Long track record of operation and established market position in Assam-
OAPL was established in the year 2005 by Mr. Rajdeep Oja and Mr. Debaraj Oja. The directors of the company have more than 15 years of experience in the automobile dealership business. The extensive experience of the management has helped the company establish long-term relations with Hyundai Motors India Limited, JCB India. The company is the sole dealer of JCB vehicles and has an established position in Assam (with two showrooms and 12 service stations spread across Assam. Additionally, the company is an authorized dealer of Hyundai Motors India Limited (HMIL). OAPL has 5 showrooms along with a sales outlet in Kamrup and a second-hand vehicle showroom in Guwahati. The established market position is also reflected steady business risk profile of the company.

Healthy scale of operation –
The revenue of the company stood healthy at Rs.457.54 crore in FY2022 as compared to Rs.468.25 crore in the previous year. This slight dip in revenue is on account of decrease in unit sales during the period due to the mismatch in demand and supply scenario for Hyundai PV’s. Also, the total unit sold for JCB in FY2022 is lower than the previous year, mainly on account of low demand from the contractor backed by lack of work order from the Assam govt. during the period. Currently the company has earned Rs.164.00 crore till August 2022 (Prov.). Going forward, Acuité believes, the revenue of the company will sustain at the healthy level backed by increasing demand for passenger vehicle as well as JCB in the domestic market on account of continuous thrust of state and central government on infrastructure development.

Comfortable financial risk profile-
The financial risk profile of the company is marked by moderate net worth, low gearing and strong debt protection metrics. The net worth of the company stood moderate at Rs.46.40 crore in FY 2022 as compared to Rs 38.80 crore in FY2021. This improvement in networth is mainly due to the retention of profit during FY2022. The gearing of the company stood at 0.28 times as on March 31, 2022 when compared to 0.30 times as on March 31, 2021. Interest coverage ratio (ICR) is strong and stood at 8.05 times in FY2022 as against 7.28 times in FY2021. The debt service coverage ratio (DSCR) of the company also stood strong at 6.32 times in FY2022 as compared to 5.91 times in the previous year. The net cash accruals to total debt (NCA/TD) stood comfortable at 0.69 times in FY2022 (Prov.) as compared to 0.89 times in the previous year. Going forward, Acuité believes the financial risk profile of the company will remain healthy on account of steady net cash accruals and no major debt funded capex plan over the near term.

Thin profitability margin –
The operating profitability margin of the company stood at 3.00 per cent in FY2022 as against of 3.26 per cent in the previous year. Acuité believes that the operating profitability margins of the company will remain at similar levels going forward due to limited value addition in trading nature of operation. The net profitability margin of the company stood at 1.66 per cent in FY2022 as compared to 1.87 per cent in the previous year.

Stiff competition from other dealers of HMIL and other brands
With HMIL focusing on expanding its dealership network, it results in increased competition within its own dealers. Furthermore, the industry competition is also with other automobile companies like Honda Cars Ltd, Tata Motors Ltd, Maruti Suzuki India Ltd, etc. Launching new models at competitive prices, results into eating the market share of HMIL which in turn also affects its dealers including OAPL.