As on Nov13 Fund Based Limits Rs 57.42 crore downgraded to [ICRA]BB(stable) Non- Fund Based Limits Rs 26.88 crore downgraded to [ICRA]A4 Non- Fund Based Limits Rs 0.25 crore downgraded to [ICRA]BB(stable)
ICRA has downgraded rating for Rs 57.67 * crore long-term fund-based and non-fund based bank facilities of Atlas Cycles Haryana Limited (ACL) from [ICRA]BBB (pronounced ICRA triple B) to [ICRA]BB (pronounced ICRA double B)
. Outlook on the long term rating is stable. ICRA has also
downgraded rating for Rs 26.88 crore short-term fund based bank facilities of the company from [ICRA]A3+ (pronounced ICRA A three plus) to [ICRA]A4 (pronounced ICRA A four).
The rating revision factors in weak liquidity position of Malanpur unit with losses from the tube mill, as well as sharp decline in sale of bicycles, also impacting its distribution of fixed costs. ICRA has also come across some instances of delays in debt servicing by Malanpur division; based on information provided by the management, these slippages have been on non ICRA rated debt. The units plans to hive-off the tube mill and generate funds, has also been put on hold because of clearance awaited from state agencies. Nevertheless, proceeds from sale of a land parcel should help ease the liquidity position over the next couple of months. The ratings also consider ACLs thin profit margins, which have deteriorated in Q1 2013-14. The financial risk profile is also moderate with decline in debt protection metrices, though supported to an extent by presence of cash balance and liquid investments. ICRA continues to take note of, ACLs long track record of operations, its established brand -Atlas, and increasing proportion of fancy bicycles in the sales mix. In ICRAs view, although 2012-13 was marked by subdued industry performance, prospects of the domestic bicycle industry remain healthy with scope for further penetration in rural markets, continuing replacement demand, and support from institutional sales backed by state Government run programmes. The ratings also factor in the significant competition from well entrenched players, as well as Chinese imports in the growing fancy segment. Further, ACLs operations as three independent units may restrict improvement in profitability wherein the financial profile of each individual unit varies significantly.
Recent Results In Q1 2013-14, ACLs net sales at Rs. 130.7 crore reported a de-growth of 25.0% over the corresponding previous period. The companys operating profit before depreciation, interest and tax declined from Rs. 6.0 crores in Q1 2012-13 to a loss of Rs 0.4 crore in Q1 2013-14. Further, ACLs reported loss of Rs 4.5 crore at the net level during 9m 2013-14.
Company Profile Atlas Cycles (Haryana) Ltd., previously known as Atlas Cycle Industries Limited (ACIL) was promoted by Sri. Janki Das Kapur in 1950. The company started with the manufacture of bicycle saddles in 1951, and bicycles in 1952. Currently the company figures amongst the top three bicycle manufacturers in India by virtue of its strong brand in India. The company is engaged in manufacturing of bicycles with units located at Sonepat (Haryana), Sahibabad (Uttar Pradesh) and Malanpur (Madhya Pradesh) besides a steel tube manufacturing unit at Bawal (Haryana). The product (bicycle) range covers from low range necessity bicycle to high-end bicycles including the e-Bike segment. As part of family settlement, the three families (belonging to the three sons) of Mr. Janki Das Kapur signed an MoU under which the company was divided into three profit centres, each under the management of one of his sons and/or his (sons) family.
November 2013
* 100 lakh = 1 crore = 10 million For complete rating definition, please refer to the ICRA website www.icra.in or any of the ICRA Rating Publications EMISPDF in-glim01 from 220.227.137.92 on 2014-10-18 19:24:41 BST. DownloadPDF. Downloaded by in-glim01 from 220.227.137.92 at 2014-10-18 19:24:41 BST. EMIS. Unauthorized Distribution Prohibited.
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