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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 65.00 | ACUITE BB | Stable | Upgraded | - |
| Total Outstanding Quantum (Rs. Cr) | 65.00 | - | - |
| Total Withdrawn Quantum (Rs. Cr) | 0.00 | - | - |
| Rating Rationale |
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Acuité has upgraded the long-term rating to "ACUITE BB" (read as ACUITE double B) from "ACUITE BB-"(read as ACUITE double B minus) on the Rs. 65.00 crore bank facilities of REGENT GARAGE PRIVATE LIMITED (RGPL). The outlook is ‘Stable’.
Rationale for Rating Upgrade The rating upgrade is on account of improvement in the operating performance of the company in FY22 and YTD performance. Further the company's track record of operations and experienced management is further a favourable factor. The aforesaid factors are underpinned by slightly high working capital cycle and the inherent cyclicality in the automobile industry. |
| About the Company |
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Regent Garage Private Limited (RGPL) was established on 27th August 2002 with Registrar of Companies, NCT of Delhi and Haryana with main objects to carry on the business of Dealers, Distributors, Stockiest, Buyers, Sellers, Importers, Exporters, Services and agents of all kinds of vehicles, equipment’s, components and spare parts thereof.The Dealership has completed 10 years as Audi Dealer. The Directors of the company are Mr Raghav Chandra,Mr Dinesh Goyal and Mr Shiwesh Kumar Thakur.
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| Analytical Approach |
| Acuité has considered the standalone business and financial risk profile of RGPL to arrive at this rating. |
Key Rating Drivers
| Strengths |
| Experienced promoter and established track record of operations
The company was incorporated in 2008 and is engaged in dealership of ‘Audi’ cars in South Delhi Region. The company is promoted by Mr. Raghav Chandra, who has experience of more than two decades in the automobile dealership business. The company currently owns one showroom in South Delhi and two workshops (rented) for services. Acuité believes that the company will continue to benefit from its established position in Delhi Region and established brand position of ‘Audi’. Revenue and Profitability The company has achieved a revenue of Rs.146.87 Crore in FY22 against Rs.106.63 Crore in FY21.The pandemic impact on sales is evident and there is also a chip shortage aspect that contributed to a decrease in the supply of the respective models. In addition to this, government regulations that discourage the use of diesel automobile also contributed to fluctuation in turnover. As of now, Company has achieved a turnover of around Rs.126.30 Crore (till September) and company is aiming to achieve the turnover of more than 270 Crores in FY23 and FY24 backed by transition on electric vehicle from petrol and the government of India has promotional programmes for electric vehicle that enable business and its dealers command higher margins. |
| Weaknesses |
| Working Capital operations
The working capital operations of the company marked by GCA days of 70 days in FY22 against 87 days in FY21. Under automobile sector, inventory days comprises of stocking norms and display norms due to which the GCA days are on higher side. The receivable period pertains to time gap in disbursal of payments from financing company (despite approval of loan to customer) to RGPL post-delivery of vehicle to customer due to which the debtor days are maintained at 6 days in FY22. |
| Rating Sensitivities |
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| Material covenants |
| None. |
| Liquidity Position |
| Adequate |
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The liquidity profile of the company is adequate. The net cash accrual of the company is Rs. 5.21 Crore against Rs.2.44 Crore in the same period. The NCA for projected period is expected to be under the range of Rs.15 Crore against debt repayment obligations under range of Rs.5 Crore in the FY23 and FY24. The bank limit utilisation of the company is around 55%. The current ratio of the company is 0.64 times in FY22. The unencumbered cash and bank balance is Rs.0.66 Crore in FY22.
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| Outlook: Stable |
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Acuité believes that the RGPL will continue to benefit over the medium term on account of the extensive experience of the promoters in the automobile dealership industry. The outlook may be revised to ‘Positive’ in case the company registers higher-than-expected revenues and profitability while effectively managing its operating cycle. Conversely, the outlook may be revised to 'negative' if there is steep decline in company’s revenues and/or profitability or deterioration in company’s financial risk profile owing to higher than expected working capital requirements.
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 22 (Provisional) | FY 21 (Actual) |
| Operating Income | Rs. Cr. | 146.87 | 106.63 |
| PAT | Rs. Cr. | 2.46 | 0.01 |
| PAT Margin | (%) | 1.67 | 0.01 |
| Total Debt/Tangible Net Worth | Times | 1.70 | 2.28 |
| PBDIT/Interest | Times | 1.67 | 1.40 |
| Status of non-cooperation with previous CRA (if applicable) |
| None. |
| Any other information |
| None |
| Applicable Criteria |
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• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm • Trading Entitie: https://www.acuite.in/view-rating-criteria-61.htm • Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm |
| Note on complexity levels of the rated instrument |
| https://www.acuite.in/view-rating-criteria-55.htm |
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