RATING RATIONALE
25 Sep 2020
Indico Motors Pvt. Ltd.
Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.24.00 Crs. of Indico Motors Pvt. Ltd.
Particulars| Facility** | Amount (Rs.Crs) | Tenure | Rating* |
|---|---|---|---|
| Fund Based | |||
| Cash Credit Sanctioned | 22.00 | Long Term | BWR BB (Stable) |
| Sub Total | 22.00 | ||
| Non-Fund Based | |||
| Bank Guarantee Sanctioned | 02.00 | Short Term | BWR A4 + |
| Sub Total | 02.00 | ||
| Grand Total | 24.00 | (Rupees Twenty Four Crores Only) | |
**Details of Bank facilities are provided in Annexure-I RATING ACTION / OUTLOOK : Stable
BWR has taken a Standalone view of Indico Motors Pvt. Ltd. and essentially relied upon the Company’s Audited financials for FY 19, Provisional figures for FY 20, projections for FY 21, other information as available in the public domain, as well as information / clarifications provided by the company and its bankers, to arrive at the present ratings. BWR believes that Indico Motors 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
Credit Strengths:
- Experienced Management & long track record of Operations :
The promoters of the Company have more than three decades experience in manufacturing of the bodies of heavy commercial vehicles. The day-to-day affairs of the company are looked after by Mr. Mr Sanjay Dubey with the support of experienced professionals. The company has established its operations since 1989.
- Reputed Customers & Suppliers :
The company has established healthy relations with reputed suppliers like Ashok Leyland, Hyva India Pvt. Ltd., Tata Steel Processing and Distribution Limited, Wipro Enterprises and customers like Tata Motors Ltd., Ashok Leyland. etc.
- Geographically well diversified :
The company has well diversified its operations; it has two plants located in Jamshedpur and Tamil Nadu catering to heavy commercial vehicles manufacturing companies across India. Its sales are to customers in different parts of the country.
Credit Risks:
- Moderate Financial Risk Profile :
The financial profile of the company is marked by moderate scale of operations & profitability. Further the same is marked by high leverage and low debt coverage indicators.
- Supplier and Customer concentration risk :
The top two suppliers accounted for around 60% of the purchases of the company, indicating a high supplier concentration risk. Also, since most of manufacturing of bodies of heavy commercial vehicles are for Tata Motors Ltd. & Ashok Lyeland there is considerable customer concentration risk. These risks are however mitigated by the excellent reputation which these companies enjoy.
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:
- Increase in scale of operations & profitability.
- Increase its Net Worth, improvement in debt coverage & leverage indicators.
Negative :
- Decline in Revenue & deterioration of the financial position of the Company.
- Delay in payments of its debt obligations.
- Further Deterioration in leverage indicator based on Total debt to TNW, as well as weakening of liquidity position of the business.
Liquidity Indicator: Adequate: The liquidity of the company stands adequate as reflected by the comfortable cash credit utilisation ~ at 85% for the last six months. The Company presently does not have any major debt-led capex plans and long term repayment obligations. Further the current ratio stood at 1.14 times in FY 20 (FY19:1.05 times). The company has also not availed the Covid 19 Relief moratorium.
PROFILEIndico Motors Private Limited is a Jharkhand based private limited company incorporated in 2005 by Mr Sanjay Dubey. It is engaged in manufacturing the bodies of heavy commercial vehicles such as tippers, trailers and tip trailers. It has two manufacturing units in Jamshedpur (Jharkhand) and Hosur (Tamil Nadu) that have a combined production capacity of over 600 vehicles per month.
KEY FINANCIAL INDICATORS| Key Parameters | Units |
FY 18-19 (Audited) |
FY 17-18 (Audited) |
|---|---|---|---|
| Operating Revenue | Rs.Crs. | 155.71 | 96.63 |
| EBITDA | Rs.Crs. | 6.39 | 5.33 |
| PAT | Rs.Crs. | 0.90 | 0.34 |
| Tangible Net Worth | Rs.Crs. | 6.01 | 5.11 |
| Total Debt/Tangible Net Worth | Times | 5.47 | 6.95 |
| Current Ratio | Times | 1.05 | 1.03 |
NON-COOPERATION WITH PREVIOUS RATING AGENCY ,IF ANY
| CRA Name | Date | Amount | Rating |
|---|---|---|---|
| FITCH | 23 May 2018 | 31.00 | IND BB/Stable/A4+ |
| S.No | Current Rating (2020) | Rating History | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Facilities | Tenure | Amount (Rs.Crs) | Rating | 2019 | 2018 | 2017 | ||||
| Fund Based | ||||||||||
| 1 | Cash Credit - Sanctioned | Long Term | 22.00 | BWR BB(Stable) | NA | NA | NA | |||
| Non-Fund Based | ||||||||||
| 2 | Bank Guarantee - Sanctioned | Short Term | 02.00 | BWR A4+ | NA | NA | NA | |||
| Total | 24.00 | (Rupees Twenty Four 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 |
|---|---|
|
Saroj K Das Ratings Analyst D : +91 90739 18940 sarojkumar.d@brickworkratings.com |
Liena Thakur Assistant Vice President - Corporate Communications M : +91 84339 94686 liena.t@brickworkratings.com |
|
Anuradha Gupta anuradha.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 CreditSanctioned | 22.00 | _ | 22.00 |
| 2 | Bank GuaranteeSanctioned | _ | 2.00 | 2.00 |
| Total | 24.00 | |||
| TOTAL (Rupees Twenty Four 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 |
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.