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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 40.00 | ACUITE BBB- | Stable | Reaffirmed | - |
| Total Outstanding | 40.00 | - | - |
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Rating Rationale |
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Acuité has reaffirmed the long-term rating ‘ACUITE BBB-’ (read as ACUITE triple B minus) on the Rs. 40.00 Cr. bank facilities of Avlight Automotives Private Limited (AAPL). The outlook is ‘Stable’. Rationale for Rating The rating on AAPL takes into account of long track record of operations and moderate operating performance of the group marked by slight decline in operating income The financial risk profile of the group is comfortable which is reflected by low gearing of the group which stood at 0.67 times in FY 24 (Prov.) against 0.89 times in FY23 along with strong debt protection metrics . However mention strengths are partly offset by high dependence on external short term borrowings and intensive competition due to presence of a large number of players in the unorganised sector.
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| About the Company |
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Avlight Automotives Private Limited. (AAPL), incorporated in 1996, is engaged in manufacture of Plastic Moulded Components, Moulds and automotive lighting equipments having its plants in Manesar(Haryana) and Chennai (Tamil Nadu). Directors of the company are Mr. Anil Anand. Mr. Rajan Sharma, Mrs. Renu Sharma, and Mr. Akshat Anand.
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| About the Group |
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Avlight Automotives Private Limited (AAPL), incorporated in 1996, is engaged in manufacture of Plastic Moulded Components, Moulds and automotive lighting equipments having its plants in Manesar(Haryana) and Chennai (Tamil Nadu), Avlight Auto Components Private Limited, is engaged in manufacture of Motorcycle wheel assemblies since 2013, with its plant in NOIDA (U.P.) and Avlight Altrustooling Private Limited with its plant in Manesar (Haryana) is engaged in manufacture of Moulds for automotive sector since 2020.
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| Unsupported Rating |
| Not Applicable |
| Analytical Approach |
| Extent of Consolidation |
| •Full Consolidation |
| Rationale for Consolidation or Parent / Group / Govt. Support |
| Acuité has considered the consolidated view of business and financial risk profiles of Avlight Automotives Private Limited (AAPL), Avlight Altrustooling Private Limited (AATPL), and Avlight Auto Components Private Limited (AACPL) to arrive at this rating. The consolidation is in view of a common line of business, common management, and significant business and financial linkages between the entities. The group is henceforth referred to as Avlight Group (AG). |
| Key Rating Drivers |
| Strengths |
| Established track record of operations support ed by improvement in the business risk profile
AG was established in 1996 with the incorporation of AAPL by Mr. Anil Anand and Mr. Rajan Sharma, who have experience of more than four decades in the aforementioned industry. The promoter Mr. Anil Anand has prior experience with Yamaha Motor Company Limited (then known as Escorts Yamaha Motor Limited) as well. AG counts several leading automobiles companies as its clients such as Yamaha India, Motherson Sumi, Royal Enfield, Maruti Suzuki, and Honda India as a Tier – 1/2 supplier for its products. AG has also diversified its clientele in the recent past while catering to entities operating in EV, Robotics, and LED lighting system for automotives. Locational Advantage AG’s manufacturing facilities are located near automobile manufacturing hubs which has helped the company in maintaining operational efficiencies and timely completion of orders, this has, in turn, ensured the costs incurred are minimal. While initially, AG was significantly dependent on Yamaha India for the business, the diversification towards the needs of other OEMs has helped sustain the business risk profile and reduce the revenue concentration risk. Yamaha, which earlier contributed 100 percent to the revenue, currently, contributes ~40 percent. The group counts major Automobile players such as Maruti Suzuki, Honda, Royal Enfield, Motherson Sumi as its clientele as Tier – 1 and 2 suppliers. AG is further diversifying its customer base by catering to entities, which are into the EV, Robotics, and LED lighting system for automotives. The proximity to customer base and approval from big automobile players has provided a shield to AG while ensuring future business and poses an entry barrier for new entrants as customers availed cost benefits due to AG strategically located plants.
Financial Risk Profile- Moderate AG has Moderate financial risk profile marked by Moderate net worth and comfortable debt protection metrics. AG’s net worth stood at Rs. 39.80 Cr. as on 31st March 2024(Prov.) as against Rs. 35.54 Cr. as on 31st March 2023. Group follows conservative leverage policy. Gearing levels (debt-to-equity) improved and stood at 0.67 times as on March 31, 2024(Prov.) as against 0.89 times in FY 2023. Improvement in Gearing Ratio in FY 24 (Prov.) is on account of profit accretions and repayment of debt. The total debt outstanding of the group is Rs. 26.52 crore as on 31 March, 2024(Prov.) which consists of long term bank borrowings of Rs.6.29 crore, short term working capital limit of Rs. 16.71 crore and current maturities of long term Debt Rs 3.35 crore. The financial risk profile of the group is expected to remain comfortable in near terms as the company do not have any new capex plan in the short term period. |
| Weaknesses |
| Dip in operating income and thin profitability margins |
| Rating Sensitivities |
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Significant improvement in scale of operations, while maintaining its profitability margins. A slowdown in demand leading to deterioration in the working capital cycle and stress on the debt protection metrics or the liquidity position of the entity. |
| Liquidity Position |
| Adequate |
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Group has adequate liquidity marked by net cash accruals to its maturing debt obligations, Group generated cash accruals of Rs.10.20 crore for FY2024 (Prov.) against repayment of Rs. 6.66 crore. Current Ratio stood at 0.88 times as on 31 March 20224(Prov.) as against 0.87 times in the previous year. Cash and Bank Balances of group stood low at Rs 6.36 crore. The liquidity of the group is expected to improve and the unencumbered cash and bank position and FD will also support the liquidity of the company.
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| Outlook: Stable |
| Acuité believes that AG will maintain a ‘Stable’ outlook in the near to medium term on account of its stable business risk profile supported by its established position in the market and reputed customer profile. The outlook may be revised to 'Positive' if the entity registers higher-than-expected growth in its scale of operations, while also improving its operating profitability and coverage indicators. Conversely, the outlook may be revised to 'Negative' in case the entity registers a significant decline in revenues or profitability indicators or if the financial risk profile deteriorates due to a higher-than-expected increase in debt-funded capex/requirements or working capital requirements resulting in deterioration in the overall capital structure. |
| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 24 (Provisional) | FY 23 (Actual) |
| Operating Income | Rs. Cr. | 448.68 | 473.50 |
| PAT | Rs. Cr. | 4.55 | 5.92 |
| PAT Margin | (%) | 1.01 | 1.25 |
| Total Debt/Tangible Net Worth | Times | 0.67 | 0.89 |
| PBDIT/Interest | Times | 4.00 | 5.79 |
| Status of non-cooperation with previous CRA (if applicable) |
| Not Applicable |
| Any Other Information |
| None |
| Applicable Criteria |
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• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm • Consolidation Of Companies: https://www.acuite.in/view-rating-criteria-60.htm • Default Recognition: https://www.acuite.in/view-rating-criteria-52.htm • Manufacturing Entities: https://www.acuite.in/view-rating-criteria-59.htm |
| Note on Complexity Levels of the Rated Instrument |
| In order to inform the investors about complexity of instruments, Acuité has categorized such instruments in three levels: Simple, Complex and Highly Complex. Acuite’ s categorisation of the instruments across the three categories is based on factors like variability of the returns to the investors, uncertainty in cash flow patterns, number of counterparties and general understanding of the instrument by the market. It has to be understood that complexity is different from credit risk and even an instrument categorized as 'Simple' can carry high levels of risk. For more details, please refer Rating Criteria “Complexity Level Of Financial Instruments” on www.acuite.in |
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| *Annexure 2 - List of Entities (applicable for Consolidation or Parent / Group / Govt. Support) | ||||||||
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