VG Automobiles receive BBB+ and A3 rating for its long term and short term bank facilities; Company part of Vishal Group of Companies

Fri, Feb 14, 2020 1:23 PM on Credit Rating, Latest,
VG Automob...

CARE Ratings Nepal Limited (CRNL) has reaffirmed rating of ‘CARE-NP BBB-’ assigned to the long term bank facilities and ‘CARE-NP A3’ assigned to the short term bank facilities of V. G. Automobiles Private Limited (VGAPL). 

Key Rating Strengths

  • Experienced and resourceful promoters
  • Moderate track record of operations
  • Established brand and sole distributor of Suzuki Motorbikes, Atul Auto Vehicles and Motul Lubricants
  • Established dealer network
  • Moderate financial risk profile marked by growth in revenue, moderate debt service indicators, however, leveraged capital structure

Key Rating Weaknesses

  • 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

About the Company

V.G. Automobiles Private Limited was incorporated in September 13, 2013 by Mr. Nikunj Agrawal and his relatives. The company started its operations as a sole authorized distributor for SMIPL for their two wheeler vehicles and spare parts in Nepal. During FY18, the company also started selling three wheeler vehicle & spare parts of Atul Auto Limited and Motul Lubricants in Nepal. 

Brief financials of VGAPL 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

1,162

1,488

1,880

PBILDT

87

131

200

PAT

23

46

80

Overall Gearing (times)

5.71

4.76

3.44

Interest Coverage (times)

1.87

2.17

2.43

 Source: https://careratingsnepal.com/

Read full report here.