PR

Press Release
TAYAL INDIA MOTORS PRIVATE LIMITED
February 17, 2023
Rating Assigned

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
Bank Loan Ratings	33.98	ACUITE BBB- \| Stable \| Assigned	-
Bank Loan Ratings	0.02	-	ACUITE A3+ \| Assigned
Total Outstanding Quantum (Rs. Cr)	34.00	-	-

Rating Rationale

Acuite has assigned its long term rating of ‘ACUITE BBB-' (read as ACUITE triple B minus) and short term rating of ACUITE A3+(read as ACUITE A three plus) to the Rs 34.00 Cr bank facilities of Tayal India Motors Private Limited (TIMPL). The outlook is 'Stable'.

Rationale for rating
The rating assigned takes into account long track record and experience of the management in auto mobile dealership.Further, the rating factors in moderate financial risk profile along with efficient working capital mechanism. However, above mentioned strengths are partially offset by highly competitive nature of automobile dealer industry.

About the Company

Based in Faridabad and incorporated in 2000, Tayal India Motors Private Limited)(TIMPL) is an authorized dearler of Maruti Suzuki Vehicles, spares and parts and servicing of vehicles. Company operates Maruti Suzuki Arena showroom located in Faridabad, Nexa showroom in Palwal and truevalue showroom in Faridabad. Company also operates two workshop, one of them is located in Faridabad and one workshop is located in Palwal. TIMPL is promoted by Mr. Rakesh mohan Agarwal, Mr. Ayush Agarwal and Mr. Arpit Agarwal.

Analytical Approach

Acuite has considered the stadalone business and financial risk profile of Tayal India motors Private Ltd(TIMPL) to arrive at the rating.

Key Rating Drivers

Strengths

Long track record and established market position
Tayal India motors Private Ltd(TIMPL) is incorporated in 2000, is an authorized dealer for Tata motors till 2017, since April 2018 TIMPL has taken authorised dealership of Maruti Suzuki India Ltd (MSIL). TIMPL is promoted by Mr. Rakesh mohan Agarwal, Mr. Ayush Agarwal and Mr. Arpit Agarwal. TIMPL operates in Faridabad and Palwal regions. Company has Maruti Suzuki Arena showroom located in Faridabad, Nexa showroom in Palwal and truevalue showroom in Faridabad. Company also operates two workshop, one of them is located in Faridabad and one workshop is located in Palwal. Company generates revenue through sale and services of Maruti Suzuki vehicles. The company also sells spares for the service purpose.
Acuite’ believes that TIMPL may continue to benefit from its established treack record of operations and extensive experience of promoters.

Moderate Financial risk profile
TIMPL’s financial risk profile is moderate marked by healthy capital structure and coverage indicators. Company’s net worth stood Rs.15.37 Cr as on March 31, 2022 as against Rs.10.84 Cr as on 31 March, 2021. Networth is expected remain moderate on account of limited accretion to reserves. The debt protection metrics of interest coverage and debt service coverage ratio stood at 5.47 times and 4.52 times respectively as on March 31st 2022 as against 2.77 times and 2.46 times respectively as on March 31st 2021. The net cash accrual to debt stood at 0.37 times as on March 31st 2022 against 0.16 times as on March 31st 2021. The total outside liabilities to tangible net worth stood at 1.52 times as on March 31st 2022 against 2.18 times as on March 31st 2021.
Acuité believes that the financial risk profile of the firm is expected to remain moderate in medium term in absence of any debt funded capex.

Moderate working capital mechanism
The working capital operations of TIMPL is marked moderate with Gross current asset (GCA) days of 41 days in FY 2022 as against 49 days in FY 2021 reduction in GCA days is due to better inventory management with inventory days reduced from 23 days in FY2021 to 18 days in FY2022. Debtors days remained stable at 14 days for FY2022 and FY2021.
Acuite’ believes that working capital operations of the company may continue to remain moderate considering the nature of business.

Weaknesses

Exposure to intense industry competition
The passenger car industry in India is highly competitive. Being an authorized dealer for Maruti suzuki India Ltd (MSIL), the company has to compete with dealers of other car brands such as Mahindra & Mahindra Ltd, Tata Motors Ltd . Auto manufacturers also encourage more dealerships (thereby increasing competition among dealers) to improve market penetration and sales. Thus, the business risk profile may continue to be constrained by limited bargaining power with principals, and exposure to intense competition.

Rating Sensitivities

Improved business risk profile supported by increase in scale of operations and improvement in operating margins.
Improved working capital requirement marked by decline in inventory levels.

Material covenants

None

Liquidity Position: Adequate

TIMPL has adequate iquidity positions as reflected by company’s net cash accruals of Rs.5.90 Cr improved from 3.01 Cr in FY2021 against no maturing debt obligations. Current ratio of the firm stood at 1.08 times and cash and bank balance stood at 0.73 Cr as on March 31st 2022. Firm’s GCA days are around 41 to 50 days making it less dependent for short term borrowing for working capital requirements. Average dealer finance bank utilization stood at 54.5 percent for 9 months ended December 2022.

Outlook: Stable

Acuité believes that TIMPL will maintain a ‘Stable’ outlook and continue to benefit over the medium term owing to its promoter’s extensive industry experience, Strong product profile, and strong dealership network. The outlook may be revised to 'Positive' in case of sustained improvement in the scale of operations and profitability while maintaining comfortable financial risk profile and liquidity position. Conversely, the outlook may be revised to 'Negative' in case of a steep decline in revenue and profitability or if the financial risk profile weakens, because of stretch in the working capital cycle or higher than expected debt-funded capital expenditure.

Other Factors affecting Rating

None

Key Financials

Particulars	Unit	FY 22 (Actual)	FY 21 (Actual)
Operating Income	Rs. Cr.	210.03	160.18
PAT	Rs. Cr.	4.54	1.80
PAT Margin	(%)	2.16	1.13
Total Debt/Tangible Net Worth	Times	1.05	1.74
PBDIT/Interest	Times	5.47	2.77

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

Crisil vide its press release dated 16.05.2022, had rated the company to CRISIL BB+;INC

Any other information

None

Applicable Criteria

• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm
• Rating Process and Timeline: https://www.acuite.in/view-rating-criteria-67.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

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

Rating History :

Not Applicable

Annexure - Details of instruments rated

Lender’s Name	ISIN	Facilities	Date Of Issuance	Coupon Rate	Maturity Date	Quantum (Rs. Cr.)	Complexity Level	Rating
Canara Bank	Not Applicable	Bank Guarantee (BLR)	Not Applicable	Not Applicable	Not Applicable	0.02	Simple	ACUITE A3+ \| Assigned
Canara Bank	Not Applicable	Cash Credit	Not Applicable	Not Applicable	Not Applicable	1.90	Simple	ACUITE BBB- \| Stable \| Assigned
Canara Bank	Not Applicable	Channel/Dealer/Vendor Financing	Not Applicable	Not Applicable	Not Applicable	31.50	Simple	ACUITE BBB- \| Stable \| Assigned
Not Applicable	Not Applicable	Proposed Long Term Bank Facility	Not Applicable	Not Applicable	Not Applicable	0.58	Simple	ACUITE BBB- \| Stable \| Assigned

Contacts

Analytical	Rating Desk
Aditya Gupta Vice President-Rating Operations Tel: 022-49294041 aditya.gupta@acuite.in Gnanreddy Rakesh Reddy Analyst-Rating Operations Tel: 022-49294065 rakesh.reddy@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.