Somnath Enterprises

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs. 65.50 Crs. of Somnath Enterprises

Particulars

Facilities**	Amount(Rs.Crs.)	Tenure	Rating#
Fund Based	60.00	Long Term	BWR BBB - /Stable Assignment
	1.00	Short Term	BWR A3 Assignment
Non Fund Based	4.50	Short Term	BWR A3 Assignment
Grand Total	65.50	(Rupees Sixty Five Crores and Fifty lakhs Only)

#Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank Loan facilities,consolidation or instruments are provided in Annexure RATING ACTION / OUTLOOK

Brickwork Ratings has assigned a long-term rating of BWR BBB-/Stable and a short-term rating of BWR A3 to the bank loan facilities of Rs.65.50 Crores of Somnath Enterprises Firm.

The rating factors in the Partner's extensive industry experience and the growth in the scale of its operations, the presence of auto dealerships with well-known brands contributes to strong business stability, a steady flow of customers, and a continuous supply of products. Additionally, the firm has a moderate financial risk profile, supported by consistent revenue growth over the past two years. However, the rating is constrained by intense industry competition, with many dealers representing the same brands as well as other automobile manufacturers, the working capital-intensive nature of the business, and low profitability margins. Going forward, the company's ability to enhance its revenue profile and strengthen its financial risk profile will be key factors influencing the rating.

The rating outlook has been assigned as "Stable" as BWR believes that Somnath Enterprises firm's 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 revenue and profitability margins show sustained improvement. The rating outlook may be revised to 'Negative' if the financial risk profile goes down.

KEY RATING DRIVERS

Credit Strengths:

• Experience Management :

  The firm was established by highly experienced partners. Mr. Vivek Agrawal, approximately 52 years old, is a graduate engineer with versatile experience in the automobile spare parts market in Bihar and Jharkhand. He has been associated with the business for over a decade and has taken voluntary retirement from a Class I Gazetted government job. Mrs. Jaya Agrawal, the wife of Mr. Vivek Agrawal, is 50 years old and is also a graduate engineer. She has excellent communication skills and maintains strong relationships with all team members. Mrs. Agrawal oversees the entire administration, human resources, and operations, including: Daily dispatch system management and control, Customer grievances, Inventory management, and Warehouse operations.

• Consistent Revenue growth :

  The firm's total operating income has demonstrated consistent growth over the past two years, rising from Rs.237.90 Cr in FY2023 to Rs.269.63 Cr in FY2024, and further increasing to Rs.324.64Cr in FY2025. This constant increase shows that the business is performing well and gaining more customers each year, and underscores the company's strengthening market position. Because the firm has proven it can grow consistently, it is well-positioned to continue this success and expand even further in the future.

• Dealership with well-known brands :

  The firm is an authorized distributor for renowned brands, including Mahindra, Toyota, Escorts, Piaggio, Bajaj, Greaves, Bosch, Ashok Leyland, and many more. Leveraging an extensive network, the firm caters to a comprehensive range of vehicles, including two-wheelers, three-wheelers, four-wheelers, tractors, Light Commercial Vehicles (LCVs), Heavy Commercial Vehicles (HCVs), and new-generation passenger and commercial vehicles.

  Its long-standing association with these industry leaders ensures robust business stability, a steady flow of customers, and a continuous supply of products. Furthermore, being an authorized dealer provides access to established brand recognition, standardized operating practices, marketing support, and a diversified product portfolio. This strategic partnership facilitates consistent revenue generation across vehicle sales, spare parts, and after-sales services, thereby strengthening the company’s business profile and credit quality.

• Net worth of the partners :

  According to the net worth certificate dated July 4, 2025, the combined net worth of the partners is Rs. 70.82 crore, with Mr. Vivek Agrawal having a net worth of Rs. 40.64 crore and Mrs. Jaya Agrawal having a net worth of Rs. 30.18 crore. In the event of any shortage of funds, the partners have a strong net worth to support their working capital requirements.

• Improvement in the financial profile in FY2026 :

  According to the FY2026 provisional financials provided by the client, the firm's total operating income increased to Rs. 334.36 Cr, with a reported OPBDIT of Rs. 9.98 Cr and a net profit of Rs. 2.11 Cr. The firm’s leverage ratios have improved. The Total Debt/TNW ratio decreased from 2.31x in FY2025 to 2.04x in FY2026, while the TOL/TNW ratio declined from 2.97x to 2.41x during the same period. Debt coverage metrics also showed progress: the ISCR improved marginally from 1.40x to 1.48x, and the DSCR rose from 1.24x to 1.46x in FY2026. Furthermore, the current ratio strengthened to 1.96x in FY2026, indicating an adequate short-term liquidity position.

Credit Risks:

• High Industry Competition :

  The firm operates in a highly competitive automobile dealership industry with the presence of multiple dealers of the same brand as well as other automobile manufacturers in the region. Intense competition may lead to pressure on sales volumes and lower profit margins due to discounts and promotional schemes. This could impact the firm's revenue and profitability.

• Thin Profitability Margins & Nature of the Business :

  The firm operates in a high-volume, low-margin industry, reporting an operating margin of 3.13% and a net profit margin of 0.78% for FY2025. These figures reflect the typical traits of the automobile dealership sector, where profitability is constrained by several structural factors. As an authorized dealer, the firm's profits are limited by its agreement with the original equipment manufacturers (OEMs). This arrangement limits the ability to negotiate purchase costs or significantly increase markups, resulting in minimal opportunities for additional income growth.

  The nature of the business requires significant capital investment for procuring spare parts. The high purchase costs compared to the final selling price naturally compress the net margins. To maintain its "Authorized" status, the firm must also periodically invest in facility upgrades, showroom branding, and the modernization of service centers. These mandatory investments, driven by the manufacturers’ global marketing strategies, consistently pressure the company’s cash flow.es, consistently pressure the company’s cash flow. Due to the scale of the distribution network and the specialized nature of the industry, the company maintains higher inventory levels, with an average cycle of 60 to 75 days.

• Geographical concentration risk :

  Since the firm operates exclusively in Bihar and Jharkhand, it faces significant geographical concentration risk. This lack of diversification means that any regional disruption, such as state-specific policy shifts, political instability, or localized economic downturns, would have a negative impact on the firm’s operations. The absence of a multi-state presence limits the firm's growth, making its financial stability heavily dependent on the regional stability of its core markets

  However, the firm’s total operating income has shown a sustained upward trend, rising from Rs. 237.90 Cr in FY2024 to Rs. 324.64 Cr in FY2025 and further to Rs.334.36 Cr in FY2026 as per the provisional financials. This consistent year-on-year growth highlights a successful expansion of operations, suggesting that the impact of this regional concentration is mitigated by the firm’s strengthening market position.

ANALYTICAL APPROACH - Standalone

For arriving at its ratings, BWR has considered the standalone approach for the company. BWR has applied its rating methodology as detailed in the rating criteria.

RATING SENSITIVITIES

Going forward, the company’s ability to improve its revenue profile and strengthen its financial risk profile will remain the key rating sensitivities.

Positive:

• Improvement in scale of operations and an improvement in operating margin by 20% or above, with enhanced cash accruals and a stronger cash and cash equivalent position.
• Improvement in debt protection metrics, with DSCR improving more than 1.50x.

Negative:

• A decline of 10% or more in revenue, and an increase in leverage ratios i.e Total Debt/ TNW ratio increasing more than 2.50x.
• Reduction in the Tangible networth to below Rs. 33.00 Crores due to the withdrawal of partners' capital.

LIQUIDITY INDICATORS - Adequate

Adequate liquidity characterised by a sufficient cushion in accruals vis-a-vis repayment obligations and a moderate net cash accruals of Rs. 3.06 Crore. No Capex plans are envisaged in the near future. Its bank limits are utilised to the extent of around 99% and has sought enhancement in bank lines, supported by the above unity current ratio.

The firm has net cash accruals of Rs.3.06 Cr as against the CPLTD of Rs.1.09 Cr in FY2025. The current ratio stood at 1.81x in FY2025, indicating an adequate short-term liquidity position of the company. The firm has Rs.28.09 Cr of TNW in FY2025, reflecting the moderate net worth of the company. The ISCR of the firm stood at 1.40x in FY2025, and the DSCR stood at 1.24 times in FY2025, indicating a sufficient debt servicing capacity of the firm. 

According to the net worth certificate dated July 4, 2025, the combined net worth of the partners is Rs. 70.82 crore, with Mr. Vivek Agrawal having a net worth of Rs. 40.64 crore and Mrs. Jaya Agrawal having a net worth of Rs. 30.18 crore. In the event of any shortage of funds, the partners have a strong net worth to support their working capital requirements.

ABOUT THE ENTITY

Somnath Enterprises is a partnership firm established in 2008 by Mr. Vivek Agrawal and Mrs. Jaya Agrawal. The firm is one of the leading and largest distribution houses for automotive spare parts and lubricants in Bihar and Jharkhand.

As an authorized distributor for renowned brands, including Mahindra & Mahindra, Escorts, Piaggio, Bajaj, Greaves, Bosch, Ashok Leyland, and Gulf Lubricants, the firm maintains an extensive network. This network caters to a full range of vehicles, such as 2-wheelers, 3-wheelers, 4-wheelers, tractors, LCVs (Light Commercial Vehicle), HCVs(Heavy Commercial Vehicle), and new-generation passenger and commercial vehicles.

Somnat Enterprises primarily operates on a B2B model, supplying materials to retailers. Somnat Enterprises has three branches located in Patna, Purnia, and Ranchi, and has a strong network across all 38 districts of Bihar and Jharkhand. 

ESG Profile

The company demonstrates a Adequate ESG profile based on its environmental, social, and governance practices.

Environmental: Risks are centered on high energy intensity, water usage, and waste. Performance is tracked via emissions levels, waste management, and the percentage of renewable energy used.

Social: Focuses on operational resilience through labor law compliance, workplace safety, and human capital development (workforce diversity and training).

Governance: Evaluation is based on the transparency and effectiveness of board independence, audit oversight, and risk-management systems.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 23 - 24 (Audited - Annual)	FY 24 - 25 (Audited - Annual)	FY 25 - 26 (Provisional - Annual)
Operating Revenue	Rs.Crs.	269.63	324.64	334.36
EBITDA	Rs.Crs.	8.89	10.15	9.98
PAT	Rs.Crs.	2.26	2.54	2.11
Tangible Net Worth	Rs.Crs.	25.04	28.09	32.67
Total Debt / Tangible Net Worth	Times	2.00	2.31	2.04
Current Ratio	Times	1.70	1.81	1.96

KEY COVENANTS OF THE FACILITY RATED

The terms of sanction include covenants normaly stipulated for such facilities.

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

Not Applicable

RATING HISTORY FOR LAST THREE YEARS (including withdrawal and suspended)

Facilities	Current Rating  (2026)			2025		2024		2023
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	60.00	BWR BBB-/Stable (Assignment)	NA	NA	NA	NA	NA	NA
Fund Based	ST	1.00	BWR A3 (Assignment)	NA	NA	NA	NA	NA	NA
Non Fund Based	ST	4.50	BWR A3 (Assignment)	NA	NA	NA	NA	NA	NA
Grand Total		65.50	(Rupees Sixty Five Crores and Fifty lakhs Only)

Hyperlink/Reference to applicable Criteria

• General Criteria
• Approach to Financial Ratios
• Short Term Debt
• Trading Entities

Analytical Contacts
Krishnappa Murugesh Ratings Analyst krishnappa.m@brickworkratings.com	Sabitha M Nayak Associate Director-Ratings sabitha.nayak@brickworkratings.com
Media Contact | media@brickworkratings.com	Client Support | clientsupport@brickworkratings.com

SL.No.	Name of the Bank/Lender	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)	Complexity of the Instrument
1	Axis Bank Ltd.	Adhoc Facilities FB (CC/TL/OD) - Sanctioned	_	0.50	0.50	Simple##
2	Axis Bank Ltd.	Adhoc Facilities FB (CC/TL/OD) - Sanctioned	_	0.50	0.50	Simple##
3	Axis Bank Ltd.	Channel Finance Facility - Sanctioned	3.00	_	3.00	Simple##
4	Axis Bank Ltd.	Channel Finance Facility - Sanctioned	5.00	_	5.00	Simple##
5	Axis Bank Ltd.	Channel Finance Facility - Sanctioned	4.50	_	4.50	Simple##
6	Axis Bank Ltd.	Channel Finance Facility - Sanctioned	3.50	_	3.50	Simple##
7	ICICI Bank	Overdraft - Sanctioned	10.00	_	10.00	Simple##
8	ICICI Bank	Cash Credit - Sanctioned	25.50	_	25.50	Simple##
9	ICICI Bank	Bank Guarantee - Sanctioned	_	4.50	4.50	Simple##
10	Standard Chartered Bank	Channel Finance Facility - Sanctioned	4.50	_	4.50	Simple##
11	TATA Capital Financial Services Limited	Channel Finance Facility - Sanctioned	4.00	_	4.00	Simple##
Total			60.00	5.50	65.50
TOTAL (Rupees Sixty Five Crores and Fifty 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.