Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 26.80 Crs. of Uma Motors Pvt. Ltd.
Particulars| Facilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||
|---|---|---|---|---|---|
| Previous | Present | Previous (13 Feb 2021) |
Present | ||
| Fund Based | 26.64 | 26.80 | Long Term |
BWR BB+/Stable
Reaffirmation |
BWR BB +
/Stable Reaffirmation |
| Grand Total | 26.64 | 26.80 | (Rupees Twenty Six Crores and Eighty lakhs Only) | ||
BWR has reaffirmed the ratings of Uma Motors Private Limited at BWR BB+ / Stable. The reaffirmation of rating reflects the extensive experience of the promoters in the automobile dealership business and other group businesses run by the family. The rating also takes strength from the company's association with Maruti Suzuki India Limited (MSIL) which is India's largest passenger car manufacturer and seller. The rating is also strengthened by Uma Motors' monopoly in the city in terms of MSIL cars dealership and also their expansion of showrooms through Nexa and Arena showrooms.
The rating is however constrained by the small scale of operations of the company and slowdown in Auto Mobile Industry. The rating has also factored with impact of Covid-19 pandemic and Chip Shortage on the overall demand in the passengers car segment in its impact on the current financial year's performance. The ‘stable’ outlook indicates a low likelihood of a rating change in the medium term. BWR expects that the company’s performance is likely to be maintained over the next few years. The rating outlook may be revised to Positive if there is a significant improvement in firm revenues and profitability margins. The rating outlook may be revised to 'Negative' if there is any further deterioration in the financial risk profile of the firm.
KEY RATING DRIVERSCredit Strengths:
The promoters of Uma Motors have more than a decade of experience in the automobile dealership business and also the company enjoys the benefits of association with MSIL which is the leading car manufacturer of the country.
The company has a monopoly in the Mathura city with respect to the MSIL dealership and the brand invokes huge demand due to its affordable price points which appeal to the customers in tier 2 & 3 cities.
For the full year 2019-20, overall automobile sales were down by 18%, with commercial vehicles sales falling by nearly 30%. An increased cost of ownership, revised axle norms, financing issues due to the NBFC crisis, the economic slowdown and subdued consumer sentiments contributed towards weak automobile sales in FY20. However, automobile sales have been reviving owing to the resumption of business activities post the lockdown.
The COVID-19 pandemic has had a swift and severe impact on the globally integrated automotive industry. Symptoms include a disruption in Chinese parts exports, large scale manufacturing interruptions across Europe, and the closure of assembly plants in the United States.
Demand can fluctuate dramatically, so overstocked inventories can be costly. The automotive market can be highly unpredictable and volatile, often as a result of external factors that are beyond shippers' control. Recalls can damage trust in a brand, causing demand to take a sudden nosedive.
For arriving at its ratings, BWR has considered the standalone financials of the company. BWR has applied its rating methodology as detailed in the Rating Criteria (hyperlinks provided at the end of this rationale).
RATING SENSITIVITIES
Going forward, the ability of the company to improve its scale of operations, reduction in operating expenses, improve its profitability margins, the debt servicing capability & liquidity would be key rating sensitivities.
Upgrade : The rating may be revised for an upgrade if the company is able to achieve significant growth in revenue along with a significant improvement in profit margins, DSCR/ISCR ratio and sustained improvement in net worth.
Downgrade : The rating may be revised negatively if revenue and profit margins substantially deteriorate from current level and if there is an overall deterioration in the financial risk profile of the entity. Any additional borrowing by the company may lead to further deterioration in debt protection metrics and profit margins.
Uma Motors Pvt Ltd, a part of Brij Bihar Group of Mathura, was started in the year 2006 in the city of Mathura to sell Maruti Suzuki India Limited (MSIL) automobiles as their authorized dealer. Apart from its two showrooms (Including Nexa showroom), the company also runs Maruti Driving school, True value (assisting in valuation of pre-owned cars) and Maruti Suzuki accidental repair setup-i.e. Body shop. In addition to sale and services of MSIL cars, the company provides financial services for new and used cars through tie-ups with various financial institutions. The company employs around 400 employees and workers and is the only dealer of Maruti Suzuki cars in Mathura.
KEY FINANCIAL INDICATORS (Standalone)| Key Parameters | Units |
FY 20-21 (Audited) |
FY 19-20 (Audited) |
|---|---|---|---|
| Operating Revenue | Rs.Crs. | 116.82 | 125.78 |
| EBITDA | Rs.Crs. | 5.61 | 4.97 |
| PAT | Rs.Crs. | 1.21 | 0.44 |
| Tangible Net Worth | Rs.Crs. | 13.01 | 9.65 |
| Total Debt/Tangible Net Worth | Times | 2.52 | 2.60 |
| Current Ratio | Times | 1.17 | 0.90 |
| Facilities | Current Rating (2022) | 2021 | 2020 | 2019 | |||||
|---|---|---|---|---|---|---|---|---|---|
| Type | Tenure | Amount (Rs.Crs.) |
Rating | Date | Rating | Date | Rating | Date | Rating |
| Fund Based | LT | 26.80 |
BWR BB+/Stable
(Reaffirmation) |
13Feb2021 |
BWR BB+Stable
(Reaffirmation) |
NA |
NA
|
27Feb2019 |
BWR BB+Stable
(Assignment) |
| 0.00 |
NA
|
NA |
NA
|
NA |
NA
|
29Nov2019 |
BWR BB+Stable
(Reaffirmation) |
||
| Grand Total | 26.80 | (Rupees Twenty Six Crores and Eighty 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.
Hyperlink/Reference to applicable Criteria| Analytical Contacts | |
|---|---|
|
Yashika Goyal Ratings Analyst yashika.g@brickworkratings.com |
Hari Kishan Yadav Associate Director - Ratings hari.ky@brickworkratings.com |
| 1-860-425-2742 | media@brickworkratings.com | |
| SL.No. | Name of the Bank/Lender | Type Of Facilities | Long Term(Rs.Crs.) | Short Term(Rs.Crs.) | Total(Rs.Crs.) | |
|---|---|---|---|---|---|---|
| 1 | Bank of Baroda | Term Loan | _ | _ | 0.00 | |
| 2 | Bank of Baroda | Adhoc Facilities FB (CC/TL/OD) | 1.50 | _ | 1.50 | |
| 3 | Bank of Baroda | Inventory Funding Facility | 5.00 | _ | 5.00 | |
| 4 | HDFC Bank | Inventory Funding Facility | 5.00 | _ | 5.00 | |
| 5 | State Bank Of India (SBI) | Electronic Dealer Finance System (e-DFS) | _ | _ | 0.00 | |
| 6 | State Bank Of India (SBI) | Inventory Funding Facility | 6.50 | _ | 6.50 | |
| 7 | State Bank Of India (SBI) | Cash Credit | 6.50 | _ | 6.50 | |
| 8 | State Bank Of India (SBI) | Stand by Line of Credit | _ | _ | 0.00 | |
| 9 | State Bank Of India (SBI) | Adhoc Facilities FB (CC/TL/OD) | 2.30 | _ | 2.30 | |
| 10 | State Bank Of India (SBI) | Term Loan | _ | _ | 0.00 | |
| Total | 26.80 | 0.00 | 26.80 | |||
| TOTAL (Rupees Twenty Six Crores and Eighty lakhs Only) | ||||||
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