CARE Ratings Nepal downgrades the rating of Advanced Automobiles' bank facilities; Deteriorating financial risk profile major factor

Fri, Feb 14, 2020 1:29 PM on Credit Rating, Latest,
CARE Ratin...

CARE Ratings Nepal Limited (CRNL) has revised the rating to ‘CARE-NP BB’ for long term bank facilities and

Key Rating Weaknesses

  • Financial risk profile marked by decline in revenue, net loss, stressed debt service indicators and leveraged capital structure
  • Limited track record of operations
  • Working capital intensive nature of operation
  • Cyclical nature of the auto industry and high competition from other automobile players
  • Exposure to volatile interest rates
  • Exposure to regulatory risk related to automobile industry

Key Rating Strengths

  • Experienced and resourceful promoters
  • Established brand, sole distributor of Renault SAS andestablished dealer network

About the Company

Advanced Automobiles Private Limited was incorporated in September 13, 2013 by Mr. Nikunj Agrawal and started its operation from October 2016 as a sole authorized distributor for Renault SAS, France in Nepal. The company is engaged in the sale of passenger vehicles of Renault, servicing of the vehicles and sale of spare parts. The company owns and operates two showrooms and two service centers that are situated in Kathmandu. During FY19, the company generated ~96% of the revenue from the sale of vehicles, while the balance was achieved from service charge income, sale of spare parts and accessories.

Brief financials of AAPL for last three years ending FY19 are given below:

(Rs. Million)

For the year ended Mid July

FY17

FY18

FY19

(Audited)

(Audited)

(Audited)

Income from Operations

2,659

2,982

1,898

PBILDT

230

181

57

PAT

134

52

(68)

Overall Gearing (times)

5.00

6.74

5.25

Interest Coverage (times)

5.35

1.96

0.53

 Source: https://careratingsnepal.com/

Read the full report here.