB-(Stable) | NA | NA | NA | |||
| Total | 14.00 | (Rupees Fourteen 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.
Hyperlink/Reference to applicable Criteria : For More Information Contact:| Analytical Contacts | Investor Contacts |
|---|---|
|
Preeti Dhanasekar Ratings Analyst B : +91 044 24663326 Ext : 103 preeti.d@brickworkratings.com |
Liena Thakur Assistant Vice President - Corporate Communications M : +91 84339 94686 liena.t@brickworkratings.com |
|
R Varadarajan Associate Director - Ratings B : +91 044 24663326 varadarajan.r@brickworkratings.com |
|
| 1-860-425-2742 | |
| SL.No. | Type Of Facilities | Long Term(Rs.Crs.) | Short Term(Rs.Crs.) | Total(Rs.Crs.) |
|---|---|---|---|---|
| 1 | Over DraftSanctioned | 14.00 | _ | 14.00 |
| Total | 14.00 | |||
| TOTAL (Rupees Fourteen Crores Only) | ||||
Note: The company also has business loans with Axis Bank and IndusInd Bank.The oustanding amount is Rs 0.24 Crs as on 31 March 2019 and the same is not considered for the purpose of rating.
| 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 |
Ratings are not a recommendation or suggestion ,directly or indirectly, to you or any other person, to buy sell, make or hold on any investement,loan or security or to undertake any investement strategy with respect to any investment,loan or security or any issuer.
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.