Rating Rationale

Brickwork Ratings has assigned the long-term rating and short-term rating of BWR BB (Stable) and BWR A4 for the bank loan facilities of Rs. 53.08 Crore of Chambal Motors Private Limited.

For assigning the ratings, BWR has relied upon the last three year financials till FY26 and Projected financials for FY27 and FY28 as well as publicly available information and clarification provided by the management.

The assigned ratings reflect Chambal Motors Private Limited’s established track record and market presence as an authorized dealer for Tata Motors Limited across Rajasthan, experienced management team and significant top-line expansion alongside a turnaround to net profitability in FY26 Prov.

The ratings, however, remain constrained by the company’s highly leveraged capital structure (Total Debt / TNW of 9.35x in FY26 Prov.), thin operating profit margins (1.45% in FY26 Prov.), modest net worth base (Rs. 3.52 crore), sub-unity Current Ratio (0.93x), and tight debt coverage metrics (ISCR of 1.00x and DSCR of 0.90x). The ratings are further constrained by 100% principal dependency on Tata Motors, intense competitive pressures in the retail automotive sector, and regional geographic concentration risk in Rajasthan.

The rating outlook has been assigned as "Stable" as BWR believes that Chambal Motors Private Limited '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.

The key covenants are the standard terms as stipulated in the sanction letters of the rated facilities.

• Substantial Top-Line Expansion :

  Total Operating Income grew by 48.81% YoY in FY26 Prov. to Rs. 223.92 crore (up from Rs. 150.47 crore in FY25 and Rs. 136.46 crore in FY24), reflecting strong retail vehicle volume growth.

• Promoter Capital Support :

  Promoters demonstrated ongoing financial commitment by infusing Rs. 1.00 crore of fresh equity capital in FY26 Prov., increasing paid-up equity share capital to Rs. 1.79 crore and expanding Tangible Net Worth (TNW) to Rs. 3.52 crore (from Rs. 2.45 crore in FY25)..

• Extensive Promoter Experience & Second-Generation Continuity :

  Leadership is spearheaded by Ms. Neerja Kohli (Director) with 26 years of industry experience and over 24 years on the board, offering strong operational stability. Inducting Mr. Karan Kohli (Director, BBA) strengthens second-generation management continuity and mitigates key-person dependency risks.

• Established Regional Distribution Network :

  CMPL maintains a strong distribution footprint across Rajasthan through 11 showrooms and 3 dedicated service stations, supported by a workforce of approximately 260 employees.

• Highly Leveraged Capital Structure :

  Despite moderation, capital leverage remains elevated with Total Debt / TNW standing at 9.35x in FY26 Prov. (peak of 13.24x in FY25) and Total Outside Liabilities / TNW (TOL/TNW) at 10.39x. Total Debt stands at Rs. 32.92 crore, heavily dominated by short-term working capital borrowings of Rs. 28.74 crore.

• Thin Operating Profit Margins :

  Operating profit margins remain low at 1.45% in FY26 Prov. (1.61% in FY25), constrained by the trading nature of auto dealerships and rising operational costs.

• Weak Debt Protection Metrics :

  High finance charges of Rs. 3.24 crore in FY26 Prov. continue to absorb operating profit before interest and tax Rs. 2.64 crore, resulting in an Interest Coverage Ratio (ISCR) of 1.00x and a Debt Service Coverage Ratio (DSCR) of 0.90x.

• Tight Liquidity and Working Capital Deficit :

  The Current Ratio dipped below unity to 0.93x in FY26 Prov. (from 1.01x in FY25), yielding a net working capital deficit of Rs. 2.28 crore. Free cash reserves remain minimal at Rs. 0.68 crore, resulting in a constrained Quick Ratio of 0.31x.

• High Principal Concentration & OEM Dependency :

  CMPL’s business performance is linked to the strategic initiatives, pricing decisions, market share and vehicle supply continuity of Tata Motors Limited.

Positive Triggers:

• Sustained growth in Total Operating Income beyond Rs. 250.00 crore along with expansion in OPBDIT margin above 2.00% and net profit margin (PAT margin) expanding above 0.50%
• Substantial equity/unsecured loan infusion by the promoters, strengthening the Tangible Net Worth (TNW) 
• Bringing Total Debt / TNW to below 7.00x.
• Improvement in liquidity profile, evidenced by the Current Ratio rising above 1.10x (improving from 0.93x in FY26 Prov.) and reduced reliance on short-term bank borrowings.

Negative Triggers:

• Decline in Total Operating Income or recurrence of net losses.
• Further erosion of Tangible Net Worth and negative operational cash flows.
• Further deterioration of the liquidity profile.
• Any adverse modification, non-renewal or termination of the authorized dealership agreement with Tata Motors Limited

Chambal Motors Private Limited’s liquidity profile remains tight in FY26 Prov., marked by a working capital deficit of Rs. 2.28 crore as the Current Ratio slipped below unity to 0.93x (down from 1.01x in FY25). With minimal free cash reserves of Rs. 0.68 crore, the company relies heavily on short-term bank borrowings of Rs. 28.74 crore (~87% of total debt) to support vehicle inventory holding of Rs. 21.68 crore. While Net Cash Accruals recovered to Rs. 0.68 crore, the Debt Service Coverage Ratio (DSCR) remains constrained at 0.90x relative to annual debt servicing requirements. This stress is partially offset by improved operational efficiency, as the cash conversion cycle compressed to 45 days (37 days inventory; 11 days receivables with zero overdues > 6 months). Medium-term liquidity is projected to normalize in FY27, with the Current Ratio recovering to 1.02x, Net Cash Accruals expanding to Rs. 3.41 crore, and DSCR strengthening to 1.22x.

Chambal Motors Private Limited demonstrates an evolving ESG profile anchored by sustainable product offerings and structured governance. Environmentally, the company actively supports clean mobility through the retail distribution and servicing of Tata electric vehicles (EVs) and CNG models, with no past environmental violations or penalties reported. On the social front, the company maintains full statutory compliance for its workforce of approximately 260 employees, supported by OEM-aligned technical and safety training programs. Governance is overseen by a closely held executive board comprising Ms. Neerja Kohli (26 years of experience) and Mr. Karan Kohli (BBA, 5 years of experience), backed by a clean banking conduct and regulatory compliance track record.

Chambal Motors Private Limited (CMPL) is an authorized dealer for Tata Motors Limited, engaged in the retail sales, distribution, and servicing of Tata passenger vehicles across Rajasthan. The company operates a fully integrated automotive dealership model, managing the complete customer ownership cycle—from front-end vehicle sales to back-end servicing and value-added automotive support.

The Complexity Indicator refers to the ease with which the returns associated with the rated instrument could be estimated. It does not indicate the risk related to the timely payments on the instrument, which is rather indicated by the instrument's credit rating. It also does not indicate the complexity associated with analysing an entity's financial, business, industry risks or complexity related to the structural,transactional or legal aspects. Details on the complexity levels of the instruments are available on BWR's website Complexity Levels.

Not Applicable

BWR Board of Directors have no influence over rating decisions, nor do they sit on the rating committee or review, discuss or evaluate any credit rating during the Board meetings.

Brickwork Ratings (BWR), a Securities and Exchange Board of India [SEBI] registered Credit Rating Agency and accredited by Reserve Bank of India [RBI]. BWR is the 5th agency to get a credit rating registration in India in 2009 and its corporate office in Bengaluru. It has a country-wide presence with representatives in 150+ locations. Canara bank is an institutional investor in Brickwork.

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