| ASK Automotive Limited | ||||||
| Ratings reaffirmed at 'Crisil AA/Stable/Crisil A1+' | ||||||
| Rating Action | ||||||
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| Note: None of the Directors on Crisil Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||||
| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale Crisil Ratings has reaffirmed its ‘Crisil AA/Stable/Crisil A1+’ ratings on the bank facilities of ASK Automotive Ltd (AAL; a part of the ASK group).
The ratings continue to reflect the strong market position of the ASK group in the two-wheeler components industry and its robust financial risk profile. These strengths are partially offset by customer and segmental concentration in revenue and moderate operating profitability. |
Analytical Approach Crisil Ratings has combined the business and financial risk profiles of AAL and its wholly owned subsidiary, ASK Automobiles Pvt Ltd (AAPL). This is because both the companies, together referred to as the ASK group, have operational linkages.
Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers & Detailed Description Strengths: Strong market position in the two-wheeler components industry: The group is a leading manufacturer of two-wheeler friction materials, commanding a significant market share in the domestic original equipment manufacturer (OEM) sector. It supplies to prominent industry players, including Hero MotoCorp Ltd, Honda Motorcycle and Scooter India Pvt Ltd, TVS Motors Co Ltd, and Suzuki Motorcycle India Pvt Ltd. The product portfolio is diverse, encompassing brake shoes, aluminum die castings, and panel assemblies, with ongoing research and development initiatives and strategic technical collaborations, such as high-pressure die casting alloy wheels driving expansion and innovation. This multifaceted approach reinforces the group's market position in both the domestic OEM and international markets, as well as the aftermarket segment. Furthermore, the management has proactively invested in capacity development to cater to the emerging electric vehicle (EV) landscape, currently serving 70-80% of two-wheeler EV manufacturers. The anticipated revenue growth is expected to be driven by the increasing trend of lightweighting in EVs due to the growing use of aluminum. For fiscal 2025, the group reported revenue of ~Rs 3,606 crore while operating margin was 12.2%, in line with expectations. In the first quarter of this fiscal 2026, revenue reached Rs 891 crore while margin was 13.8%, slightly exceeding expectations. The rapid ramp-up of operations at the Rajasthan and Bengaluru plants, combined with favourable industry trends, drove revenue growth. Scale and profitability are likely to improve further, driven by higher capacity utilisation (70%), enhanced economies of scale, and strong market position. Utilisation of new capacities, commercialisation of the newly formed joint venture (JV) with a Japanese company, and sustained improvement in the business risk profile, leading to higher operating profitability, will remain monitorable.
Robust financial risk profile: The group's financial risk profile has consistently improved due to a conservative approach to external debt, as reflected in prepayment of term loan and prudent working capital management, which reduce dependence on short-term debt. A sizeable capital expenditure (capex) of Rs 450 crore is planned for fiscal 2026, of which Rs 250-300 crore will be used to support alloy wheel JV with Kyushu Yanagawa Seiki Company Ltd, Japan; while the remaining amount will be used to modernise the Bengaluru and Rajasthan plants. Despite this, the capital structure is expected to remain strong, with adjusted networth of over Rs 856.8 crore as on March 31, 2025, and gearing and total outside liabilities to adjusted networth ratio of 0.52 time and 1.19 times, respectively. These ratios are expected to improve further to 0.4-0.45 time and 0.8-0.9 time, respectively, as on March 31, 2026. Steady growth in revenue and profitability is expected to generate annual net cash accrual of over Rs 380-450 crore, thereby maintaining robust debt protection metrics: interest coverage and net cash accrual to total debt ratios are expected to be 9-10 times and 0.8-0.9 time, respectively, for fiscal 2026 (13.07 times and 0.81 time, respectively, for fiscal 2025).
Weaknesses: Customer and segmental concentration in revenue: The group's growth prospects are susceptible to cyclicality in the automotive industry given its significant exposure to the two-wheeler segment, which accounts for over 90-95% of its revenue; with OEMs constituting 70-80% of its sales. Although the group is diversifying into exports, aftermarket services, and non-auto applications, these segments currently contribute minimally to its revenue. Also, the top three customers account for 60-65% of the group’s total revenue, which exposes it to the changing regulations for auto components. However, the management's proactive initiatives to introduce new products, foster strong OEM relationships, and acquire new customers in the domestic and export markets are expected to mitigate the impact of cyclical demand fluctuations and reduce customer concentration risks. The group's ability to sustain revenue growth, diversify its customer and segment concentration, and capitalise on its expanded capacity amidst cyclical industry trends will be closely monitored.
Moderate operating profitability: Though operating profitability has consistently improved over the past few fiscals, it remained muted at 12.2% during fiscal 2025 (10.4% during fiscal 2024) on account of the sizeable greenfield expansion undertaken by the group over the past 2-3 fiscals, which constrained cost efficiency. While both the new plants have turned commercial partially in the ongoing fiscal, leading to improvement in operating profitability to 13.8% in the first quarter of fiscal 2026, sustaining this will be monitorable as the operations there are yet to scale up and stabilize. Operating profitability is also constrained by the regular development of new products, especially for the EV segment, and slow ramp up in its demand amidst subdued order flow from end customers. Optimal utilisation of capacities at the new plants, along with increase in sales of high value-added products, leading to significant improvement in operating profitability, will remain monitorable. |
Liquidity: Strong Bank limit utilisation was around 44.2% for the 12 months through June 2025. Expected annual cash accrual of Rs 380-450 crore will be sufficient to meet annual term debt obligation of Rs 80-110 crore, over the medium term; and the remaining will cushion liquidity. Current ratio was moderate at 1.02 times as on March 31, 2025. Strong gearing and moderate networth support financial flexibility and provide the financial cushion against any adverse condition or downturn in the business. |
Outlook: Stable The ASK group will continue to benefit from its strong market position in the two-wheeler components industry, and robust financial risk profile over the medium term. |
Rating sensitivity factors Upward factors
Downward factors
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About the Group Incorporated in 1988 in Manesar, Haryana, and promoted by Mr K S Rathee and his wife, Ms Vijay Rathee, AAL manufactures components used in advanced braking systems, aluminium lightweighting precision solutions and safety control cables such as brake shoes, and other aluminium pressure die casting and machined components such as brake panels, crank cases and hubs. The promoters’ children, Mr Prashant Rathee and Mr Aman Rathee, have also joined the business and are part of the board.
AAPL is a wholly owned subsidiary of AAL and was incorporated in June 2021. It has set up manufacturing plants in Bhiwadi in Rajasthan and in Bengaluru to manufacture auto components and parts. The new facilities commenced operations in July 2024. |
Key Financial Indicators (Consolidated)
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Any other information: Not Applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
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Annexure – List of entities consolidated
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| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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* - Issuer did not cooperate; based on best-available information
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| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||||||||||||||||||
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Criteria Details
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