Jagrut Motors Pvt. Ltd.

Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 40.00 Crs. of Jagrut Motors Pvt. Ltd.

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (05 Feb 2021)	Present
Fund Based	36.64	38.80	Long Term	BWR BB/Stable Reaffirmation	BWR BB /Stable Reaffirmation
Non Fund Based	1.20	1.20	Short Term	BWR A4 Reaffirmation	BWR A4 Reaffirmation
Grand Total	37.84	40.00	(Rupees Forty 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

Brickwork Ratings reaffirms the rating at BWR BB Stable/ BWR A4 for the Bank Loan Facilities of Rs.40.00 Crore of Jagrut Motors Private Limited (JMPL).

BWR believes that Jagrut Motors Private Limited business risk profile will be maintained over the medium term. The 'Stable' outlook indicates a low likelihood of rating change over the medium term.

BWR has essentially relied upon the audited financial statements of Jagrut Motors Private Limited for FY20, FY21 and Key figures for 10FY22(Provisional) and projections of FY22 and FY23 and publicly available information and information/clarifications provided by the company's management.

The rating reaffirmations continue to take into account the experience of promoters in the automobile dealership industry, established operational track record and diversified product profile. The rating is constrained by modest Scale of operations,with low level of Profitability, Leveraged capital structure and debt coverage indicators and highly fragmented and cyclical nature of the auto industry.

KEY RATING DRIVERS

Credit Strengths:

Experience of promoters in the automobile dealership industry :
Mr. Rajendra Joshi is the founder and Managing Director of the company and has over two decades of experience in the automobile industry which is benefited to the company. JMPL is an authorized dealer for Maruti Suzuki India Limited (MSIL) and Honda Motorcycle and Scooter India Private Limited(HMSI).
Established operational track record and diversified product profile :

JMPL is an Authorized dealer for Maruti Suzuki India Limited (MSIL) and Honda Motorcycle Scooter Limited (HMIL). The company has an established market position in the domestic scooter segment operate in Ratnagiri and Sindhudurg of Maharashtra and also has additional sales points in Chiplun, Kudal, Kankavali , Dapoli, Rajapur, Guhagar, Sawantwadi in Maharashtra region. The company has wide range of product profile i.e. Alto, Dzire, S-PRESSO, Eeco, Alto, Alto K10, Ertiga, Wagon R, Vitara, Brezza,Celerio, Celerio X Ertiga, Swift etc. from MSIL and Honda Activa 5G,Honda Activa 125 K, Honda Activa, Honda Dio, Honda Aviator, Honda Cliq, Honda Grazia, Honda Navi, Honda Hornet 160 SP, Honda X-Blade, Honda CB Unicorn 150, Honda CB Shine SP, Honda CB Shine, Honda CBR 250 etc from HMSI.

Credit Risks:

Modest Scale of operations :
The scale of operations continued to remain modest with total operating income (TOI) in the range of Rs.123.46 crore to Rs.127.11 crore during FY19 to FY21. During FY21, The TOI of company has marginally improved and stood at Rs.127.11 crore as against Rs.123.46 crore in FY20.Further, during 10MFY22 (Prov.) the company has achieved TOI of Rs.80.43 crore with profitability at Rs.2.44 crore.
Leveraged capital structure and weak debt coverage indicators :
The company’s capital structure continues to remain leveraged although the same has improved and stood at 2.30 times as on March 31, 2021 ( 6.67 times as on March 31, 2020) owing to increase in tangible net worth base from Rs.6.91 crore to Rs.15.01 crore as on March 2021 which was on account of conversion of unsecured loan to equity amounting to Rs.7.73 crore. Debt protection metric i.e. ISCR and DSCR remained weak at 1.14x and 0.75x as of March 2021 (1.30x and 0.81x as on March 2020).
Low Profitability :

The operating margins of auto dealers, is inherently low due to the dealership nature of operations and intense competition in the auto-dealership business. Low profitability with net profit margin and operating profit margin at 0.29% and 3.16% in FY21 (vis-a-vis 0.39% and 4.21% in FY20).
Cyclical nature of the auto industry :
The auto industry is inherently vulnerable to the economic cycles and is highly sensitive to the interest rates and fuel prices. A hike in interest rate increases the costs associated with the purchase leading to purchase deferral. Fuel prices have a direct impact on the ownership costs of the vehicle and any hike in the same would lead to reduced disposable income of the consumers, influencing the purchase decision.

ANALYTICAL APPROACH - Standalone

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 will be upgraded if the company is able to achieve significant growth in revenue and improvement in profitability, capital structure and debt service coverage indicators.

Negative:The rating may be downgraded if there is lower than expected revenues affecting the profitability margins, coverage ratios, liquidity, working capital management and capital structure adversely

LIQUIDITY INDICATORS - Adequate

The liquidity profile of the company remained adequate with cash and bank balance of Rs.5.98 crore as on January 2022. with its average working capital utilization of its working capital borrowing. Utilization of i.e. Cash credit of Rs.21.00 Crore stood high at ~96.80%, Utilization of Cash Credit Limit of Rs.5.00 Crore stood at ~11.81%, Utilization of Cash Credit Limit of Rs.2.75 Crore stood at ~68.11% and Utilization of Cash Credit Limit of Rs.5.00 Crore stood at ~5.3% for past ten months ended January 2022. Furthemore, the company has low level of net accruals at Rs.0.96 crore as on March 2021 with current ratio at 0.88 times as on March 2021.

ABOUT THE ENTITY

Jagrut Motors Pvt Ltd (JMPL) was incorporated in 2014 as private limited by Mr. Rajendra keshav Joshi. The company is an authorized dealer of Maruti Suzuki India Limited (MSIL) and Honda Motorcycle & Scooters India Private Limited (HMSI). Dealership includes Arena from Oct 2000, Nexa from Dec 2016, Commercial vehicles of maruti Suzuti from Nov 2017 & Honda Two Wheelers from Nov 2007. JMPL has 9 showroom workshop, True Value outlets & driving school in Ratnagiri,Chiplun,Kudal,Kankavali,Dapoli,Rajapur,Guhagar,Sawantwadi for MSIL (Four Wheeler) and HMSI (Two wheeler). The workshop is equipped with the State of Art machinery that is manned by a skilled workforce to meet the highest customer satisfaction standards as per the Maruti norms and Honda norms.? Furthermore, the company also provides auxiliary services like sale of spare parts, accessories, insurance services, workshop and financing of vehicles.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 20-21 (Audited)	FY 19-20 (Audited)
Operating Revenue	Rs.Crs.	127.11	123.46
EBITDA	Rs.Crs.	4.01	5.20
PAT	Rs.Crs.	0.37	0.48
Tangible Net Worth	Rs.Crs.	15.01	6.91
Total Debt/Tangible Net Worth	Times	2.30	6.67
Current Ratio	Times	0.88	0.82

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

ICRA B+ ISSUER NOT COOPERATING through its press release dated October 8, 2021 as the company has not provided the requisite information to monitor the performance despite repeated requests by ICRA.

RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)

Facilities	Current Rating (2022)			2021		2020		2019
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	38.80	BWR BB/Stable (Reaffirmation)	05Feb2021	BWR BBStable (Reaffirmation)	NA	NA	02Dec2019	BWR BBStable (Assignment)
Non Fund Based	ST	1.20	BWR A4 (Reaffirmation)	05Feb2021	BWR A4 (Reaffirmation)	NA	NA	02Dec2019	BWR A4 (Assignment)
Grand Total		40.00	(Rupees Forty Crores Only)

COMPLEXITY LEVELS OF THE INSTRUMENTS - Simple

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

Analytical Contacts
Durga Lalit Purohit Ratings Analyst durga.lp@brickworkratings.com	Ajit S Jagnade Senior Manager - Ratings Board : +91 22 2831 1426, +91 22 2831 1439 ajit.j@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

Jagrut Motors Pvt. Ltd.

ANNEXURE-I

Details of Bank Facilities rated by BWR

SL.No.	Name of the Bank/Lender	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)
1	Bank of Maharashtra	Bank Guarantee - Sanctioned	_	1.20	1.20
2	Kotak Mahindra Bank	Emergency Credit Line Guarantee Scheme (ECLGS) - Sanctioned	6.24	_	6.24
3	Kotak Mahindra Bank	Term Loan - Sanctioned	1.75	_	1.75
4	Kotak Mahindra Bank	Cash Credit - Sanctioned	29.35	_	29.35
5	Kotak Mahindra Bank	Cash Credit - Proposed	1.46	_	1.46
Total			38.80	1.20	40.00
TOTAL (Rupees Forty Crores Only)

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