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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 5.00 | ACUITE BB+ | Reaffirmed & Withdrawn | - |
| Bank Loan Ratings | 4.00 | - | ACUITE A4+ | Reaffirmed & Withdrawn |
| Total Outstanding | 0.00 | - | - |
| Total Withdrawn | 9.00 | - | - |
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Rating Rationale |
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Acuite has reaffirmed and withdrawn its long-term rating of 'Acuite BB+' (read as Acuite double B plus) on the Rs.5.00 Cr. bank facilities and also reaffirmed and withdrawn the short term rating of ‘ACUITE A4+’ (read as ACUITE A four Plus) on Rs.4.00 Cr. bank facilities of General Auto Electric Corporation (GAEC).The withdrawal is in accordance with Acuite's policy on withdrawal of ratings. The rating is being withdrawn on account of request received from the company and No Objection Certificate from the lenders.
Rationale for rating reaffirmation The rating considers by improving net worth, comfortable gearing and healthy debt protection metrics, The rating also draws comfort from the Experienced promoters and Established nature of operations in the industry. These strengths are however, offset by the working capital-intensive in nature of operations. |
| About the Company |
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Mumbai based, General Auto Electric Corporation (GAEC) was established in 1959 as a partnership firm. The promoters are Mr. Ramesh Gandhi and Mr. Gopal Gandhi and now the operations are managed by their sons Mr. Hetal R. Gandhi (Partner) and Mr. Nehal G. Gandhi (Partner) having over three decades of experience in the electronic components industry. The firm is engaged in the manufacturing of Power, LED Signals, Track circuit and Rolling Stock equipment's which are used in Railways and also manufactures industrial products like Prog. Dc Electronic Load 97 Series, Regulated DC Power Supply, etc.
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| Unsupported Rating |
| Not Applicable |
| Analytical Approach |
| Acuité has considered the standalone view of the business and financial risk profile of GAEC to arrive at the rating. |
| Key Rating Drivers |
| Strengths |
| Experienced promoters and Established nature of operations
GAEC was established in 1959 by Mr. Ramesh Gandhi and Mr. Gopal Gandhi. The current partners of the firm are Mr. Ramesh Gandhi, Mr. Hetal Gandhi, Mr. Nehal Gandhi, Mrs. Purna Gandhi and Mr. Geet Gandhi who possess an industry experience of over four decades in the same line of business. The partners’ longstanding experience has helped GAEC in securing repeated orders from the Indian Railways and private sector entities. Acuité believes that GAEC will continue to benefit from the partners’ experience in the industry, its established presence and improving business risk profile over the medium term. Average financial risk profile The financial risk profile of the company is marked by improving net worth, comfortable gearing and healthy debt protection metrics. The revenue of the company stood at Rs.93.39 Cr. in FY2023 as compared to Rs. 77.30 Cr. as on FY2022. The tangible net worth of the company stood at Rs. 36.62 Cr. as on FY2023 as compared to Rs. 29.19 Cr. as on FY2022 due to accretion to reserves. The gearing of the company stood at 0.80 times as on FY2023. The Total Outside Liabilities/Tangible Net Worth (TOL/TNW) stood at 1.29 times as on FY2023. The debt protection metrices of the company remain healthy marked by Interest coverage ratio (ICR) of 7.36 times and debt service coverage ratio (DSCR) of 5.16 times for FY2023. The net cash accruals to total debt (NCA/TD) stood healthy at 0.28 times in FY2023. Going forward, Acuité believes that the financial risk profile will remain average over the medium term, supported by steady accrual, moderate capital structure and debt protection metrices. |
| Weaknesses |
| Working capital intensive nature of operations
The working capital intensive nature of operations of the company improved as reflected by Gross Current Assets (GCA) of 264 days for FY2023 as compared to 195 days for FY2022. The debtor period stood at 197 days as on FY2023 as compared to 152 days as on FY2022. Further, the inventory days of the company stood at 42 days in FY2023 as compared to 28 days in FY2022. Creditors stood at 117 days as on FY2023. Acuité believes that the working capital operations of the company will remain at the similar levels over the medium term. |
| Rating Sensitivities |
| Not Applicable |
| Liquidity Position |
| Adequate |
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The company has adequate liquidity marked by net cash accruals of Rs 8.12 Cr. as on FY2023 as against nil. long-term debt over the same period. The cash and bank balance stood at Rs. 2.80 Cr for FY 2023. Further, the current ratio of the company stood at 2.45 times in FY2023. The working capital cycle of the company is marked by Gross Current Assets (GCA) of 264 days for FY2023 as compared to 195 days for FY2022. Acuité believes that the liquidity of the company is likely to remain adequate over the medium term on account of low but steady cash accruals, term debt repayments and financial flexibility of promoters to bring in funds in business over the medium term.
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| Outlook: Not Applicable |
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 23 (Actual) | FY 22 (Actual) |
| Operating Income | Rs. Cr. | 93.39 | 77.30 |
| PAT | Rs. Cr. | 7.72 | 7.14 |
| PAT Margin | (%) | 8.27 | 9.23 |
| Total Debt/Tangible Net Worth | Times | 0.80 | 0.67 |
| PBDIT/Interest | Times | 7.36 | 6.44 |
| Status of non-cooperation with previous CRA (if applicable) |
| Not Applicable |
| Any other information |
| None |
| Applicable Criteria |
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• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm • Manufacturing Entities: https://www.acuite.in/view-rating-criteria-59.htm • Service Sector: https://www.acuite.in/view-rating-criteria-50.htm • Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm |
| Note on complexity levels of the rated instrument |
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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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