| VEE GEE Auto Components Private Limited | ||||||
| Ratings upgraded to 'Crisil A / 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 upgraded its ratings on the bank facilities of VEE GEE Auto Components Private Limited (VGAC; part of the Veegee group) to 'Crisil A/Stable/Crisil A1' from 'Crisil A-/Stable/Crisil A2+'
The upgrade reflects improvement in the credit risk profile of the parent, VeeGee Industries Enterprise Pvt Ltd (VGI).
The upgrade also factors in VGAC sustained improvement in revenue over the years, driven by the timely addition of new products and models, as well as higher demand for existing products. Revenue is likely to improve over medium term, driven by stable realizations and better volume. It is likely to increase by 10–12% year-on-year in fiscal 2027, supported by value-added products such as chassis parts and healthy demand from Maruti Suzuki India Ltd (MSIL; rated 'Crisil AAA/Stable/Crisil A1+') and Honda Motorcycle & Scooter India Pvt Ltd (HMSI). Moreover, operating efficiency stands improved as well, driven by improvement in operating margin estimated around 7.7-7.8% in fiscal 2026 from 7.6% in fiscal 2025, prudent working capital management and comfortable return on capital employed.
Financial risk profile has improved too, backed by moderate reliance on external debt with healthy leverage and comfortable debt protection matrix. Total outside liabilities to adjusted networth (TOLANW) ratio estimated to improve to 0.7-0.8 times in fiscal 2026 (0.94 times in fiscal 2025) and further estimated to improve further to 0.6-0.65 times over medium term, on the back of accretion to reserve and absence of sizeable debt-funded capital expenditure (capex). Debt protection metrics will remain comfortable with interest cover over 10 times over the medium term amid steady operating profitability. Liquidity has also strengthened on the back of improved net cash accrual following steady increase in revenue and better profitability. This has improved cushion between net cash accrual and debt obligation.
The ratings reflect the strong operational, managerial and financial support from the parent, VGI, and the healthy financial risk profile of the company. These strengths are partially offset moderate scale of operations and susceptibility to demand prospects in the auto industry and customer concentration. |
Analytical Approach Crisil Ratings has applied its parent notch-up framework to factor in the strong support VGAC receives from VGI. |
Key Rating Drivers - Strengths Strong operational, managerial and financial support from the parent: VGAC is a subsidiary of VGI; the parent has control over the company’s strategic and operational decisions and strong oversight over financial matters. VGI has extended financial support (equity) to VGAC. Established market position of the parent and its association with MSIL enabled addition of new models through MSIL and value-added products mix. This has led to group's revenue having increased with a compound annual growth rate (CAGR) of over 10% over the past four years, culminating in revenues estimated to around nearly Rs. 1,900-2000 crores in fiscal 2026. Revenue is further expected to improve to 10-15% over medium term, supported by demand for auto components not just for existing models but also for new models recently launched by OEMs. However, with addition of new models into the profile and increasing contribution through value added products, revenue is expected to improve during fiscal 2027. Furthermore, the operational, managerial and financial support from the parent will continue to strengthen the business risk profile of VGAC over the medium term.
Healthy financial risk profile: The capital structure is aided by a moderate reliance on external debt, as reflected in a low gearing estimated at around 0.15–0.20 times and a total outside liabilities to tangible net worth of 0.7–0.8 times in fiscal 2026; it is further estimated to improve to 0.14–0.16 times and 0.6–0.65 times, respectively, over the medium term, on the back of accretion to reserves and the absence of sizeable debt-funded capital expenditure (capex). Steady growth in revenue and profitability is expected to generate an annual net cash accrual of more than Rs. 40–50 crores, thereby maintaining robust debt protection metrics. The interest coverage and net cash accrual to total debt ratios are expected to be more than 10 times in fiscal 2026 and more than 11 times over the medium term, with the net cash accrual to adjusted debt ratio above 1.2 times. The improvement in debt protection metrics is due to a reduction in interest costs and an expected improvement in operating profitability during fiscal 2026; these factors remain key monitorable. |
Key Rating Drivers - Weaknesses Modest scale of operations: The revenue stood modest at Rs. 761 crores during fiscal 2025. However, on account of reduction in the tolling sales the revenue growth is expected to remain flattish. While the revenue is expected to grow by 8-10% during fiscal 2027, the scale remains modest. Revenue growth is supported by demand for auto components not just for existing models but also for new models recently launched by OEMs. Furthermore, revenue remains concentrated towards MISL and any decline in performance of MISL will adversely impact on the performance. However, company in discussion with multiple OEMs but timely additional and contribution therefore remains moniterable. Going forward, improved contribution from other OEMs and regular orders from MSIL leading to improvement in business risk profile remains key monitorable.
Susceptibility to demand prospects in the auto industry and customer concentration: Since the company supplies components for four-wheelers, growth is linked to the prospects of the automotive industry. The business risk profile will remain vulnerable to the performance of the auto industry. Further, MISL is the major customer, thereby exposing the business to intense customer concentration risk. However, this risk is partially offset by longstanding relationship with customers. Also, it is susceptible to change in government policies regarding auto mobiles like pollution norms, electric vehicles etc. |
Liquidity Strong Bank utilisation was low, averaging 6.8% for the 12 months through January 2026. Expected net cash accrual of Rs 40-45 crore per annum will comfortably cover the yearly term debt obligation of Rs 12-15 crore over the medium term, with the surplus aiding liquidity. Current ratio was low at 0.97 times as on March 31, 2025. Moreover, the promoters are likely to extend support through equity and unsecured loans, if warranted, to cover the working capital expenses and debt obligation. |
Outlook Stable Crisil Ratings believes VGAC will continue to improve in the near term with increase in sales while maintaining healthy financial risk profile. |
Rating sensitivity factors Upward factors
Downward factors
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About the Company VGAC, incorporated in 2016, is a subsidiary (74%) of VGI; both companies are in the same business. Its manufacturing unit in Gujarat caters to the plant of MSIL in the state. F-Tech Inc (Japan) has acquired 26% stake in VGAC and had invested Rs 28 crore as on March 31, 2021.
About the Group VGI was set up in 1990 as a partnership firm and was reconstituted as a private limited company. The company, based in Faridabad, Haryana, manufactures sheet metal components, pedals and chassis for the auto segment. MSIL and HCIL are its leading customers. |
Key Financial Indicators
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Any other information: Not Applicable |
Note on complexity levels of the rated instrument: Annexure: List of instruments and names of regulators of the instruments As required by SEBI CRA Circular dated Feb 10, 2026, a list of activities or instruments falling under the purview of various FSRs, along with the names of respective FSRs, is being disclosed below:
* Includes securitisation transactions involving assignee payout, acquirer's payout. ~ The rated instrument may involve issuance of different instruments such as debt securities (listed or otherwise), bank loans, commercial paper (listed or otherwise), etc. The regulator of the instrument may accordingly be SEBI, RBI or MCA and can only be determined upon issuance. In PRs subsequent to issuance(s), Crisil Ratings Limited shall separately capture the rated quantum details along with names of respective regulators. ^ Includes bank facilities such as liquidity facility, second loss facility that are part of securitisation transactions. # There is no instrument being rated and hence, Regulator of the Instrument is not applicable. The rating scale and definitions are being followed as stipulated in SEBI Master Circular for CRAs. @ These ratings were assigned during regulatory regime prior to introduction of SEBI CRA Circular dated Feb 10, 2026 and the investor side regulators have accordingly been included.
Note: Kindly note that for activities or instruments falling under the purview of FSRs other than SEBI, the grievance/dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available. |
Annexure - Details of Instrument(s)
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| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||||||||||||||
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Criteria Details
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