| Gestamp Automotive Chennai Private Limited | ||
| Rating Withdrawn | ||
| Rating Action | ||
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| 1 crore = 10 million | ||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has withdrawn its rating on the non-convertible debentures (NCDs) of Gestamp Automotive Chennai Private Limited (GACPL, part of Gestamp group) at the company's request and on receipt of the letter of redemption from the depository. The rating action is in line with CRISIL Ratings’ policy on withdrawal of Non-Convertible debentures (NCDs).
Fiscal 2021 performance was impacted due to disruptions caused by COVID-19 and subsequent lower volume of orders from OEMs. Gestamp recorded losses at the EBITDA level due to high fixed costs and low capacity utilisation in H1’21 which was partially mitigated by better traction in H2’21. Fiscal 2022 performance is expected to improve driven by higher volume of orders from OEMs and high capacity utilisation.
During fiscal 2021, GACPL has issued equity shares and raised Rs.400 crore to redeem the NCDs which was due in April 2021. Besides, GACPL has availed Rs 60 crore of inter corporate loans from Gestamp Automotive India, Pune, subsidiary of Gestamp Automocion S.A(GASA, S&P rated BB-/Stable) to better manage liquidity requirements during the nationwide lockdown.
The ratings continue to factor strong support from the parent, GASA, a leading automotive parts manufacturer for many global OEMs. GAPCL will benefit from the improving business risk profile driven by new customer additions. This is partially offset by client concentration risk and absence of revenue diversification into aftermarkets or exports. |
Analytical Approach For arriving at its rating, CRISIL Ratings has fully consolidated the business and financial risk profiles of GACPL and Gestamp Pune Automotive Pvt Ltd (GPAPL). CRISIL Ratings considers GPAPL as being strategically important to GACPL in view of their common line of business and significant operational and financial linkages.
For arriving at the ratings, CRISIL Ratings has applied its parent notch-up framework to factor in the extent of financial and managerial support available from the parent, GASA. CRISIL Ratings believes that GACPL will, in case of exigencies, receive distress support from GASA for timely repayment of debt obligations.
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 Need-based support from the parent, Gestamp Automocion S.A: GACPL derives need-based operational and financial support from the parent GASA. The company has achieved a moderate scale of business by leveraging the parent’s product portfolio and established relationships with key global customers such as Ford, Renault and Nissan. The parent company also extends need-based technical and operational support. In fiscal 2016, NCDs of Rs 275 crores issued by GACPL, were fully subscribed by the parent, demonstrating the commitment of the parent company in providing financial support to enable GCAPL to operate and settle its obligations as they become due. NCD repayment of Rs.275 crore in April 2021 was serviced through issuance of equity shares which was bought by one of the parent companies.
CRISIL Ratings believes GACPL will continue to derive timely need-based support from the parent.
Improving business risk profile Company’s market position is driven by its established relationships with OEMs such as Renault, Nissan, and Ford. Company is expected to forge new partnerships with leading OEMs mainly for its hot-stamping technology driven by increasing opportunities from the implementation of BS-VI norms and introduction of electric vehicles over the medium term. Profitability in fiscal 2021 was impacted due to lower OEM volumes and effect of COVID-19. Operating margins are expected to improve in fiscal 2022 with restoration of volumes and high capacity utilisation.
Weaknesses Modest financial risk profile GACPL’s financial risk profile remains modest. Gearing is expected to improve from above 3 times in fiscal 2021 with repayment of NCDs and equity infusion of Rs.400 crore. Debt protection metrics were impacted in fiscal 2021 due to operating losses incurred by the company. However, the impact is expected to be temporary, and metrics are expected to be improve with interest coverage above 2 times and NCATD around 0.1 times over the medium term.
Exposure to risks relating to concentration in revenue OEMs account for the entire revenue, in the absence of any diversification into exports or aftermarket segments. Risks relating to revenue concentration in the OEM segment are partially mitigated by the company’s established relationships with the OEMs. Gestamp is expected to forge new customers for its hot stamping technology over the medium term; nevertheless, CRISIL believes that due to limited customer diversification, revenue will continue to be linked with performance of OEMs in the domestic market. |
Liquidity: Adequate Liquidity remains adequate, aided by sufficient cushion in bank limits of Rs 215 crore which have been utilized at around 78% as of June 2021. Yearly cash accrual is expected to increase to about Rs 30-40 crore expected over the medium term driven by higher capacity utilisation which will be adequate to cover incremental working capital requirements. The company could also avail inter corporate loans to match any mismatches in fund requirements. |
About the Parent GASA based in Madrid, Spain, was founded in 1997 and is one of large manufacturers of body-in-white and chassis for global automobile OEMs. Key products include external as well as structural components, chassis, door mechanism components, powered systems, and drive controls. It has strong and longstanding association will many global OEMs including Volkswagen AG (rated BBB+/Stable/A2 by S&P), Renault-Nissan BV (rated BBB-/Credit watch negative/A-3 by S&P), Daimler AG (rated A-/Negative/A-1 by S&P), General Motors Company and Bayerische Motoren Werke AG (BMW; rated A+/Negative/A-1 by S&P). The Gestamp group has over 100 manufacturing plants spread over 20 countries across the globe.
About the Company GACPL, incorporated on July 29, 2011, manufactures cold stampings and structural components. The company has a 40,150 square meter manufacturing facility in Chennai, and sells primarily to Renault, Nissan, and Ford. It began operations in August 2012. |
Key Financial Indicators (Consolidated)
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Any other information: Not applicable |
| Note on complexity levels of the rated instrument: CRISIL Ratings' complexity levels are assigned to various types of financial instruments. The CRISIL Ratings' complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL Ratings' 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)
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Annexure - List of Entities Consolidated
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| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Criteria Details
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