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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 23.00 | ACUITE BB | Stable | Reaffirmed | - |
| Total Outstanding Quantum (Rs. Cr) | 23.00 | - | - |
| Rating Rationale |
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ACUITE has reaffirmed its long-term rating of ‘ACUITE BB’ (read as ACUITE double B) on the Rs.23.00 Cr bank facilities of Rudra Automart Private Limited (RAPL). The outlook remains ‘Stable’.
Rationale for rating reaffirmation The rating reaffirmation factors the improvement in the scale of operations in FY2023 coupled with comfortable profitability margins. The rating also factors the long standing operations of RAPL supported by the experienced management. These strengths are, however, offset by the company’s moderate financial risk profile and the moderate working capital management. |
| About the Company |
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Incorporated in 2007, Rudra Automart Private Limited (RAPL) is based in West Bengal and managed by Mr. Dipak Kumar Rudra and family. The company is an authorized dealer of Mahindra and Mahindra Ltd and is engaged in trading of passenger cars and commercial vehicles. It also provides repair and maintenance services to the same. RAPL has four showroom-cum-service centres with two showrooms located in Bankura and one showroom in Burdwan and one in Purulia district of West Bengal.
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| Standalone (Unsupported) Rating |
| None |
| Analytical Approach |
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Acuité has considered the standalone financial and business risk profile of Rudra Automart Private Limited (RAPL).
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Key Rating Drivers
| Strengths |
| Long standing operations and experienced management
With the assistance of the directors, Mr. Dipak Kumar Rudra and Mr. Debrup Rudra the company has established a long track record of operations spanning around two decades. The promoters have an extensive experience of over three decades in the auto dealership industry. The promoters has been able to establish four showrooms in West Bengal. Acuité derives comfort from the vintage of the promoters and believes that RAPL’s long presence in the business along with the experience of the management will continue to support the company going forward. Improvement in the business risk profile The company’s scale of operations has improved to Rs.156.72 Cr in FY2023 as compared to Rs. 112.45 Cr in FY2022 and Rs. 118.53 Cr in FY2021. Improvement in revenues is driven by the pent-up demand during pandemic along with better than anticipated festive sales and easing up of supply chain shortages. Moreover, the operating margins stood at 3.47 per cent in FY2023 as against 3.40 per cent in FY2022. The PAT margin stood at 0.73 per cent in FY2023 as compared to 0.47 per cent in FY2022. The improvement in margins is buoyed by increase in the commissions and dealership margins. Acuité believes that the business risk profile of the company will remain stable over the medium term backed by strong demand for the products. |
| Weaknesses |
| Moderate working capital management
The working capital cycle of the company stood moderate in FY2023 marked by the improving but moderate level of Gross Current Assets (GCA) of 83 days as on March 31, 2023 as compared to 113 days in 31st March 2022. The GCA days improved on account of improvement in the inventory cycle and reduction in the other current assets i.e., advances to suppliers. The inventory period improved to 70 days as on March 31, 2023 from 87 days as on 31st March 2022. Moreover, the debtor days stood comfortable at 11 days as on March 31, 2023 as against 19 as on 31st March 2022. Also, the creditor days improved to 19 days as on March 31, 2023 from 38 days as on March 31, 2022. Acuité believes that the working capital operations of the company will remain around similar levels as evident from the moderate inventory level and low debtor cycle over the medium term. Moderate financial risk profile The financial risk profile of the company is marked by moderate gearing and debt protection metrics along with improving net worth. The tangible net worth of the company increased to Rs. 19.28 Cr as on March 31, 2023 from Rs. 18.13 Cr as on March 31, 2022 due to accretion to reserves. Gearing of the company moderated to 1.12 times as on March 31, 2023 from 0.96 times as on March 31, 2022 due to rise in the borrowings owing to term loans taken for the purchase of demo vehicles and infusion of unsecured loans by the directors. The Total Outside Liabilities/Tangible Net Worth (TOL/TNW) stood moderate at 1.62 times as on March 31, 2023 as against 1.65 times as on March 31, 2022. The moderate debt protection metrics is marked by Interest Coverage Ratio at 2.06 times as on March 31, 2023 and Debt Service Coverage Ratio stood moderate at 1.28 times as on March 31, 2023. Net Cash Accruals/Total Debt (NCA/TD) stood low at 0.11 times as on March 31, 2023. Acuité believes that going forward the financial risk profile will remain moderate over the medium term, in the absence of any major debt funded capex plans. |
| Rating Sensitivities |
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| All Covenants |
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None
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| Liquidity Position |
| Adequate |
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The company’s liquidity is adequate marked by steady net cash accruals of Rs. 2.37 Cr as on March 31, 2023 as against long term debt repayment of Rs. 1.26 Cr over the same period. The fund based limit of the company is moderately utilized at 82 per cent over the six months ended September, 2023. The unencumbered cash and bank balances of the company stood at Rs. 1.10 Cr as on March 31, 2023. The current ratio stood comfortable at 1.33 times as on March 31, 2023 as compared to 1.36 times as on March 31, 2022. The working capital cycle of the company remained moderate marked by the improving but moderate level of Gross Current Assets (GCA) of 83 days as on March 31, 2023 as compared to 113 days in 31st March 2022 on account of improvement in the inventory cycle and reduction in the other current assets i.e., advances to suppliers.
Acuité believes that the company will maintain adequate liquidity position due to steady accruals and absence of any debt funded capex plans over the medium term. |
| Outlook: Stable |
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Acuité believes that the outlook on RAPL will remain 'Stable' over the medium term on account of the long track record of operations, experienced management and sustenance of the financial risk profile. The outlook may be revised to 'Positive' in case of significant growth in revenue or operating margins from the current levels. Conversely, the outlook may be revised to 'Negative' in case of a decline in revenue or operating margins, deterioration in financial risk profile or further elongation in its working capital cycle.
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| Other Factors affecting Rating |
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None
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| Particulars | Unit | FY 23 (Actual) | FY 22 (Actual) |
| Operating Income | Rs. Cr. | 156.72 | 112.45 |
| PAT | Rs. Cr. | 1.14 | 0.53 |
| PAT Margin | (%) | 0.73 | 0.47 |
| Total Debt/Tangible Net Worth | Times | 1.12 | 0.96 |
| PBDIT/Interest | Times | 2.06 | 1.99 |
| Status of non-cooperation with previous CRA (if applicable) |
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CRISIL, vide its press release dated June 27, 2023 had denoted the rating of Rudra Automart Private Limited as 'CRISIL B/Stable; ISSUER NOT COOPERATING’.
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| Any other information |
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None
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| 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 |
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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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