| Eximiius Autocomps Private Limited | ||||
| 'CRISIL BBB / Stable' assigned to Bank Debt | ||||
| Rating Action | ||||
| ||||
| 1 crore = 10 million | ||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has assigned its ‘CRISIL BBB/Stable’ rating on the long term facility of Eximiius Autocomps Private Limited (EAPL; part of Badve group).
The ratings reflect the group's market leadership in the two- and three-wheeler chassis and silencer segments, longstanding relationships with large original equipment manufacturers, increasing product diversity, moderate working capital management and above-average financial risk profile. These strengths are partially offset by customer concentration in revenue and exposure to cyclicality in the domestic automobile (auto) industry. |
Analytical Approach CRISIL Ratings has combined the business and financial risk profiles of Eximiius Autocomps Pvt Ltd (EAPL) with Badve Engineering Ltd (BEL), Badve Autotech Pvt Ltd (BAtPL), Sumedh Tools Pvt Ltd (STPL), Creative Tools & Press Components Pvt Ltd (CTPL), Swastid Engineering Pvt Ltd (SEPL), Badve Autocomps Private Limited (BAPL), Eximiius Infratech Solutions LLP (EIS LLP) and Swami Ashirwad Engimech Pvt Ltd (SAEPL), collectively referred to as the Badve group. This is because the entities have a common promoter, are in the same business, and have significant operational, managerial and financial linkages.
Unsecured loans from the promoters of Rs.84 crores as on March 31, 2021 has been treated as 75% equity and 25% debt as it is expected to remain in the business over the medium term.
Please refer Annexure - Details of Consolidation, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers & Detailed Description Strengths:
Around three decades ago, the Badve group started by manufacturing small auto components and doing jobwork, predominantly for Bajaj Auto Ltd (BAL; ‘CRISIL AAA/Stable/CRISIL A1+’). Over the years, the group has developed a diversified product portfolio comprising plastic and metal components. It is one of the leading players in two- and three-wheeler silencer and chassis segments. The group caters to marquee clients such as BAL, Honda Motorcycle and Scooter India Pvt Ltd (HMSIL), Hero MotoCorp Ltd (‘CRISIL AAA/Stable/CRISIL A1+’), Tata Motors Ltd (‘CRISIL AA-/Negative/CRISIL A1+), Exide Industries Ltd, LG Electronics India Pvt Ltd, Piaggio Vehicles Pvt Ltd and Jaguar Land Rover Ltd.
The working capital cycle is moderate, as reflected in gross current assets estimated at 153 days as on March 31, 2021, driven by receivables and inventory of 87 days and 59 days, respectively. The group offers credit of 60-90 days to its key customers and maintains low inventory as production is order backed and raw material is easily available. The overall working capital cycle is expected to be stretched in fiscal 2021 as compared to the previous fiscal on account of a higher debtor and inventory cycle. Furthermore, the group is entitled for Mega Project benefits (State Government Subsidies) in various states for the capital investments done in the Projects. There have been delays in receiving the subsidy which has also led to an increase in the working capital cycle for the group. CRISIL Ratings believes the group’s working capital cycle will remain moderate over the medium term.
Networth is estimated to be strong at Rs 2,098 crore as on March 31, 2021. With increasing working capital requirements and delay in receipt of subsidies, the group’s reliance on bank debt has gone up substantially in FY21. This has resulted into gearing and total outside liabilities to adjusted networth (TOLANW) ratio to be at an estimated 1.88 times and 2.29 times, respectively, as on March 31, 2021. Debt protection metrics were adequate, reflected in interest coverage and net cash accrual to total debt ratios estimated at 2.9 times and 0.15 time, respectively, for fiscal 2021. The Badve group management is committed to correct its capital structure through a mix of equity and subsidy receipts that would be utilized to reduce the short term bank borrowings. This coupled with large repayments during the year will correct the gearing to below 1.5 times in the near term, there by strengthening the overall financial risk profile.
Weaknesses:
The auto industry accounts for the entire revenue of the group, particularly two-wheeler industry. The performance of the auto industry is linked to financing costs and overall macroeconomic scenario. The group will remain susceptible to cyclicality in the auto industry over the medium term.
The Badve group generates over 75% of its revenue from three customers, BAL (around 40%), HMSIL (around 20%) and Hero MotoCorp Ltd (7%), which makes it vulnerable to downturns in the customers’ business or vendor rationalization. Although the group has diversified its clientele, it will remain highly dependent on BAL over the medium term |
Liquidity: Adequate Expected cash accrual of Rs 723-855 crores per annum in fiscals 2022 and 2023 will comfortably cover debt obligation of Rs 325 crore and Rs 390 crores, respectively. Cash and equivalent are estimated at Rs 97 crore as on March 31, 2021. Fund-based limits of Rs 991.53 crore remained utilised to the extent of 75% on an average as of January 2021. The promoter will continue to provide financial support by way of unsecured loans. Current ratio was moderate at an estimated 1.33 times as on March 31, 2021. The group had availed moratorium on term loan repayment and interest obligation for March to August 2020. |
Outlook: Stable CRISIL Ratings believes the Badve group will maintain its position in the auto components industry backed by the extensive experience of the promoter, established customer relationships and diversified product portfolio.
Rating sensitivity factors Upward factors * Improvement in the financial risk profile, with sustained gearing below 1time and TOLANW ratio below 1.2 times * Steady revenue and stable operating margin
Downward factors * Inability to correct the gearing to below 1.5 times * Significant decline in revenue (beyond 20%) or profitability, or stretch in subsidy receipts impacting overall liquidity. |
About the Group Mr. Shrikant Badve, promoter of the Badve group, set up the flagship company of the Badve Group- BEL in September 1996. The Badve Group is engaged in the manufacture of exhaust systems (silencers), chassis and frame assembly, sheet metal, plastic moulded & painted parts and assemblies mainly for the auto and consumer durables segment. The group has manufacturing units across India.
Eximiius Autocomps Pvt Ltd was setup in 2014 and the manufacturing unit is located at Bhiwadi, Rajasthan. It is engaged in the business of manufacturing of auto components for Hero Corp |
Key Financial Indicators*
*Consolidated |
Any other information: Not applicable |
| Note on complexity levels of the rated instrument: CRISIL complexity levels are assigned to various types of financial instruments. The CRISIL complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL complexity levels for instruments that they consider for investment. Users may also call the Customer Service Helpdesk with queries on specific instruments. |
Annexure - Details of Instrument(s)
|
Annexure – List of entities consolidated
|
| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||
|
|||||||||||||||||||||||||||||||||||||||
| All amounts are in Rs.Cr. | |||||||||||||||||||||||||||||||||||||||
| Annexure - Details of various bank facilities | ||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||
Criteria Details
|