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

Facilities**	Amount (Rs.Crs.)	Tenure	Rating#
Fund Based
Over Draft - Sanctioned	14.00	Long Term	BWR
Sub Total	14.00
Grand Total	14.00	(Rupees Fourteen Crores 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

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

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.

ANALYTICAL APPROACH

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 INDICATORS -

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.

ABOUT THE ENTITY

Aditya 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.

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

ANY OTHER INFORMATION

RATING HISTORY FOR LAST THREE YEARS (including withdrawal and suspended) 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
• Approach to Financial Ratios

Analytical Contacts
Preeti Dhanasekar Ratings Analyst Board : +91 044 24663326 preeti.d@brickworkratings.com	R Varadarajan Associate Director - Ratings Board : +91 044 24663326 varadarajan.r@brickworkratings.com
1-860-425-2742 | media@brickworkratings.com

SL.No.	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)
1	Over Draft - Sanctioned	14.00	_	14.00
Total				14.00
TOTAL (Rupees Fourteen Crores Only)