Press Release DEWARS GARAGE LIMITED March 02, 2023 Rating Assigned and Reaffirmed

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
Bank Loan Ratings	30.00	ACUITE B+ | Stable | Assigned	-
Bank Loan Ratings	68.90	ACUITE B+ | Stable | Reaffirmed	-
Bank Loan Ratings	2.35	-	ACUITE A4 | Reaffirmed
Total Outstanding Quantum (Rs. Cr)	101.25	-	-

Rating Rationale

­Acuité has reaffirmed the long-term rating of ‘ACUITE B+’ (read as ACUITE B plus) and reaffirmed the short-term rating of ‘ACUITE A4’ (read as ACUITE A four) to Rs. 71.25 crore bank facilities of Dewar's Garage Limited. Acuite has also assigned the long-term rating of ‘ACUITE B+’ (read as ACUITE B plus) to Rs 30 crore bank facilities od Dewar's Garage Limited(DGPL). The Outlook is ‘Stable’. Rating Rationale The rating on DGL takes cognizance of the improvement in revenue and profitability margins. These strengths are, however, constrained by the below average business risk profile, and competitive and fragmented nature of the industry.

About the Company

­Dewar’s Garage Limited (DGL) was incorporated in 1995. Currently, the company is headed by Mr. Sudhir Jhujhunwala, Mr. Rohit Kedia and Mr. Bhavnesh Gujral. DGL is an authorized dealer of Maruti Suzuki India Limited and engaged in trading and servicing of passenger vehicles. The company is having 8 showrooms, out of which 5 showrooms are for ne w vehicles and 3 showrooms are for pre-owned vehicles, 2 workshops and 2 stockyards. All the 12 facilities are in Kolkata, West Bengal.

Analytical Approach

­Acuité has taken a standalone view of the business and financial risk profile of DGL to arrive at the rating.

Key Rating Drivers

Strengths

­Experienced Management and Long track record of operations The key promoter of Dewar’s Garage Limited (DGL), Mr. Sudhir Jhujhunwala has been in the industry for 25 years. Acuité derives comfort from the long experience of the promoter. Established in 1995, DGL has a long operational track record of 25 years in the automobile dealership industry. Acuité believes that the long track record of operations will benefit thecompany going forward, resulting in steady growth in the scale of operations. Moderate Business Risk Profile Modest business risk profile DGPL’s revenues decreased to Rs.217.35 Cr as on 31st March, 2022 as compared to Rs.221.52 Cr as on 31st March, 2021. The decrease in the top line is due to the shortage in the supply of vehicles by the manufacturer. The operating margin of the company increased to 3.34 as on 31st March, 2022 as compared to 3.24 per cent as on 31st March, 2021. The increase in the margin is buoyed by the increasing commissions and comparatively decreasing costs. In the 9months of FY23 the revenue stood at Rs. 220 crore backed by strong demand of the cars.

Weaknesses

­Intense compet it ion from ot her aut o dealers and suscept ible to cyclicality in the auto sector The company faces stiff competition from other auto dealers leading to increase in competition. Furthermore, the industry competition from other big automobile players in commercial and passenger car vehicle segment, launching of new models at competitive prices, results into eating the market share of Maruti Suzuki, which in turn also affects its dealers including DGPL. The operations of the company are also vulnerable to the inherent cyclical nature of the automobile industry. Average Financial Risk Profile The company’s financial risk profile is marked by modest networth, high gearing and modest debt protection metrics. The company’s networth has remained modest at around Rs. 11.84crore as on March 31, 2022 as against Rs. 10.97 crore as on March 31, 2021. The company has high gearing at 4.45 times as on March 31, 2022 as against 4.15 times as on March 31, 2021. The debt of Rs.52.68 crore mainly consists of long-term debt of Rs.25.28 crore and shortterm debt of Rs.24.40 crore against current maturity of term loan of Rs.0.83 crore as on March31, 2022. The Total outside Liabilities/Tangible Net Worth (TOL/TNW) stood high at 5.89 times as on March 31, 2022 as against 5.86 times as on March 31, 2021. The modest debt protection metrics of the company is marked by Interest Coverage Ratio at 1.48 times as on March 31,2022 as against 1.47 times as on March 31, 2021 and Debt Service Coverage Ratio at 1.22 times as on March 31, 2022 as against 1.37 times as on March 31, 2021. Acuité believes the networth to remain modest over the medium term, in the absence of any equity infusion by the promoters.

Rating Sensitivities

­Growth in scale of operations while improving profitability margin Improvement in the capital structure

Material covenants

­None

Liquidity Position

Adequate

­The company’s liquidity is moderate marked by steady net cash accruals of Rs.2.19 crore as on March 31, 2022 against long term debt repayment of Rs.0.83 crore over the same period. The cash and bank balances of the company stood at Rs. 1.90 crore as on March 31, 2022, as compared to Rs. 2.62 crore as on March 31, 2021. The fund-based limit remains utilised at 82 percent over six months ended December, 2022. The current ratio stood at 1.18 times as on FY22 and FY21 respectively. Moreover, the working capital management of the company is efficient in nature marked by Gross Current Assets (GCA) of 77.57 days as on March 31,2022 as compared to 73.08 days as on 31st March,2021. Acuité believes that going forward the company will maintain adequate liquidity position due to steady accruals.

Outlook: Stable

­Acuité believes that the outlook on DGL will remain 'Stable' over the medium term on account of the experience of the promoters and long track record of operations. The outlook may be revised to 'Positive' in case of significant growth in revenue and improvement in financial risk profile. Conversely, the outlook may be revised to 'Negative' in case of decline in revenue and deterioration in financial risk profile.

Key Financials

Particulars	Unit	FY 22 (Actual)	FY 21 (Actual)
Operating Income	Rs. Cr.	217.35	221.52
PAT	Rs. Cr.	0.86	1.15
PAT Margin	(%)	0.40	0.52
Total Debt/Tangible Net Worth	Times	4.45	4.16
PBDIT/Interest	Times	1.48	1.47

Status of non-cooperation with previous CRA (if applicable)

­CRISIL, vide its press release dated January 24, 2019 had denoted the rating of Dewar’s Garage Limited as 'CRISIL B-/Stable/A4; ISSUER NOT COOPERATING’

Any other information

­None

Applicable Criteria

• Trading Entitie: https://www.acuite.in/view-rating-criteria-61.htm • Default Recognition: https://www.acuite.in/view-rating-criteria-52.htm • Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.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. -or more details. please refer Rating Criteria "Complexity Level Of Financial Instruments" on www.Acuite.in

Rating History

Date Name of Instruments/Facilities Term Amount (Rs. Cr) Rating/Outlook 02 Dec 2021 Secured Overdraft Long Term 7.00 ACUITE B+ | Stable (Upgraded from ACUITE B | Stable) Term Loan Long Term 15.11 ACUITE B+ | Stable (Upgraded from ACUITE B | Stable) Inventory Funding Long Term 19.00 ACUITE B+ | Stable (Upgraded from ACUITE B | Stable) Cash Credit Long Term 3.00 ACUITE B+ | Stable (Upgraded from ACUITE B | Stable) Inventory Funding Long Term 8.00 ACUITE B+ | Stable (Upgraded from ACUITE B | Stable) Bank Guarantee Short Term 0.35 ACUITE A4 (Reaffirmed) Letter of Credit Short Term 2.00 ACUITE A4 (Reaffirmed) Proposed Inventory Funding Long Term 0.79 ACUITE B+ | Stable (Upgraded from ACUITE B | Stable) Inventory Funding Long Term 13.00 ACUITE B+ | Stable (Upgraded from ACUITE B | Stable) Inventory Funding Long Term 3.00 ACUITE B+ | Stable (Upgraded from ACUITE B | Stable) 10 Sep 2020 Inventory Funding Long Term 19.00 ACUITE B | Stable (Reaffirmed) Cash Credit Long Term 3.00 ACUITE B | Stable (Reaffirmed) Term Loan Long Term 15.11 ACUITE B | Stable (Assigned) Secured Overdraft Long Term 7.00 ACUITE B | Stable (Assigned) Proposed Inventory Funding Long Term 0.79 ACUITE B | Stable (Reaffirmed) Bank Guarantee Short Term 0.35 ACUITE A4 (Reaffirmed) Letter of Credit Short Term 2.00 ACUITE A4 (Reaffirmed) Inventory Funding Long Term 8.00 ACUITE B | Stable (Reaffirmed) Inventory Funding Long Term 13.00 ACUITE B | Stable (Reaffirmed) Inventory Funding Long Term 3.00 ACUITE B | Stable (Reaffirmed)

­

Annexure - Details of instruments rated

Lender’s Name ISIN Facilities Date Of Issuance Coupon Rate Maturity Date Quantum (Rs. Cr.) Complexity Level Rating HDFC Ltd Not Applicable Bank Guarantee/Letter of Guarantee Not Applicable Not Applicable Not Applicable 0.35 Simple ACUITE A4 | Reaffirmed UCO Bank Not Applicable Cash Credit Not Applicable Not Applicable Not Applicable 2.00 Simple ACUITE B+ | Stable | Reaffirmed ICICI Bank Ltd Not Applicable Covid Emergency Line. Not Applicable Not Applicable Not Applicable 0.56 Simple ACUITE B+ | Stable | Assigned State Bank of India Not Applicable Covid Emergency Line. Not Applicable Not Applicable Not Applicable 2.70 Simple ACUITE B+ | Stable | Assigned HDFC Bank Ltd Not Applicable Covid Emergency Line. Not Applicable Not Applicable Not Applicable 4.79 Simple ACUITE B+ | Stable | Assigned Axis Bank Not Applicable Covid Emergency Line. Not Applicable Not Applicable Not Applicable 1.00 Simple ACUITE B+ | Stable | Assigned State Bank of India Not Applicable Inventory Funding Not Applicable Not Applicable Not Applicable 19.00 Simple ACUITE B+ | Stable | Reaffirmed HDFC Bank Ltd Not Applicable Inventory Funding Not Applicable Not Applicable Not Applicable 10.50 Simple ACUITE B+ | Stable | Reaffirmed Axis Bank Not Applicable Inventory Funding Not Applicable Not Applicable Not Applicable 8.00 Simple ACUITE B+ | Stable | Reaffirmed ICICI Bank Ltd Not Applicable Inventory Funding Not Applicable Not Applicable Not Applicable 3.00 Simple ACUITE B+ | Stable | Reaffirmed ICICI Bank Ltd Not Applicable Inventory Funding Not Applicable Not Applicable Not Applicable 2.00 Simple ACUITE B+ | Stable | Assigned Axis Bank Not Applicable Inventory Funding Not Applicable Not Applicable Not Applicable 1.00 Simple ACUITE B+ | Stable | Assigned Yes Bank Ltd Not Applicable Inventory Funding Not Applicable Not Applicable Not Applicable 5.00 Simple ACUITE B+ | Stable | Assigned UCO Bank Not Applicable Letter of Credit Not Applicable Not Applicable Not Applicable 2.00 Simple ACUITE A4 | Reaffirmed Not Applicable Not Applicable Proposed Inventory Funding Not Applicable Not Applicable Not Applicable 4.29 Simple ACUITE B+ | Stable | Reaffirmed Not Applicable Not Applicable Proposed Inventory Funding Not Applicable Not Applicable Not Applicable 5.71 Simple ACUITE B+ | Stable | Assigned Not Applicable Not Applicable Proposed Inventory Funding Not Applicable Not Applicable Not Applicable 0.59 Simple ACUITE B+ | Stable | Assigned HDFC Bank Ltd Not Applicable Secured Overdraft Not Applicable Not Applicable Not Applicable 7.00 Simple ACUITE B+ | Stable | Reaffirmed HDFC Bank Ltd Not Applicable Secured Overdraft Not Applicable Not Applicable Not Applicable 1.00 Simple ACUITE B+ | Stable | Assigned HDFC Ltd Not Applicable Term Loan Not available Not available Not available 15.11 Simple ACUITE B+ | Stable | Reaffirmed ICICI Bank Ltd Not Applicable Term Loan Not available Not available Not available 5.65 Simple ACUITE B+ | Stable | Assigned

Contacts

Analytical	Rating Desk
Pooja Ghosh Vice President-Rating Operations Tel: 022-49294041 pooja.ghosh@acuite.in Swagata Bhattacharjee Analyst-Rating Operations Tel: 022-49294065 swagata.bhattacharjee@acuite.in	Varsha Bist Senior Manager-Rating Operations Tel: 022-49294011 rating.desk@acuite.in

About Acuité Ratings & Research

Acuité is a full-service Credit Rating Agency registered with the Securities & Exchange Board of India (SEBI). The company received RBI Accreditation as an External Credit Assessment Institution (ECAI) for Bank Loan Ratings under BASEL-II norms in the year 2012. Acuité has assigned ratings to various securities, debt instruments and bank facilities of entities spread across the country and across a wide cross section of industries. It has its Registered and Head Office in Kanjurmarg, Mumbai. Disclaimer: An Acuité rating does not constitute an audit of the rated entity and should not be treated as a recommendation or opinion that is intended to substitute for a financial adviser's or investor's independent assessment of whether to buy, sell or hold any security. Ratings assigned by Acuité are based on the data and information provided by the issuer and obtained from other reliable sources. Although reasonable care has been taken to ensure that the data and information is true, Acuité, in particular, makes no representation or warranty, expressed or implied with respect to the adequacy, accuracy or completeness of the information relied upon. Acuité is not responsible for any errors or omissions and especially states that it has no financial liability whatsoever for any direct, indirect or consequential loss of any kind, arising from the use of its ratings. Ratings assigned by Acuité are subject to a process of surveillance which may lead to a revision in ratings as and when the circumstances so warrant. Please visit our website (www.acuite.in) for the latest information on any instrument rated by Acuité.