Rating Rationale
March 16, 2018 | Mumbai
JMK Motors Private Limited
Rating Reaffirmed
 
Rating Action
Total Bank Loan Facilities Rated Rs.14.15 Crore
Long Term Rating CRISIL B+/Stable (Reaffirmed)
1 crore = 10 million
Refer to annexure for Details of Instruments & Bank Facilities
Detailed Rationale

CRISIL has reaffirmed its rating on the long term bank facilities of JMK Motors Pvt. Ltd. (JMK) at 'CRISIL B+/Stable'.

The ratings reflects modest scale of operations in highly competitive automotive dealership industry and modest debt protection metrics. The above weaknesses are partially offset by the extensive experience of the promoters and their funding support.

Analytical Approach

CRISIL has treated unsecured loans from the promoters (Rs 7.28 crore as on March 31, 2017), as neither debt nor equity (NDNE) as these loans are subordinated to bank debt and are expected to remain in the business over the medium term.

Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations in highly competitive automotive dealership industry: JMK reported modest operating income of Rs 44 crores in fiscal 2017 and is expected to report operating incomes of around Rs 50 crores in the current fiscal.
 
* Moderate debt protection metrics: JMK reported interest coverage ratio of 1.6 times and net cash accrual to adjusted debt of 10% in fiscal 2017. Debt protection metrics are expected to remain modest over the medium term.
 
Strengths
* Extensive experience of the promoters: The promoters of the company have more than 15 years of experience in the industry which helps in maintaining good relationships with customers and principal.
 
* Funding support from the promoters: The promoters continue to support JMK through unsecured loans. JMK reported unsecured loans from promoters of Rs 7.28 crore on March 31, 2017.
Outlook: Stable

CRISIL believes that JMK will benefit over the medium term from the extensive experience of its promoters. The outlook may be revised to 'Positive' if significant ramp-up in scale of operations and improvement in operating profitability lead to large net cash accrual, and if liquidity improves with efficient working capital management. The outlook may be revised to 'Negative' if substantial decline in scale leads to lower net cash accrual, or if liquidity deteriorates on account of larger-than-expected working capital requirement or debt-funded capital expenditure.

About the Company

Set up in 2000 by Mr. Rakesh Singh Baghel and his wife, Ms. Pratibha Singh, JMK is an authorised dealer and service provider for Tata Motors passenger vehicles in Jhansi district, Uttar Pradesh.

Key Financial Indicators
Particulars Unit 2017 2016
Revenue Rs crore 43.95 36.33
Profit After Tax Rs crore 35 15
PAT margin % 0.8 0.4
Adjusted debt/Adjusted net worth Times 1.43 2.01
Interest coverage Times 1.59 1.58

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)
ISIN Name of instrument Date of allotment Coupon rate (%) Maturity date Issue size
(Rs crore)
Rating assigned
with outlook
NA Channel Financing NA NA NA 7 CRISIL B+/Stable
NA Drop Line Overdraft Facility NA NA Mar-20 1.4 CRISIL B+/Stable
NA Proposed Long Term Bank Loan Facility NA NA NA 1.55 CRISIL B+/Stable
NA Loan Against Property NA NA Mar-23 4.2 CRISIL B+/Stable
Annexure - Rating History for last 3 Years
  Current 2018 (History) 2017  2016  2015  Start of 2015
Instrument Type Quantum Rating Date Rating Date Rating Date Rating Date Rating Rating
Fund-based Bank Facilities  LT/ST  14.15  CRISIL B+/Stable    No Rating Change  28-02-17  CRISIL B+/Stable    No Rating Change  26-10-15  CRISIL BB-/Stable/ CRISIL A4+  -- 
Table reflects instances where rating is changed or freshly assigned. 'No Rating Change' implies that there was no rating change under the release.
Annexure - Details of various bank facilities
Current facilities Previous facilities
Facility Amount (Rs.Crore) Rating Facility Amount (Rs.Crore) Rating
Channel Financing 7 CRISIL B+/Stable Channel Financing 7 CRISIL B+/Stable
Drop Line Overdraft Facility 1.4 CRISIL B+/Stable Drop Line Overdraft Facility 1.4 CRISIL B+/Stable
Loan Against Property 4.2 CRISIL B+/Stable Loan Against Property 4.2 CRISIL B+/Stable
Proposed Long Term Bank Loan Facility 1.55 CRISIL B+/Stable Proposed Long Term Bank Loan Facility 1.55 CRISIL B+/Stable
Total 14.15 -- Total 14.15 --
Links to related criteria
CRISILs Approach to Financial Ratios
CRISILs Bank Loan Ratings - process, scale and default recognition
Rating criteria for manufaturing and service sector companies

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