| BMW Ventures Limited | ||||
| Rating upgraded to 'CRISIL BBB+/Stable' | ||||
| 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 upgraded its rating on the bank facilities of BMW Ventures Limited (BVL; part of the BMW group) to ‘CRISIL BBB+/Stable’ from CRISIL BBB/Positive.
The upgrade reflects improvement in scale of operations driven by increase in volumetric sales leading to healthy net cash accruals. In 11 months of fiscal 2023, revenue of the group is estimated to be upwards of Rs 2130 crore, driven by volume growth of more than 20%, generating net cash accruals higher than Rs 40 crore, thereby improving liquidity position of the group.
The rating continues to reflect the extensive experience of the promoters, established market position in Bihar, healthy financial risk profile and prudent working capital management. These strengths are partially offset by limited bargaining power & operating margins and low operating income to gross block ratio. |
Analytical Approach To arrive at its ratings, CRISIL Ratings has combined the business and financial risk profiles of BVL and BMW Enterprises (BE; ‘CRISIL BBB/Stable), together referred to as the BMW group, as they have significant business linkages and same promoters.
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: Extensive experience of the promoters, and established market position: The BMW group has been the sole distributor of long and flat products of the Tata group since inception and caters to over 700 dealers and large institutional buyers in Bihar. Established market position of the group is reflected in steady improvement in scale of operations over the years. The promoters’ experience and strong relationship with the Tata group will continue to support the business over the medium term.
Healthy financial risk profile: Healthy networth, estimated to be over Rs 185 crore as on March 31, 2023, support capital structure yielding gearing and total outside liabilities to total networth ratios, estimated to be around 1.3 times and 1.7 times, respectively for fiscal 2023. Debt protection metrices are also comfortable with interest coverage and net cash accruals to adj debt ratios estimated at 3.5 times and 0.2 time respectively as on March 31, 2023. In absence of large, debt funded capital expenditure (capex), repayment of term loan as scheduled coupled with controlled working capital cycle, financial risk profile is expected to remain on strengthen over the medium term.
Weaknesses:
Low operating income to gross block ratio: Over the years, promoters of the BMW group has focused on investing in own assets, leading to low operating income to gross block ratio (estimated to be around 22 times as on March 31, 2023) vis-à-vis some of its peers having the same ratio around 75-90 times. Though this indicates group’s resourcefulness, it has increased their dependence on external working capital borrowing limiting their financial flexibility in case of business downturn. Improvement in the ratio remains a key monitorable going forward. |
Liquidity: Adequate Bank limit utilisation was moderate around 88% through January 2023. Net cash accrual in range of Rs 40-45 crore per fiscal, will sufficiently cover yearly term debt obligation of Rs 8-10 crore over the medium term. In addition, the surplus will cushion liquidity and provide funding support to maintenance capex. Current ratio was estimated to be healthy around 1.5 times as on March 31, 2022. Group has also maintained free cash bank balances, estimated to be more than Rs 15 crore for fiscal 2023. Promoters belong to cash-rich group and are likely to infuse funds in form of unsecured loans in case of exigency. |
Outlook Stable CRISIL Ratings believes the established market position and long standing relationship with principal shall continue to support business risk profile of the BMW Group over the medium term. |
Rating Sensitivity factors Upward factors
Downward factors
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About the Group BVL was set up in 1994. It is the sole distributor of long and flat steel products of Tata Steel Ltd in Patna, Bihar.
BE commenced operations in 2005. The firm has a 35,000-tonne stock yard. The proprietor is Jai Basukinath Traders Pvt Ltd, which has been a consignment agent for Tata Tiscon for two decades. Mr. Bijay Kumar Kishorepuria and his son, Mr. Nitin Kishorepuria, are the promoters. |
Key Financial Indicators (Consolidated & CRISIL Ratings adjusted)
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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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| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||
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This Annexure has been updated on 05-May-2023 in line with the lender-wise facility details as on 15-Mar-2023 received from the rated entity
Criteria Details
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